S. Ranganathan, J.
(1) The petitioner, M/s. Swastika Metal Works, is a firm carrying on business in the manufacture of copper alloys in its factory at Jagadhari in the State of Haryana. The petitioner imports for the purpose of its manufacture copper ingots from places outside Ind
(2) On 28.2-1966 the Central Governmentssued a notification under Rule S. (1) of the Central Excise Rules. By this notification the Central Government exempted sheets and circles of copper and copper alloys produced by a manufacturer on a rolling mill and issued there from in untrimmed condition, from so much of the duty of excise livable thereon as is in excess of (a) Rs. 425 per metric tonne if made from metal in a crude form which has already paid duty under sub-item (1) at the rate of Rs. 1.000.00 per metric tonne, or from old scrap of copper and copper and copper alloys, or from scrap obtained from virgin metal where the appropriate amount of duty had already been paid on such metal; and (b) Rs. 1,350.00 per metric tonne if made from metal in a crude form on which duty had not been paid. There was a proviso which stated that if duty had been paid for sheets and circles made from metal in a crude form at a rate lower than Rs. 1,000.00 per metric tonne, the duly payable would be Rs. 425.00 plus the amount by which the duty paid full short of Rs. 1,000.00 per metric tonne. On 1-5-1965 there was a retrospective amendment of the above notification. It changed the figure of Rs. 425.00 in the previous notification to Rs.500.00 . There was another notification on 20-8-1965 by which the figure of Rs. l,000.00 in the earlier notification was raised to Rs. 1.500.00 per metric tonne. On 15-10-1965 a further notification was issued under Rule (1) of Central Excies Rules. By this notification an Explanationn was added to the notification dated 28-2-1965 as amended by the notification dated 1-5-1965. This Explanationn reads as follows :
'FORthe purposes of this notification, all stocks of copper and copper alloys in any crude form available in the market on or after the 20th day of August, 1966 shall be deemed to have discharged the full crude stage duly liability of Rs. l,500.00 per metric tonne.'
(3) As already stated, the petitioner had on 20-8-1966 a stock of 33705 Kgs. of copper in ingot form. After the issue of the above notifications the petitioner used the above stock for purposes of manufacture of brass sheets and circles during the period from 15-2-1967 to 20-3-1967. At the stage of manufacture he filled appropriate returns and statements for purposes of excise duty in form Ar 1. On the basis that the copper ingots available with the assessce had suffered duty(c) Rs. l,500.00 per metric tonne the petitioner paid the excise duty on the occasion of the manufacture and clearance @ Rs. 500.00 per metric tonne. There is no dispute that the duty @ Rs. 500.00 has been paid by the petitioner in respect of such manufacture.
(4) On 9-1-1969 the petitioner received a notice of damand in respect of a sum of Rs. 16,852/50 paise which was described as the differential duty at Rs. 500.00 per metric tonne on 33705 Kgs. of copper ingots. The petitioner was asked to deposit the amount in the treasury as demanded. The demand was raised by the Superintendent, Central Excise, Jagadhari. The petitioner filed a representation against the said demand. But the representation was rejected by the Assistant Collector on 13th May, 1969. The Assistant Collector pointed out that on 33705 Kgs. of crude ingot the petitioner had paid duty only at Rs. l,000.00 and that, thereforee, the petitioner was liable to differential duty @ Rs. 500.00 per metric tonne. He observed:-
'THEintention of the notification No. 164/66 dated 15-10-1966 was that taking into consideration the imports and consumption etc. of crude copper, the imported crude copper available in the market on or after 20-8-1966 would be only that copper which paid duty at the rate of Rs. 1,500.00 per MT. But in this case the crude copper was not purchased from the market. It was in stock with you on 20-8- 1966 and it is admitted that the duty paid on it was only Rs. l,000.00 per M.T. thereforee, the crude copper should pay further duty of Rs. 500.00 per M.T. Thus the demand was correctly made and it would be under Rule 10-A.'
(5) The petitioner preferred an appeal to the Collector of Central Excise contending that the demand was barred by limitation as the case was covered by Rule 10 and not Rule IO-A and also that the petitioner was entitled to credit for Rs. 1,500.00 per Metric Tonne as the duty paid at the crude stage. Both these contentions were rejected by the Collector of Central Excise on 16-10-1969. Arevision application to the Central Government was also rejected on 24th October, 1970 and hence the present writ petition.
(6) Shri R.P. Bansal, learned counsel for the petitioner, raises two contentions in support of the writ petition: (a) He submited that the demand in the present case has been raised under Rule 10 of the Central Excise Rules which required that a notice of demand should be issued within three months from the date on which the short levy had been made. In the present case the original demand had been made some time in 1967 and the fresh demands raised after nearly two years were barred by limitation, (b) The second contention raised by Shri Bansal is that even otherwise on the merits the duty had been properly charged from the petitioner in the first instance and that the construction now sought to be placed by the respondents on the relavant notifications is incorrect. He submits that the whole object of the notification dated 16th October, 1966 was to shut out all enquiry regarding the copper in crude form that was available in the Market on 20-8-1966. He submits that the petitioner was not only a manufacturer hut also a dealer in copper among other goods and that, thereforee, there was no reason to hold that the curde copper available with him was not copper available in the market within the meaning of the said notification.
(7) Both the contentions of the learned counsel for the petitioner have been refuted by the learned counsel for the respondent. In the first place Shri Chandrashekharan argues that Rule 10 does not apply to the present case because this was not a case in which there had been any proper assessment and levy of excise duty in the first instance. He points out that the petitioner's case was not one of self removal. He submits that the onus is on the petitioner to show that there had been an assessment and levy of duty in the first instance and that, thereforee, the provisions of Rule 10 are attracted. There being nothing on record to show the manner in which the duty had been at the initial stage on the petitioner, he contends that the petitioner has not made out the ingredients necessary for the applicability of Rule 10 as explained by the Supreme Court. Shri Chandrashekharan also argues that Rule 10 does not apply in the present case because this was a case in which there had been an error of law on the part of the authorities in making a short levy on the petitioner. He submits that an error of law does not fall within the terms of this provision. It is, thereforee, argued that Rule 10 being out of the way Rule Ioa will apply to a case like the present and that since this provision does not contain any period of limitation the demands made against the petitioner were fully justified and within time. On the merits also, learned counsel contends that the petitioner being a mere manufacturer of goods any material kept by him in stock for purposes of manufacturer cannot be said to be goods available in the market within the meaning of the notification in question.
(8) I have considered the contentions urged on behalf of both the parties. I am of opinion, that the present case is governed by Rule 10 and not Rule 10-A and that, thereforee, the demand raised against the petitioner is barred by limitation. Rule 10(1) which is relevant for our present purposes reads as follows:
'WHENduties or charges have been short-levied through inadvertence, error, collusion or mis-construction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such causes, erroneously refunded, the proper officer may, within three months from the date on which the duty or charge was paid or adjusted in the owner's account-current, if any, or from the date of making the refund, serve a notice on the person from whom such deficiency in duty or charges is or are recoverable requiring him to show cause to the Assistant Collector of Central Excise why he should not pay the amount of specified in the notice.'
At the time when the petitioner paid the duty in the first instance all the relevant notifications were in existence and even assuming that the contentions of the respondents regarding the merits is correct the short levy of the duty was entirely due to inadvertence, error or mis-construction on the part of the officers of the department. It appears that they considered the notification dated 16-10-1966 as applying to the petitioner's case on account of an erroneous construction or misconstruction thereof. But clearly this is a case in which the collection of duty in the first instance was based on a construction of the relevant notification which according to the respondent now is not correct. I am unable to accept the plea of Shri Chandrashekharan that Rule 10 will no include or taken within its ambit errors of law. Learned counsel relied on a decision of the Karnataka High Court in the case of Indian Tobacco Co., 1981 Excise Law Times 690, in support of his contention. It is true that the learned Judge of the Karnataka High Court has expressed an opinion contended for by the learned counsel relying on certain observations made by the Supreme Court in the case of Patel India, : 1973ECR1(SC) but that decision was rendered on facts almost identical to those in the case of Paid India. I have been taken through the observations of the Supreme Court in the case of Patel India and I am of opinion that the Supreme Court did not lay down such a general proposition as the one contended for by Chandrashekheran on the terms of Rule 10. As pointed out by Shri Bansal there is authority for the contrary position also. He has cited the decisions in The Assistant Collector of Central Excise and others v. Khemchand Rajkumar 1978 Tax. L.R. Noc 6 and Mis. Jay Engineering Works Ltd. v. Govt. of India and others, 1978 Tax. L.R. 2370 in support of his contention. I agree with this view. The Supreme Court was dealing with Section 40 of the Sea Customs Act and they found that the case before them did not fall within the language of that provision. I am unable to interpret that decision as laying down that errors of law were outside the purview of Section 40 the language of which corresponds to that of Rule 10 with which we are here concerned. I am of opinion that the terms of Rule 10(1) are quite clear and general and that there is no justification to restrict the applicability of Rule 10(1) only to cases of error or misconstruction on facts. On the other hand the reference to 'misconstruction' in the Rules would rather support the contention that the section takes into account also misconstruction of some statute, rule, notification or document. In other words it certainly takes in cases of mistakes by law resulting in short levy of duty.
(9) Shri Chandrashekheran's contention that Rule 10 cannot apply in the present case because there was no short levy after a proper assessment is also, in my opinion, not acceptable. The argument for the respondent was that it is well settled, after the decision of the Supreme Court in National Tobacco, (1973) 1 SGR 822 that the non-levy or short levy referred to in Rule 10 should be on the basis of an assessment, there having been an assessment of duty in a positive figure or at nil figure and that it is not enough if some sort of adjustments are carried out in books maintained for an assessed by the Excise Department, The contion of Shri Chandrashekheran was that in the present case the petitioners have not said anything regarding the mode of assessment of duty in first instance. All they have said is that Ar I forms had been filed and duty had been paid. Learned counsel contended that duty might have been purely by adjustments as in the case before the Supreme Court and that the assessed has said nothing to establish that there had been assessment to duty by the respondents. He urged that the onus was on the assessed to establish that the terms of Rule 10 were attracted in the present case and that this onus has not been discharged.
(10) I am unable to accept this argument. As pointed out by Shri Bansal, learned counsel for the petitioner his petitioner has made positive averments in the writ petition. In Paragraphs 13, 22, 24 and 25 the petitioner has clearly stated not only that he had filed appropriate returns and paid appropriate duty but that such appropriate duty had been paid to the Central Excise Authorities after assessment and verification made by such authorities about the correctness of the statements and returns. This assertion had been made as already mentioned not in single passage but at several places in the writ petition. I am unable to find any categorical denial of this assertion in the counter affidavit filed on behalf of the respondents. Even now it is not the case of the respondents that the petitioners had not paid the duty after assessment but that duty had been paid in the manner in which it had been done in the case before the Supreme Court. But Shri Chandrashekheran says that the onus is not on him to show this. It is for the petitioner, he says, to show to the contrary. I am of opinion that the petitioner has clearly stated his case in the petition and that in the absence of any refutation or contradiction or denial in clear terms in the counter affidavit the statements made in the writ petition have to be accepted. I am, thereforee, of opinion that this is a case which clearly falls within the terms of Rule 10 of the Central Excise Rules. The demand which has been made beyond the period of three months mentioned in Rule 10 cannot, thereforee, be upheld.
(11) In the view taken by me that it is Rule 10 which applies to the present case, it is unnecessary to go into the second contention raised on merits. I, thereforee, express no opinion in regard thereto. In the result, the writ petition succeeds. A writ of certiorari will issue quashing the orders of respondent No. 5 dated 9th January, 1969 and the orders of the other authorities dated 13-5-1969, 16-10-1969 and 20-4-1970 confirming the same. The writ petition is allowed and the rule made absolute. There will be no order as to costs.