1. The petitioners are a partnership firm and are manufacturing aluminium strips out of aluminium wire rods in coil purchased from the open market. The petitioners are required under Rule 173B of the Central Excise Rules, 1944 to submit their classification list from time to time. The classification lists were duly approved and the petitioners used to remove the goods under 'Self Removal Scheme'. The petitioners submitted monthly statements in Form RT-12 showing therein excisable goods manufactured and the said statements were duly scrutinised and accepted. On May 29, 1970, the Superintendent of Central Excise, Range No. III, Division V, Bombay, served show cause notice on the petitioners claiming that on verification of documents, it was found that the petitioners had cleared aluminium strips weighing 22,974.100 kg. from June 1, 1968 to December 31, 1969 and further quantities in subsequent period, on payment of duty at Rs. 500/- per metric tonne after setting off Rs. 950/- per metric tonne under Notification No. 140/68, dated July 6, 1968. The show cause notice claims that the petitioners are not entitled to the advantage of the Notification and the petitioners should appear before the Superintendent to show cause why proper duty should not be levied. The petitioners gave reply on June 8, 1970 and the petitioners were also heard by the Superintendent on August 10, 1970, but no order was passed by the Superintendent of Central Excise. On March 4, 1972, the corrigendum dated May 29, 1970 to the show cause notice was issued and the petitioners were called upon to show cause to the Assistant Collector, Central Excise, instead of Superintendent of Central Excise.
2. The petitioners appeared before the Assistant Collector and complained that the proceedings commenced by the Superintendent were over and the corrigendum cannot be issued fixing fresh hearing before the Assistant Collector. The petitioners also claimed that the goods were cleared on payment of proper duty. The petitioners further claimed that the show cause notice covering the period from June 1, 1968 to December 31, 1969 was invalid as levy of duty under Rule 10 read with Rule 173J of the Central Excise Rules cannot be for a period of more than one year prior to the date of the show cause notice. The Assistant Collector, by his order dated October 4, 1973 held that the product manufactured by the petitioners was aluminium strips and as it was not manufactured from aluminium in crude form, the petitioners were not entitled to the advantage of the exemption provided by the Notification dated July 6, 1968. The Assistant Collector did not accept the claim of the petitioners that the earlier notice stands exhausted and the corrigendum is invalid and held that the petitioners shall pay the amount of duty availed as set off, in respect of the clearances effected from May 1, 1969 to December 31, 1969 and further quantities in the subsequent period within ten days from the date of receipt of the modified demand. The petitioners carried appeal against this order before the Appellate Collector of Central Excise and the appeal was disposed of by order dated July 27, 1975. The Appellate Collector concurred with the conclusions reached by the Assistant Collector, but the order was modified only to the extent, that the demand was restricted for a period from May 28, 1969 onwards - instead of May 1, 1969 onwards. The modification was effected on the ground that the claim for a period of more than one year prior to the date of show cause notice was barred by limitation.
3. The petitioners feeling aggrieved by the Appellate Order, carried revision application before the Government of India, Ministry of Finance, but the revision was dismissed by an order dated July 1, 1978, except giving a direction to the Assistant Collector to recalculate the demand as the petitioners were claiming that certain quantity of aluminium strips was manufactured not from wire rods but from aluminium strips only, the certain other quantity was similarly converted on job work basis. The Assistant Collector was directed to recalculate after verifying and ascertaining the accuracy of the claim made by the petitioners. During the pendency of the revision application, the Government of India had also commenced suo moto proceedings under Sub-section (2) of Section 36 of the Central Excises and Salt Act, 1944, and on considering the reply of the petitioners, modified the order passed by the Appellate Collector to the extent that even the period from May 1, 1969 till May 28, 1969 was also held to be not hit by limitation, provided under Rule 10 read with Rule 173-J of the Excise Rules. The orders passed by the revisional authorities are under challenge in this petition filed under Article 226 of the Constitution of India.
4. Shri Bhandare, learned counsel appearing on behalf of the petitioner, has raised three or four contentions to challenge the legality of the orders passed by the authorities below. The first submission of the learned counsel is that the authorities were in error in coming to the conclusion that the advantage of notification dated June 6, 1968 was not available to the manufacture of aluminium strips by the petitioners. The notification issued by the Central Government in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, exempts aluminium of the description specified in Column 3 of the Table annexed and falling under sub-item specified in the corresponding entry in Column (2) of the Table of Item 27 of the First Schedule to the Central Excises Act, from so much of duty of excise leviable thereon as is in excess of the duty specified and subject to the conditions laid down in the corresponding entries in Columns (4) and (5) respectively of the said Table. This exemption is available to all articles falling under sub-items (b), (bb), (c) and (d) Item 27 of the First Schedule from so much amount of excise duty leviable thereon as is equivalent to Rs. 950/- per metric tonne if in the manufacture of which aluminium in crude form made from any of the following materials is used :
(1) Old aluminium scrap.
(2) Scrap obtained from virgin aluminium on which the prescribed amount of excise duty or the additional duty leviable thereon under Rule 2A of India Tariff Act, 1934 has already paid, or
(3) Virgin aluminium in any crude form on which the prescribed amount of duty of excise or the additional excise duty leviable thereon under Rule 2A of 1934 has been already paid.
Shri Bhandare submits that the petitioners have manufactured aluminium strips from aluminium wire rods which were purchased from the open market. The learned counsel urged that as the excise duty was already paid on aluminium wire rods, it is not open for the excise authorities to levy fresh excise duty on the aluminium strips. It is not possible to accept this submission, because the aluminium strips is an item which is entirely different from aluminium wire rods and the excise duty is leviable on the manufacture of aluminium strips and therefore the grievance of the petitioners that duty cannot be levied on the aluminium strips is entirely misconceived. The mere fact that the base product, aluminium wire rods are liable to excise duty is no ground to claim that the manufacture of aluminium strip is not liable to payment of excise duty.
5. The submission of Shri Bhandare that the exemption under notification is applicable is also without any substance. The advantage of exemption under the notification is available provided the manufacture of aluminium strips by the petitioners is out of aluminium in crude form, made from any of the three materials stated in the notification. Shri Bhandare could not claim, and in my judgment very rightly, that the manufacture of aluminium strip was from the aluminium in crude form. The petitioners have manufactured aluminium strip from aluminium wire rods and aluminium wire rods can by no stretch of imagination be said to be aluminium in crude form. In my judgment, the authorities below were perfectly right in concluding that the petitioners were not entitled to the advantage of the notification and the set off at the rate of Rs. 950/- per metric tonne claimed by the petitioners under the Notification was entirely wrong and illegal.
6. Shri Bhandare then submitted that the revisional authority was in error in modifying the order passed by the appellate authority and holding that the demand for the period from May 1, 1969 to May 28, 1969 was not hit by limitation. The learned counsel urged that reading Rule 10 with Rule 173J of Excise Rules, the Department can make a demand only for a period of one year prior to the date of issuance of show cause notice. The show cause notice was issued, in the present case, on May 29, 1970 and Shri Bhandare therefore, submits that the demand prior to May 29, 1969 was barred by limitation. In answer to this submission, Shri Sethna, learned counsel for the respondents, relies upon averments made in paragraph 8 of the return dated November 21, 1983 sworn by Smt. Mala Srivastav, Assistant Collector of Central Excise. The respondents claim that the demand from May 1, 1969 was valid because the RT-12 form relating to May 1969 was finalised only on June 25, 1969 and the period of one year is required to be computed from that date. In my judgment, the contention urged on behalf of the respondents that the demand could be made from May 1, 1969 is correct and the grievance of the petitioners in that connection deserves to be repelled.
7. Shri Bhandare then submitted that as the show cause notice was issued by the Superintendent on May 29, 1970 and the petitioners had given reply to it and were also given a personal hearing, the said show cause notice must be treated as having come to an end or exhausted itself and the corrigendum issued subsequently on March 4, 1972 was without any basis. The submission of the learned counsel is that the Assistant Collector could not have made demand on the basis of the show cause notice issued on May 29, 1979. The submission is not correct. Under Rule 10 of the Central Excise Rules, the petitioners are required to show cause to the Assistant Collector and an error was made in the show cause notice dated May 29, 1970 calling upon the petitioners to show cause to the Superintendent to Central Excise. The error was corrected on March 4, 1972 by issuance of corrigendum and in my judgment, it is futile for the petitioners to claim that the notice dated May 29, 1970 is worked out and therefore the proceedings could not have been started. The claim made in the show cause notice was not decided by the Superintendent and the Assistant Collector was the proper forum to decide the same.
8. A faint submission was also advanced by Shri Bhandare that the contents of the show cause notice were vague, but the submission has no merit, because the petitioners never made any grievance about the same before any of the authorities below and perusal of the notice does not indicate any vagueness in the same. In my judgment, there is no merit in the petition and the same deserves to be dismissed.
9. Accordingly, rule is discharged with costs.
The respondents are entitled to withdraw the amount deposited by the petitioners with the Prothonetary & Senior Master in accordance with the interim order. The respondents to withdraw the amount after a period of four weeks from to-day.