1. The appellants manufacture matches. They were paying duty at the concessional rate under Notification No. 154/75-C.E., dated 3-6-1975 (as amended) from 1-4-1979. They had cleared more than 10 million matches in October 1979. They crossed the 75 million mark in November 1979 and therefore from 1-12-1979 began to pay duty at Rs. 4/50 per gross. On 2-4-1980 a show cause notice was issued to them why they should not be called upon to pay differential duty for the clearances from 1-4-1979 to 30-11-1979. They sent a reply denying liability. After granting a personal hearing in which a defence of time bar was also raised the Assistant Collector under his order dated 17-9-1982 confirmed the demand. An appeal against the same was dismissed by the Collector of Central Excise (Appeals) under his order dated 24-9-1984.
This appeal is against the said order.
2. We have heard Shri H.P. Arora, Advocate for the appellants and Smt.
Dolly Saxena, Senior Departmental Representative and Shri K.C. Sachar, Junior Departmental Representative for the respondent Collector.
3. The facts above-stated are not in dispute. Though various contentions have been raised in the grounds of appeal, Shri Arora put forward two contentions only during his arguments. He first contended that in terms of the notification abovementioned the differential duty could have been demanded on the entire clearances from 1-4-1979 only if the clearance during the year exceeded 100 million matches and not when the clearance had exceeded 75 million matches only as in the case of the appellants. The terms of the notification, so far as it is relevant for the present purpose, are as follows : (i) In the case of matches referred to in Category 2 and cleared for home consumption during a financial year by a manufacturer from a factory which is recommended by the Khadi and Village Industries Commission for exemption under this notification as a bonafide cottage unit, or which is a member of a co-operative society (including marketing or service industrial co-operative society but excluding a co-operative bank) registered under any law relating to co-operative societies for the time being in force and assisting exclusively manufacturers of such matches, exemption shall be increased by Rs. 2.90 per gross of boxes of 50 matches each- (a) if the manufacturer makes a declaration under this proviso that the total clearances of matches from such factory during the financial year is not estimated to exceed 75 million matches ; (b) if the production in a calender month from such factory does not exceed 10 million matches ; and (c) where the clearance of matches from such factory in the financial year exceeds 75 million matches, but does not exceed 100 million matches, the duty on such excess clearance shall be required to be paid at the rate of Rs. 4.50 per gross of 50 matches each and if the clearance, by or on behalf of such manufacturer exceeds 100 million matches during the financial year, the duty shall be required to be paid at the rate of Rs. 4.50 per gross of 50 matches each on the entire quantity cleared during the financial year." The contention of Shri Arora is that not merely should the appellant have exceeded clearance of 10 million matches in a particular calendar month but the total clearances for the year should also have exceeded 100 million matches if duty at Rs. 4.50 is to be demanded for all the clearances during the year and that if the total clearances during the year had exceeded 75 million matches only the differential duty could be demanded only on the excess over the 75 million mark [in terms of Clause (c) of the proviso] even though the 10 million mark may have been exceeded in any particular month. The findings of the authorities below was to reject this contention.
4. On a full and fair reading of the terms of the proviso [Sub-clauses (a) to (c) ] we are satisfied that the contention put forward by Shri Arora cannot be accepted. Sub-clauses (a) and (b) lay down conditions which are necessary to be fulfilled for claiming the relief of payment at a concessional rate. Sub-clause (c) provides that even so the concessional rate would be available only for the clearances upto 75 million matches if the total clearances exceeds 75 million but not 100 million and that the concessional rate would not be available for any portion of the clearances if the total clearances exceed 100 million matches during the year. We are not able to accept the contention that full duty become payable only in cases wherein apart from the 10 million mark being crossed during any particular calendar month, the 100 million mark is also crossed during the year. We are satisfied that, on a proper construction of all the Sub-clauses, the benefit under the notification could itself be claimed only when the 10 million mark is not crossed during any month during the year. Once that condition [under Sub-clause (b)] is contravened, duty will become payable at the full rate, irrespective of the quantum of total clearances during the year. We therefore hold against the appellants with reference to this contention.
5. The second contention of Shri Arora is that in any event the demand for differential duty is barred by time so far as the period which exceeds six months prior to the date of the show cause notice which is 2-4-1980. His contention is that under Rule 10, as it then stood, the period of limitation was six months and that therefore the demand for the period prior to 3-11-1979 is barred in terms of that Rule itself.
In dealing with this contention the Asstt. Collector [whose reasoning has been accepted and affirmed by the Collector (Appeals) also] has observed as follows : "Under Rule 10, the notice for demand of duty is in time as the R.T. 3 return for October, 1979 was submitted by the party on 3-11-79 and the notice was served on the party on 2-4-1980 as evident from the record on file. As the fact that the party has crossed the specified limit of production during the month of October, 1979 comes to light on 3-11-79 when the R.T. 3 was submitted by the party. Thus, the party's contention of time-bar is absolutely incorrect and I find that the demand has been raised within the time limit." 6. Shri Arora cited two decisions as supporting his contention in this connection. They are-Collector of Central Excise, Jaipur v. Shree Pratap Commercial Company Private Limited, BhilwaraCollector of Central Excise and Customs, Madurai v. Sun Paper Mills Limited, Cheranmahadevi He pointed out that in both these decisions it has been held that it was provision of law that was prevalent at the time the demand was made that should govern the legality of the demand with reference to the period of limitation also. He, therefore, contended that the show cause notice having been issued on 2-4-1980 the period of limitation under Rule 10, on that date would govern the rights of the parties and the said period being six months the demand could be enforced only with reference to the period of six months preceding 2-4-1980 and not any antecedent period.
7. The contention of Shri Arora appears to us to be incorrect. Any period of limitation is prescribed under a particular Rule to ensure that stale claims are avoided. Any claim made after the expiry of period of limitation is to be refused not because the claim was not well founded but because the period of limitation for enforcing the claim had expired. Therefore, in construing any Rule of limitation and the applicability thereof to particular circumstances the three aspects to be looked into are (1) the validity of the claim; (2) the date from which it became enforceable; and (3) the period of limitation within which it ought to be enforced. In the present case it had been seen earlier that the demand for payment of differential duty was justified in law. The demand having been raised under Rule 10 the period of limitation was six months which had to be computed from the date when the right to make the demand arose. In the present instance it is not disputed that it was in October, 1979 that the appellants cleared more than 10 million matches during a particular calendar month and therefore, became dis-entitled to the concessional rate of duty under the notification cited.
8. It is admitted that the appellants had filed a declaration as required under Sub-clause (a) of the proviso to Notification 154/75. It is also not disputed that the 10 million mark in a calendar month was exceeded in October, 1979 only. Since the declaration as required under the Sub-clause (a) had been filed and till August the clearances each month had not exceeded 10 million mark the department could not have demanded duty at the regular rate but would have been entitled to demand duty at the concessional rate only for the clearances up to September, 1979. It was only on the clearances in October exceeding the 10 million mark that the appellants would have become dis-entitled to the benefit of concessional duty under the notification and would have become liable to pay duty at the full rate for all the clearances from the commencement of the year. Therefore, it is only after the department could have become aware of the crossing of the 10 million mark in October, 1979 that the department would have become entitled to demand differential duty for all clearances commencing from 1-4-1979.
9. This fact of clearance of 10 million matches during October would have come to light on the submission of the necessary return at the end of the month. Therefore, the right to enforce recovery of differential duty would have arisen on and after 1-11-1979 depending upon the date when the return was filed. From the Asstt. Collector's order it is seen that the return was filed on 3-11-1979. The right to enforce recovery of the differential duty thus having arisen on 3-11-1979 the action for enforcement thereof should be taken within six months from 3-11-1979.
The show cause notice having been issued on 2-4-1980 there can be no doubt that the right had been exercised within the six months period.
In the circumstances there can be no doubt that the claim for the recovery of differential duty was not barred with reference to any portion of the period for which the claim was made. Shri Sachar pointed out that the decision of this Tribunal in General Traders, Firozabad v.Collector of Central Excise, Kanpur (Order No. 367/84-D, dated 27-6-1984 in Excise Appeal No. 2343/83-D) would also support the above conclusion.
10. As earlier mentioned the above were the only two points urged by Shri Arora during the hearing of the appeal. Both the points being found against the appellants we confirm the orders of the lower authorities and dismiss this appeal.