Rendition of the judgement in Flock India’s (FI for short) case by the Summit Court was interpretation of Central Excise law at its best, there could not, in my opinion, have been a better judgement given the facts of the case. However, the chaos caused thereafter, by application of its ratio to purported bill of entry assessments under the Customs law by various forums is legend. This is the subject matter of this paper. The decision is now a double-edged sword that cuts, both the assessees and the department.
It escapes one’s mind as to how a decision that dealt with assessment of goods, in the sense of agitating classification by way of a refund claim, when the order classifying goods under a particular tariff entry was not challenged before the appellate authorities under Central Excise as it stood during 1982 (when the procedures for assessment towards excisable goods were stringent and there was departmental control being exercised over removal of goods), be applied to a bill of entry assessment under the Customs law (which law and procedure has more or less remained the same except for the advent of technology in the past few months i.e. EDI system of presenting a bill of entry).
In order to appreciate the decision in FI’s case it is elementary to get the facts in FI’s decision straight. The same, as understood (or misunderstood) by me, were as follows: -
- FI were manufacturers of jute hessian flocked with nylon under L-4 license issued under the Act.
- FI filed a classification list in which classification for their goods was claimed under item 22-A.
- The Assistant Collector after examining the product passed an order on 21-1-78 holding that FI’s product in question was classifiable under tariff item 22-B carrying 25% ad valorem rate of duty.
- In the said order the Assistant Collector expressly stated that the assessee may prefer an appeal against his order to the Collector (Appeals).
- FI neither challenged the said order by filing any appeal nor did it pay the duty under protest.
- FI thereafter filed a refund claim on 6-4-1979 claiming refund of duty paid contending inter alia that their product was wrongly classified under tariff item No. 22-B, instead it ought to be classified under tariff item No. 22-A and that the differential duty ought to be refunded.
- The AC after service of notice on FI passed an order dated 27-8-1980 dismissing the claim for refund on the ground that the order dated 21-1-1978 classifying the product as falling under tariff item 22-B had attained finality, and that the claim for refund was not maintainable.
- FI filed an appeal before the Collector (Appeals) who by an order dated 6-1-1984 allowed the appeal, set aside the order dated 27-8-1980 passed by the AC and remanded the matter with a direction to reconsider the matter on merits including the question whether the goods were classifiable under tariff item 22-A or 22-B.
- The Department challenged the order of the Collector (Appeals) by filing an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) which appeal was dismissed by an order passed on 19-9-88.
- The said order was challenged in the Supreme Court by the Department and the question before the Supreme Court was dependent on whether the jurisdiction of the Assistant Collector while considering an application for refund of duty paid was independent of the jurisdiction exercised by him in determining classification of the product in question. This was the question of law (kindly appreciate the parody).
- Reference to Rule 11 as it stood at the relevant point of time was made by the Supreme Court. The same is extracted hereunder for readers’ easy reference:
“Rule 11 Claim for refund of duty. – (1) Any person claiming refund of any duty paid by him may make an application for refund of such duty to the Assistant Collector of Central Excise before the expiry of six months from the date of payment of duty: Provided, that the limitation of six months shall not apply where any duty has been paid under protest.
Explanation : Where any duty is paid provisionally under these rules on the basis of the value or the rate of duty, the period of six months shall be computed from the date on which the duty is adjusted after final determination of the value or the rate of duty, as the case may be.
(2) If on receipt of any such application the Assistant Collector of Central Excise is satisfied that the whole or any part of the duty paid by the applicant should be refunded to him, he may make an order accordingly.
(3) Where as a result of any order passed in appeal or revision under the Act, refund of any duty becomes due to an person, the proper officer may refund the amount to such person without his having to make any claim in that behalf.
(4) Save as otherwise provided by or under these rules no claim for refund of any duty shall be entertained.
Explanation : For the purposes of this rule, “refund” includes rebate referred to in Rules 12 and 12A.”
- For a determination of the question formulated by the Supreme Court it was pertinent to refer to the provisions relating to appeals under the Act. Section 35 of the Central Excise Act, 1944 provided for appeals to Collector (Appeals). Sub-section (1) thereof laid down that any person aggrieved by any decision or order under the Act by a Central Excise officer lower in rank than a Collector of Central Excise may appeal to the Collector (Appeals) within 3 months from the date of communication to him of such decision or order. Proviso to sub-section (1) laid down that the power was vested in Collector (Appeals) to extend the period by further three months if he was satisfied that the appellant was prevented by sufficient cause from presenting the appeal aforesaid within the period of three months prescribed under the sub-section. Section 35-A laid down the procedure to be followed in disposal of the appeal. In sub-section (3) thereof it was provided that the Collector (Appeals) may after making such further inquiry as may be necessary pass such order as he thinks fit confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the adjudicating authority with such directions as he may think fit for a fresh adjudication or decision, as the case may be. Section 35B (1) (b) made an order passed by the Collector (Appeals) under Section 35A appealable to the appellate tribunal.
- In view of the above factual background the Supreme Court held that classification of goods manufactured by an assessee was important for the purpose of levy and collection of excise duty and at the relevant point of time Rule 173B cast a duty on every assessee to file with the proper officer a declaration listing the goods manufactured by him (claiming a particular classification) for approval and the proper officer after such inquiry as he deemed fit would approve the list with such modifications as considered necessary and clearances were to be made only thereafter.
- The Apex Court held that there was no scope for doubt that in a case where an adjudicating authority had passed an order which was appealable under the statute and the party aggrieved did not choose to exercise the statutory right of preferring an appeal, it was not open to the party to question the correctness of the order of the adjudicating authority subsequently by filing a claim for refund on the ground that the adjudicating authority had committed an error in passing his order.
- That if this position was accepted then the provisions for adjudication in the Act and the Rules, the provision for appeal in the Act and the Rules would lose relevance and the entire exercise would be rendered redundant.
- Such a position in the Supreme Court’s view ran counter to the scheme of the Act and introduced an element of uncertainty in the entire process of levy and collection of excise duty.
- Therefore, an order, which was appealable under the Act and was not challenged would not be liable to be questioned and the matter was not to be reopened in a proceeding for refund.
Now in these circumstances the point under deliberation, in this paper, is this – Whether Courts and Tribunals are legally justified (taking into consideration the provisions of law, scheme of things, procedures followed and manner in which the laws are administered) to apply FI’s decision to a purported bill of entry assessment under Customs and consistently hold that unless the bill of entry assessment is challenged no action can be taken (i.e. refund, classification or demand). More sense on this contentious yet settled issue is sought to be made by analyzing the scheme of assessment under Central Excise and Customs law and analyzing the scheme of assessments under both the laws during 1982 and presently.
What merits appreciation if the ratio of FI’s decision is to be applied across the board is that when form ER1’s or ST3’s are not challenged by the Department no show cause notice can be issued for non-levy, short levy or erroneous refund. This is because the Act does not specify whether the assessment ought to be self or departmental and if it is departmental whether the assessee ought to be a mute spectator or play an active role in the assessment proceedings. Such a view in my opinion is absurd. More-so when section 27 of the Customs Act, 1962 in clear, uncertain and unambiguous terms postulate that a refund claim can be preferred “pursuant to an order of assessment”. The readers may appreciate that no reference is made to a bill of entry assessment. The aspect that needs to be countenanced and determined is this – when section 27 is clear and unambiguous are Courts and Tribunals justified in law to interpret the provisions in such a manner and apply a decision rendered during the year 1982 in the context of the Central Excise Act, 1944 to a purported bill of entry assessment under Customs Act, 1962, when the law and procedures applicable to assessments under central excise and customs are not pari materia or remotely identical.
PROCEDURES OF ASSESSMENT UNDER CENTRAL EXCISE:
From 1961 to 1965 procedures for assessment of excise duty were broadly this. Companies used to supply the price list every quarter to the Superintendent, who would approve the price list. The price list so approved formed the basis of assessment and levy of excise duty. This was the invariable course of business. The assessment of duty was made on RT 12 statements when the assessees’ filed monthly statements. Thus, in law the date of payment of duty was the date of assessment by proper officer of Central Excise.
It may at this juncture be appropriate to mention that an assessment without the application of an identifiable test (emphasis supplied) would be nothing but perverse and arbitrary.
Assessment was defined under Rule 2 of the CER, 1944 as – assessment means assessment of duty made by the proper officer and includes re-assessment, provisional assessment under R.9B, summary assessment under Rule 37A and best judgement assessment under R173Q and any order of assessment in which the duty assessed is nil. During this era (emphasis supplied) the assessees’ were required under Chapter VII that dealt with Removal of excisable goods on determination of duty by producers, manufacturers or private warehouse licenses, to follow the following procedure: -
¨ 173 A – Application;
¨ 173B – Assessee to file list of goods for approval of the proper officer;
¨ 173C – Assessee to file price list of goods assessable ad valorem;
¨ 173CC – Assessee may remove goods in certain cases pending approval by the proper officer of the classification or price list;
¨ 173 D – Assessee to furnish information regarding principal raw material;
¨ 173 E – Determination of normal production;
¨ 173 F – Assessee to determine the duty due on the goods and to remove them on payment thereof;
¨ 173FF – Assessee to remove goods from the factory or warehouse during the hours fixed by Collector;
¨ 173G – Procedure to be followed by the assessee;
¨ 173H – Retention or re-entry of duty paid goods in the factory or warehouse;
¨ 173I – Assessment by proper officer – (1) The PO shall on the basis of information contained in the return filed by the assessee under sub-rule (3) of Rule 173G and after such further inquiry as he may consider necessary assess the duty due on the goods removed and complete the assessment memorandum on the return. A copy of the return so completed shall be sent to the assessee
(2) The duty determined and paid by the assessee under rule 173F shall be adjusted against the duty assessed by the proper officer under sub-rule (1) and where the duty so assessed is more than the duty determined and paid by the assessee, the assessee shall pay the deficiency by making a debit in the account current within ten days of receipt of a copy of the return from the PO and where such duty is less, the assessee shall take credit in the account current for the excess on receipt of the assessment order in the copy of the return duly countersigned by the Supdt of CE.
¨ 173K – Special procedure for movement of duty paid materials or component parts for use in the manufacture of finished excisable goods (other than declared excisable goods);
¨ 173L – Refund of duty on goods returned to factory;
¨ 173N – Procedure in respect of warehoused goods;
¨ 224 – Restriction on removal of goods;
During this period the assessees’ were required to maintain the following registers as per statute: -
|Particulars of Registers
||Relevant Rule as per which the register had to be maintained
|Register of declarations and annual returns by small growers and curers
||R15, 16, 36 & 37
|Daily stock account of excisable goods
|Account of excise duty / CVD paid material received for the manufacture of other excisable goods
The following were the formats of applications for statutory removal common to all manufacturers/producers:
|Particulars of applications
||Relevant Rule as per which the register had to be maintained
|Application for removal of excisable goods on payment of duty
||– AR 1
||– Rule 9, 9B, 52, 80, 93 & 158
|of excisable goods from a factory or a bonded warehouse to another warehouse
||– R156, 156A & 158
The following were the transport documents required to be issued by the assessee as per statute
|Particulars of transport documents
||Relevant Rule as per which the register had to be maintained
|Permit for duty paid un-manufactured products –
||– TP 1
||R.25, 32 & 33
|Permit for un-manufactured products on which duty has not been paid –
||– T P 2
||R.32, 33 & 156A
|Certificate for un-manufactured products on which duty has not been paid –
||R31, 32 & 33
|Gate pass for removal of excisable goods from a factory or a warehouse on payment of duty –
The following were the returns, which had to be filed as per the statute
|Particulars of Returns
||Relevant Rule as per which the Return had to be filed
|Annual returns of un-manufactured products grown
|Annual returns of un-manufactured products cured –
|Monthly return of excisable goods manufactured and issued
||– R54 –
|Monthly return of other goods manufactured
|Periodical/Quarterly return of materials used
||– R55 –
|Monthly return of stocks and receipts of CE stamps purchased for cash
||– R.67 –
|Monthly return of stocks and receipts of CE stamps obtained on credit–
|Monthly return of excisable goods used without payment of the whole or part of the duty for special industrial purposes and of commodities manufactured therefrom
In order to appreciate the gulf of difference between assessments under central excise and customs a glance at the provisions relating to “assessment” under the Customs laws would be helpful. The same are summarized below, for reference:
Customs Act, 1962 – “Assessment” – Section 2 – includes provisional assessment, reassessment and any order of assessment in which the duty assessed is nil.
Section 17 at all material points of time in this discussion dealt with assessment of duty wherein at (1) it was laid down that after an importer had entered any imported goods under section 46 or an exporter under section 50 the said goods without undue delay be examined and tested by the PO. (2) After such examination and testing, duty if any leviable on such goods save as otherwise provided in section 85, be assessed. (3) For the purpose of assessing duty under sub-section (3) the PO may require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document whereby the duty leviable on the imported goods or export goods can be ascertained and to furnish any information required for such ascertainment which it is in his power to produce or furnish, and thereupon the importer, exporter or such other person shall produce such document and furnish such information. (4) Notwithstanding anything contained in this section, imported goods or export goods may prior to the examination or testing thereof, be permitted by the proper officer to be assessed to duty on the basis of statements made in the entry relating thereto and the documents produced and information furnished under sub-section (3); but if it is found subsequently (emphasis supplied) on examination or testing of the goods or otherwise that any statement in such entry or document or any information so furnished is not true in respect of any matter relevant to the assessment the goods may without prejudice to any other action which may be taken under this Act, be re-assessed to duty (emphasis supplied). The highlighted provisions would be redundant if the ratio of FI’s decision is applied.
Section 18 – provided for provisional assessment of duty and section 19 for determination of duty where goods consist of articles liable to different rates of duty. These were and are the only provisions under the Customs law, which provide for assessment.
The point again being driven home is this – that on a comparison with the above procedures of the Customs law and of those under the Central Excise law it can be established beyond doubt in a judicious court of law that the procedures and scheme of things under excise and customs were and are to use the language of studied moderation “a world apart”, they are not even identical.
Assessment/Re-assessment – Procedures for assessment of duty can arise in different situations – Sections 13, 17, 27 and 28 of Customs Act. – Section 17 provides for two types of procedures for assessment, one after examination and testing of goods, and another before such testing to expedite clearances of goods on the basis of statements in bill of entry, which may require re-assessment in case such statements are found incorrect in any manner. But this Section nowhere lays down that re-assessment can only be made for the reason mentioned in that Section alone and for no other reason. It can arise for various other reasons or situations such as disputes on valuation, or classification, or matters involving benefits of notifications. For instance, Section 27 provides for refund claims, or Section 28 for demand of duty short levied for these and other reasons, which involve re-assessment of duty originally assessed. If the interpretation that re-assessment can only be done under Section 17 is to be followed, then other Sections would be rendered nugatory. Similar is the case with Section 15 in so far as prior entry system is concerned otherwise its proviso would become redundant. As per a rule of interpretation, various Sections of an Act have to be construed harmoniously. Any interpretation, which renders other portions of the Act nugatory has to be rejected.
Assessment and rate of duty – Laying down the procedure of assessment does not override the charging provision under Section 15 of the Customs Act, 1962 – No conflict between the provisions of Sections 15 and 17 of the Customs Act, 1962. – Section 17 does not over-ride Section 15, or for that matter any other Section inasmuch as the former is a machinery provision laying down procedures of assessment in certain situation whereas Section 15 is a part of the charging provisions under the Act laying down crucial date for the rate of duty in force which is to be applied to the goods. In fact, there is no conflict between Section 17 and the other Sections because each one of them covers a different type of situation. Looking at the Scheme of things under the Customs Act, 1962, it would appear that- (a) special forums have been created and the procedure prescribed for the adjudication of rights and liabilities there under; (b) refund of duty collected on the basis of erroneous assessment has been specifically provided for and a period of limitation had also been prescribed; (c) the remedies provided are not inadequate. The assessees can get the errors in assessments rectified in appeal or in other proceedings if they so chose, since questions relating to correctness of an assessment, apart from its constitutionality or competence are for the decision of the authorities constituted under the statute and in accordance with the provisions thereof.
On comparing the above provisions one would definitely for sure come to the indubitable, inescapable and logical conclusion that the procedure / scheme of assessment under Central Excise was in no way remotely identical or deceptively similar or in pari-materia with the provisions relating to a purported bill of entry assessment under the Customs law then or now.
The point being made here is that the law relating to assessment under the Central Excise and the Customs were and are not even remotely similar and therefore are the Courts and Tribunals legally justified in interpreting the provisions of Customs in a perverse manner so as to frustrate the object of provisions relating to refund and apply a decision rendered in the context of Central Excise in the year 1982 to present assessments under Customs law. – Refer decision in Priya Blue Industries case – a mediocre decision – there is no reference to the facts of the case and any discussion on how the decision in FI’s case was even relevant.
Some of the reasons, in my opinion, for inapplicability of FI’s decision to a bill of entry assessment under Customs law and some important questions arising for deliberation are stated below and it may be appreciated that the reasons/questions are only illustrative in nature and innumerable instances can be stated at any given point of time:
- In order for a decision to be applied as a precedent to any given case it is a sine-qua-non that the facts of the case ought to be identical or similar;
- In order for a decision to be applied as a precedent to any given case it is a sine-qua-non that the provisions of law being interpreted and the scheme of things ought to be in pari materia;
- The scheme of assessments under Central Excise law and a bill of entry assessment under the Customs law are different; (refer discussion infra).
- The provisions under the Central Excise and Customs laws dealing with assessments are not in pari material;
- The application of the FI’s decision to a bill of entry assessment runs counter to the provisions of the Customs law dealing with refunds and renders the provisions of section 27 of the Customs Act, 1962, redundant and a mere embellishment; (with due respect to the decision in Priya Blue Industries case which interprets the expression “pursuant to an order of assessment” in a manner inconsistent with legal principles)
- If the decision in FI’s case is applied to a bill of entry assessment then CBEC’s supplementary instructions issued vide a Circular / notification in the context of refunds under customs law is rendered a mere farce when it is settled law that instructions of the Board are binding on departmental officers even if it places an interpretation counter to that of a Supreme Court decision;
- The principle of estoppel would be applicable to taxing statute as the assessee and or the Department would be estopped from seeking refund or enhancing the value of imported goods as the case may be, without first challenging a purported bill of entry assessment;
- What is the order of assessment being referred to in the FI’s decision;
- Where is an order in a bill of entry assessment;
- What is the meaning of an order;
- Is a bill of entry assessment an appealable order;
- What is an appealable order;
- Are there reasons given in the bill of entry for denial of any benefit or any justification for classifying any particular product under a particular entry;
- Is such a reasoning being given in the EDI system being followed (where the computer is the proper officer conducting the purported assessment);
- What is the meaning of natural justice;
- Are’nt the principles of natural justice rendered a mere embellishment;
- When is a hearing given;
- When are allegations made known;
- Is there a speaking order;
- Do the purported assessment of bills of entry show any application of mind;
- Has any officer of the customs granted benefit of any notification legally available to imports if the importer has not claimed the same in the bill of entry;
- Is’nt it the duty of the officer of the customs to educate and guide any importer on the benefits available to any particular product being imported;
- Were any decisions expounding the meaning of the expression “assessment order” referred to by any Court, Tribunal or administrative authority before applying the ratio of the FI decision;
- Why was the expression assessment order not expounded in any of the decisions;
- Is the assessment order being spoken of in FI’s decision made under section 47 of the Customs Act, 1962 or under section 17 or under both;
- Does the proper officer have jurisdiction to pass an order under section 47 determining the liability to duty;
These are a few pointers as example on why the decision in FI’s case cannot be applied across the board when it is said that a bill of entry assessment is an appealable order. Were any of the above aspects even remotely appreciated in any of the decisions rendered on this subject till-date?
Judicial decisions which, have expounded the meaning of the expression “assessment” under the Central Excise and Customs laws would be of relevance to the issue under deliberation, and would substantiate the argument being made against the application of the decision in FI’s case left, right and centre by various Courts, judicial and quasi judicial forums in this country.
¨ The decision of the Supreme Court in Hazari Mal Kathiala Vs. ITO, 1958 (30) ITR 500 (SC) expounded as to what is assessment and re-assessment in the context of section 13 of the Income Tax Act, 1922. The Court held that assessment commences when the ITO issues a notice under section 22 and terminates when the ITO determines the amount due by the assessee and Re-assessment it was held commences with the issue of a notice under section 34 which empowered the ITO to re-examine and re-determine the income tax liability inspite of prior determination. The Court held that in any case the rule in pari-materia was not applicable when the object to which the words are applied or the intention with which the measure is enacted require the words to be differently understood in the two statutes or where the expression used in the later statute are not re-enacted with the same limitations as in the earlier statute or where a contrary intention is manifested by other qualifying or explanatory terms. The Court held that statutes in pari-materia may not be resorted to control the clear language of the statute under consideration and relied upon Palmer Vs. Santvoord, 153 New York 612 in support of this proposition. The Court held that in construing the expression “assessment” appearing in section 13 of the IT Act of 1950, the Court ought to have regard to the policy which introduced its enactment, for it is a cardinal rule of interpretation that in construing law of a doubtful meaning the Court should adopt the sense of the words which promote in the fullest measure the policy of the legislature and to avoid a construction which would alter or defeat that policy. The Court held that the same word may mean one thing in one context and another in a different context as held in D N Banerji Vs. P R Mukherjee & Ors, 1953 SCR 302 and held that as pointed out by Justice Holmes in an oft quoted passage “A word is not crystal, transparent and unchanged; it is the skin of a living thought and, may vary greatly in color and contents according to the circumstances and time in which it is used. The Court held that assessment is the official determination of liability of a person to pay a particular tax and that the levy of taxes is generally a legislative function; assessment a quasi-judicial and collection an executive act and that these three expressions were of the widest significance and embraced in their broad sweep all the proceedings which could possibly be imagined for raising money by exercise of the power of taxation from the inception to the conclusion of the proceedings. A similar line of reasoning emanates from the decision in A N Lakshman Shenoy Vs. ITO and Another, 1958 (34) ITR 275 (SC) and in this decision at page no.293 it is held that in his speech in Commissioners for General Purposes of Income Tax for the City of London Vs. Gibbs and Others, 1942 AC 402, Lord Simond pointed out that the word assessment was used in the English Income Tax Code in more than one sense; and sometimes within the bounds of the same section, two separate meanings could be found. One meaning is the fixing of the sum taken to represent the actual profit and the other the actual sum in tax, which the taxpayer is liable to pay. In Bhawani Cotton Mills Ltd., Vs. State of Punjab, 1967 (20) STC 290, it was observed “in Modern taxation laws it was not unusual to find a provision the effect of which is to make imperative the initial deposit of tax which may in certain contingencies have ultimately to be refunded on the ground that it was not due”. The coercive aspect of levy when its meaning was considered in connection with the process of collection was also considered and it was held that the submission that “even if the word levy is to be taken to mean to impose, assess or collect under the authority of law it could only mean collection after assessment and not a deposit which a dealer had to make in accordance with his quarterly return. It was held that if there is a liability to tax, imposed as per the taxing statute, then the course open is to follow the provisions in regard to the assessment of such liability.
¨ In Chatturam Vs. CIT, 15 ITR 302, quoting from the judgement of Lord Dunedin in Whitney V. Commissioner of Inland Revenue, 1926 AC 37, it was held that there are three stages in the imposition of a tax. There is the declaration of liability, i.e. the part of the statute, which determines what persons in respect of what property are liable to tax. Next is the assessment. Liability does not depend on assessment. That, ex-hypothesi, has already been fixed. But assessment particularizes the exact sum, which a person liable has to pay. Lastly, the method of recovery, if the person taxed does not voluntarily pay. Also see CIT & Aden Vs. Khemchand Ramdas, 1938 (6) ITR 414 PC for a similar line of reasoning.
¨ The decision in D N Kohli, CCE Vs. Krishna Silicate and Glass Works and Anr, 1983 (12) ELT 216 (Bom.). The High Court in this case held that mere signing of AR 1 memorandum by inspector was not determination of assessable value and final assessment. – Refer Para 12 of the judgement.
¨ The Calcutta Bench of the CEGAT in Balaji Fastners Vs. CCE, 1990 (46) ELT 543 (T), held at para 49, 50 & 51 that assessment by proper officer under Rule 173I (CEA) cannot be equated with the work of the computist in the Customs, as under Rule 173I, the officer has to apply his own mind and is required to complete the assessment after such further enquiry as may be considered necessary. It is noteworthy that this rule directs the provision to ‘assess the duty” and not merely to compute the same although computation is (also) naturally involved and is indeed necessary to conclude the process. We also hold that adjustment was not assessment but it was our opinion that it was consequential to completion of assessment and this completion by the Superintendent is the tail end of the process of assessment which was spread over, distinct, self-contained stages beginning with the approval of classification list by Assistant Collector and ending with the completion of RT12 by the Superintendent. The action of the Superintendent is thus the concluding part of the process and ultimately the matter reaches finality only on the date and time of passing of the assessment order on the RT12 by the Superintendent of Central Excise in terms of Rule 173I. As a matter of fact, the procedure prescribed for assessment under the Customs Act is quite different from the one prescribed under Central Excise Act and even within Central Excise, it is different for the items under physical control and the items under SRP, and therefore, it would not be correct in our view to apply the procedure of one category in respect of another. In fact the very concept and mode of assessment has undergone a fundamental change after introduction of SRP, inasmuch as under this scheme, the goods could be cleared in anticipation of finalization of assessment, which was unthinkable prior to introduction of this system. It will be erroneous, therefore, to read the new provisions in the light of old ones or in the context of old concept, which must be given a go by in view of the new situation. [This decision aptly elucidates the concepts of assessment under the Customs and Excise laws].
¨ The views expressed by the CEGAT Calcutta Bench in CCE Vs. Indian Cable Company Ltd., 1990 (47) ELT 112 (T), are as follows – The procedure laid down in Rule 173-I is a vital part of the self-removal procedure scheme where under the assessee takes clearance of excisable goods by debit of duty determined by himself on the basis of approved classification list and price list as applicable. No assessment of goods by the departmental officers takes place at the time of the clearance of the goods under the self-removal procedure scheme. A monthly return of production and clearances and payments of duty is submitted which is called RT-12. Only when the RT-12 is scrutinized by the departmental officers would they come to know whether the duty calculations and payment shown in the RT-12 are correct. In the present case the duty rate has been declared by the assessee himself for the said goods. Likewise, the quantity cleared has also been declared by them. The classification and the rate of duty which have already been determined by the Assistant Collector while approving the classification list had been indicated by the assessee in the RT-12. It is seen that while calculating the amount of duty by applying the rate of duty to the quantity cleared the present respondents have committed an error and paid a lower amount of duty than what was liable to be paid. There have been no assessment of officers at this stage and the revised amount of duty calculated by the Superintendent and communicated to the assessees for making payment is not the result of any adjudication action disputing a claim either on classification or on valuation by the assessee. [Readers kindly take notice of this averment]. It was to take care of such situation arising for example from errors in calculation that Rule 173-I has been introduced in the Central Excise Rules. This is a self-contained provision and is not required to be pressed into service by following the procedure prescribed under Section 11A. The decision under Section 11A would be in the nature of an adjudication of a disputed issue. In the present cases, Rule 173-I seeks to confer the power of the departmental officers concerned with the task of original assessment, the power to correct mistake in calculation etc. committed by the assessee while making the calculation of duty and subsequent payment. This is a unilateral action by the assessee at this stage and the departmental officer comes into the picture only when he sees the RT-12 at the time of scrutiny and completion. Since the assessee is not prejudiced by the assessment order which is only checking the correctness of the detail submitted by them in the RT-12 return and taking corrective action only in the course of mistake, the procedure of issuing show cause notice and giving hearing would not be called for and the Rule rightly excludes such a procedure.
¨ It is of supreme importance to take cognizance of the decision of the High Court of Calcutta in Bengal Tools Ltd., Vs. Additional DGRI, 1995 (77) ELT 858 (Cal.), wherein the nature and scope of the power u/s 47 was held to be administrative. It was held that the power u/s 47 was, to see that goods are not prohibited and that assessed duty has been paid and the section did not involve any adjudication nor proper officer making an order of clearance thereunder an adjudicating authority nor does the section result in rendering other powers under the Act nugatory, such as those under Section 28 and Section 111 and that an order under Section 47 was not final in that sense.
¨ In Vijay Rosin Traders Vs. CC, 1994 (72) ELT 54 (T), it was held assessment-cum-clearance order made by proper officer under Section 47 or 51 of Customs Act, 1962 – No finality attached thereto – Proceedings for demand of short levy, seizure, confiscation etc., was permissible.
¨ In Electric Lamp Manufacturers (India) Pvt., Ltd., Vs. CCE, 1981 (8) ELT 37 (Cal.), it was held that the description of the commodity in the declaration form or the other item in the declaration forms filled in by the manufacturer for the purpose of assessment of Excise Duty cannot be final and binding on manufacturer. It should be noted that there cannot be in the first instance an estoppel against statute and secondly, no tax can be collected except under the express authority of law. Assessment, it should be remembered is a quasi-judicial function and has to determined or quantified in accordance with express provision of law. Assessment made without application of mind thus would be bad and null and void.
In order to better appreciate the issue under deliberation an examination of what is an appealable order and the need of an appealable order being a speaking order is necessary and imperative.
Brevity being the essence of substance the author is being brief so as to restrict the length of this article, which cannot be called brief and hence have substance (pun intended). Nevertheless the interested readers in whom I would have kindled some sort of inquiry are advised to refer a few decisions, which have examined the meaning and scope of the expression appealable order, speaking order and as to what are the principles of natural justice. I thank the interested readers for their patience in appreciating the deliberation herein.