CORAMTHE HONOURABLE MR v. The Customs, Excise and Gold (Control)Appellate Tribunal, Chennai.2.The Commissioner of Central Excise,Hyderabad

the authorities concerned. Further, the composition of the goods hadbeen within the knowledge of the department, through Modvatdeclarations for the various inputs used in the manufacture of thefinal product. 4. It has been further stated that the petitioner had adoptedthe above classification, based on Note 3 to Chapter 32 in terms ofwhich a solution consisting of any of the products specified underheading 39.01 to 39.13 in Volatile Organic Solvent, when the weightof the solvent exceeds 50% of the weight of the solution, should beclassified under Chapter-32. Since the goods in question did notsatisfy the said condition the petitioner classified them under theheading 3907.50 and such a classification had been duly approved bythe Assistant Collector of Central Excise for the years 1988 and1989. However, in the year 1993, the Department, after a detailedtechnical investigation, had taken the stand that the subject goodswere classifiable under heading 3208.40. In such circumstances, thepetitioner, in order to establish its bonafides, based on therequest of the department, had paid the differential duty, suo motu,to the tune of Rs.17,41,328.65, on 4.9.93, `under protest', towardsclearances made between June, 1988 to February, 1993. While so, ashow cause notice bearing O.R.No.63/93-Adjn., dated 24.11.93, hadbeen issued calling upon the petitioner to show cause as to why theduty of Rs.17,41,328.65, being allegedly duty short-paid oninsulating varnish, cleared between 1.6.88 to 28.2.93, should not beconfirmed, under Rule 9(2) read with Section 11A of the CentralExcise Act, 1944 and as to why a penalty should not be imposed onthe petitioner, under Rules 9(2), 173Q and 226 of the Central ExciseRules, 1944. On receipt of the said show cause notice, thepetitioner had filed a detailed reply, vide letter, dated 15.3.94,and had also appeared for a personal hearing, submitting among otherthings, that the department had not made out a case for invoking theextended period of limitation and hence, the demand was time barred.However, the second respondent had passed an order being the Order-in-Original No.C.Ex.84/97, bearing O.R.No.63/93 Adjn., dated6.11.97, received by the petitioner, on 27.11.97, confirming thedemand in the show cause notice, on untenable grounds and imposing apenalty, under Rules 9(2), 173Q and 226 of the Central Excise Rules,1944, to the tune of Rs.10 lakhs, on the petitioner. 5. It has also been stated that Section 35-B of the CentralExcise and Salt Act provides for an appeal against the orders of thesecond respondent before the first respondent Tribunal. Accordingly,the petitioner had preferred an appeal before the first respondentTribunal, which had heard the appeal on various dates, effectively,from 25.1.99 to 31.3.2000. Thereafter, the appeal was reserved fororders. At the time of the commencement of the arguments during theearly part of the year 1999, the petitioner had filed a brief notecontaining the list of citations and judgments. Thereafter, a Full https://hcservices.ecourts.gov.in/hcservices/ Bench of the Supreme Court had delivered a judgment in the case ofCollector of Central Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC633). In the said case the Supreme Court had held that thedifferential duty cannot be recovered on the ground of short levywhen the duty has been paid in terms of the Approved ClassificationList and reclassification of goods and the consequent demand canonly be effective, prospectively, from the date of issue of the showcause notice. Therefore, after the said judgment had been reportedin the month of November, 1999, one of the main grounds taken onbehalf of the petitioner company was that the Classification Listclaiming classification under the heading 3907.50, was approved bythe department, from 31.3.88 onwards and since the goods had beencleared only in terms of an Approved Classification List, therecannot be a short-levy, as held by the Supreme Court in Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633) andtherefore, the demand was unsustainable. 6. However, it was pointed, at the time of the arguments beforethe Tribunal, that the judgment of the Supreme Court held the fieldas on that date. It was further contended that irrespective of themerits of the case, with regard to the dispute in classification,there was no question of short-levy and the consequential demand ofthe duty and the penalty was not sustainable. However, theamendments introduced by the Finance Bill, 2000, made substantialchanges in Section 11A of the Central Excise Act, 1944, practically,undoing the judgment of Collector of Central Excise, Baroda Vs.Cotspun Ltd. (1999(7) SCC 633). Even according to the Finance Bill,2000, there can be no question of levying penalty since it had beencategorically clarified, by way of an explanation in the amendmentssought to be brought about by the Finance Bill. After arguments hadbeen closed, on 31.3.2000, the first respondent Tribunal hadreserved orders. Thereafter, the petitioner had received a FinalOrder No.485/2000, dated 18.4.2000, on 12.5.2000. The firstrespondent Tribunal had dismissed the appeal, as it had upheld theorder of the second respondent, while restricting the demand to fiveyears. The order of the first respondent Tribunal did not record thearguments made on behalf of the petitioner, especially, withreference to the decision of the Supreme Court in Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633). The orderof the first respondent Tribunal, had not taken into account variousother submissions made on behalf of the petitioner Company. Thus,there was an error apparent on the face of the record, in the orderof the first respondent Tribunal, dated 18.4.2000. Therefore, thepetitioner had moved the first respondent Tribunal seekingrectification of the mistake in the final order by filing aMiscellaneous Application. However, the first respondent Tribunalhad dismissed the Miscellaneous Application by its MiscellaneousOrder No.535/2000, dated 28.11.2000, on the ground that the orderhad been passed based on the written submissions which do not https://hcservices.ecourts.gov.in/hcservices/ contain any reference to the Collector of Central Excise, Baroda Vs.Cotspun Ltd. (1999(7) SCC 633) and that the grounds urged before thefirst respondent Tribunal for rectification of a mistake, which werein fact fresh grounds, had not been raised at the time of thepassing of the final order, dated 18.4.2000. Since the order of thefirst respondent had been passed contrary to the judgment of theSupreme Court in the Collector of Central Excise, Baroda Vs. CotspunLtd. (1999(7) SCC 633) and the other relevant decisions of theSupreme Court, it is per incuriam and hence, it is withoutjurisdiction and without the authority of law. In suchcircumstances, the petitioner Company had preferred the present writpetition before this court, under Article 226 of the Constitution ofIndia. 7. In the counter affidavit filed on behalf of the secondrespondent, it has been stated that the writ petition is liable tobe dismissed as it has been filed before this Court without anycause of action taking place within its jurisdiction. Apart fromraising the preliminary objection, with regard to the jurisdictionof this Court, it has also been stated that the petitioner ismanufacturing various types of excisable goods such as decorativelaminates, industrial laminates, resins etc., after filingclassification lists/declarations with the Central ExciseDepartment. In the classification list, the petitioner company hadclassified the impugned goods, namely, Alkyd Resins under ChapterSub-heading No.3907.50, which was approved by the AssistantCollector. However, on certain information received through theintelligence to the effect that the petitioner company was clearingcertain grades of insulating varnishes, classifiable under Sub-heading No.3208.40 of the Central Excise Tariff Act, 1985, in theguise of Alkyd Resins, classifiable under 3907.50 of the CentralExcise Tariff Act, 1985, a detailed investigation had been taken up,along with the study of the Classification List filed by thepetitioner Company, with reference to the actual manufacturingprocessing and the versatility of the products. All grades weremanufactured by blending phenolic resins, or melamine resins or bothwith Alkyd Resins in varying proportions along with solvents andstabilizers. These grades are marketed for the purpose of using themas insulation varnishes as is clear from the technical data sheetsand the admissions made by Basha, Assistant Manager (R&D), of thepetitioner Company. Blending of Phenolic Resins or melamine resins,along with Alkyd Resins is made to get the desired characteristicsuitable for electrical or mechanical application such as thedesired film thickness and electrical insulation. Various grades ofthe impugned goods, namely, i.e. varnishes are marketed for thepurpose of using them as insulating varnishes, a fact which emergesafter going through the technical data sheets and the admissionsmade by R&D officials of the petitioner. https://hcservices.ecourts.gov.in/hcservices/

8. It has also been stated that the said facts were neverbrought to the notice of the department at any stage. Even in theletter, dated 16.11.92, the petitioner had mentioned that Polyesterbased on alkyds are only modified by drying oil fatty acids. Theydid not disclose that the final product is the blend of alkydresins. The relevant extract of Note to Chapter 34 states asfollows:"Heading No.32.08 includes solutions (other thancollection) consisting of any of the products specified inheading Nos.s39.13 in volatile organic solvents when theweight of the solvent exceeds 50 percent of the weight ofthe solution."Thus, it is evident that it is an inclusive note and it does notexclude other varnishes containing less than 50% of the solvent byweight. Since all these grades of resins are essentially used asinsulating varnishes, as is evident from the technical data sheetsand statements, for imparting electrical insulating properties, andmechanical strength such as surface production, they should havebeen classified as insulating varnishes, under 3208.40 of theCentral Excise Tariff Act, 1985. However, the assessee had neitherdeclared the correct classification of the product nor made thecomplete data available to the department to classify the productcorrectly. But for the extensive investigation undertaken by theofficers the said facts could never have come to light. The nonsubmission of the relevant information and the wrong descriptiongiven to the product by the assessee had led the Department toclassify the product under 3907.50 of the Act. It is also clear thateven though the petitioner Company had conscious knowledge of thecorrect classification of the product, it had chosen to clear thegoods as Alkyd Resins, with an intent to evade payment ofappropriate duty of excise, by wilfully suppressing the vital facts.During the period June, 1988, to February, 1993, the petitionercompany had manufactured and cleared a quantity of 3,06,368.11litres of aforesaid grades as alkyd resins, instead of clearing themas insulating varnishes. The misclassification had resulted in shortpayment of Rs.16,20,604.85/- BED and Rs.1,20,723.80 SED, which isliable to be demanded under the proviso to Section 11A of theCentral Excise and Salt Act, 1944, which envisages payment of dutyshort-paid for an extended period of five years. 9. It has also been stated that when the investigation was inprogress, the assessee had reclassified the product under 3208.40and the petitioner company had started paying the duty at the rateapplicable to the heading 3208.40. The petitioner company, videletter, dated 4.9.93, had intimated the department that thedifferential duty of Rs.17,41,428.65/- payable on the clearancemade by them during June, 1988 to February, 1993, pertaining to this https://hcservices.ecourts.gov.in/hcservices/ had been paid. It has been stated that certain informations whichwere vital in deciding the classification of the product were notprovided by the assessee. When the Department had come to know aboutthe suppression of certain information a detailed investigation wasundertaken by the Central Excise Department. After gathering theinformation through its intelligence that the assessee is clearinggrades of insulating varnishes, classifiable under Sub-headingNo.3208.40 of the Central Excise Tariff Act, 1985, in the guise ofAlkyd Resins, classifiable under 3907.50 of the Central ExciseTariff Act, 1985, a detailed investigation was taken up and afterregistering a case, a show cause notice had been issued to theassessee, in accordance with law. Since the assessee had willfullysuppressed the vital information, with an intention to evade thepayment of duty, the department had to proceed against thepetitioner company, under the proviso to Section 11A of the CentralExcise Tariff Act, 1944. Therefore, the contention of the assesseethat the demand is time barred cannot be sustained. 10. It has been further stated that the order of the firstrespondent Tribunal had been passed based on the written submissionsof the assessee which did not contain any reference to Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633). Thegrounds urged before the first respondent Tribunal are therefore,grounds which were not raised at the time of the passing of thefinal order, dated 18.4.2000. As such, the contentions raised by theassessee, are not acceptable in law. All the submissions of theassessee had been taken into account while the final order had beenpassed by the first respondent Tribunal. The Classification Listswere proved only on the basis of the information furnished by theassessee. However, on investigation, the information furnished bythe assessee were proved to be incorrect. The petitioner had notdisclosed the fact that the final product is a blend of Alkyd Resinswith other resins. Since the demand had been raised in the showcause notice, invoking the proviso to Section 11A of the CentralExcise Act, 1944, the approval or otherwise of the ClassificationLists has no significance. The assessee had never cited theCollector of Central Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC633). Further, the other decisions of the Supreme Court, relied onby the petitioner company, are not applicable to the facts andcircumstances of the present case. It is relevant to note that thepetitioner company had voluntarily effected payment of duty for theperiod from June, 1988 to February, 1993, even while they weredisputing the classification of the goods and their liability to paythe duty. Therefore, the duty demanded by the department, from thepetitioner company had been upheld by the Commissioner, CentralExcise, Hyderabad and also by the first respondent Tribunal. Thus,it is clear that the claims made by the petitioner company arewithout substance and devoid of merits. https://hcservices.ecourts.gov.in/hcservices/

11. The learned counsel appearing for the petitioner hadsubmitted that the impugned order of the first respondent, dated18.4.2000, is without jurisdiction and without the authority of law,being contrary to the decision of the Supreme Court, including theCollector of Central Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC633). The impugned order had been passed by the first respondentTribunal without taking into account the submissions made at thetime of the hearing of the appeal. The order of the first respondentTribunal is also contrary to the Central Excise Act, 1944, and theRules made thereunder. The said order is contrary to the principlesenshrined under Articles 14 and 19 of the Constitution of India. Thefirst respondent Tribunal had not taken into consideration theprinciple laid down in Collector of Central Excise, Baroda Vs.Cotspun Ltd. (1999(7) SCC 633) even though it held the field whenthe matter was pending on the file of the first respondent Tribunal,as well as on the date of the passing of the final order. Accordingto the said decision of the Supreme Court, when clearance had beenmade in terms of an approved classification or a price list therecan be no short-levy. In its final order, dated 18.4.2000, the firstrespondent Tribunal has specifically given a finding that theclassification lists filed during the period June, 1988 to February,1993, were approved. When it was found that the classification listsfor the disputed period had been approved, the decision of theSupreme Court in Collector of Central Excise, Baroda Vs. CotspunLtd. (1999(7) SCC 633) ought to have been applied. The miscellaneousapplication filed by the petitioner had been dismissed by the firstrespondent Tribunal, by its miscellaneous order, dated 28.11.2000,stating that the decision of the Supreme Court in Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633) had notbeen relied upon by the petitioner at the first instance. 12. The first respondent Tribunal had failed to note that inthe written submissions filed on behalf of the petitioner, aspecific issue had been raised, as decided in the Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633), thatthere can be no demand for differential duty when the classificationlists had been approved. The first respondent Tribunal hadoverlooked this vital aspect, while passing the final order, dated18.4.2000, in the appeal filed by the petitioner, in AppealNo.E/441/98. Thus, the order of the first respondent Tribunal iscontrary to the decision of the Supreme Court in Collector ofCentral Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633) andtherefore, it is per incuriam. 13. The learned counsel for the petitioner had also submittedthat when the matter had been taken up by the first respondentTribunal for final hearing, on 31.3.2000, the Finance Bill 2000, hadalready been introduced for being passed as a law. In terms ofClause 106 of the Finance Bill, 2000, all actions taken under https://hcservices.ecourts.gov.in/hcservices/ Section 11A of the Central Excise Act, 1944, were validated. Whenany duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a show cause noticecould be issued, within six months, from the relevant date. However,the proviso to Section 11A of the Act would be applicable only whereany duty of excise has not been levied or paid or were short-leviedor short paid or erroneously refunded by reason of order orcollection or any willful mis-statement or the suppression of factsor contravention of any of the provisions of the Act, or rules madethereunder, with intent to avoid payment of duty. In suchcircumstances of the case, a demand can be made for such payment,within a period of five years from the relevant date. Since there isnothing to show on the part of the department that the petitionercompany had evaded payment of excise duty by fraud, collusion orwillful mis-statement or suppression of facts, the extended periodof five years from the relevant date would not be applicable to thepresent case. After the amendment of Rule 173-B of the CentralExcise Rules, 1944, the petitioner has been filing declaration asrequired thereunder. The petitioner had filed a classification listin the year, 1988, claiming classification of Alkyd Resins under thechanged Sub-heading 3907.50 of the Central Excise Tariff Act, 1985.The said classification was approved by the Assistant Commissionerafter due verification. While so, it is not open to the departmentto invoke the proviso to Section 11A of the Central Excise and SaltAct, 1944. According to Clause 110 of the Finance Act, 2000, whichcame into effect on 12.3.2000, any notice issued or served on anyperson, under proviso to Section 11A of the Central Excise Act,1944, during the period commencing on and from 17.11.1980 and endingon the date on which the Finance Act 2000, received the assent ofthe President, demanding duty on account of non-payment, short-payment, non-levy, short-levy, or tax refund, within a period of sixmonths or five years as the case may be from the relevant date, asdefined in Clause (ii) of Sub Section (3) of that Section shall bedeemed to be and to always have been for all purposes, validly andeffectively issued or served under that Section, notwithstanding anyapproval, acceptance, or assessment, relating the rate of duty on orvalue of the excisable goods, by any Central Excise officer, underany other provision of the Central Excise Act or the rules madethereunder. Further, the following explanation had been inserted inthe Validation Act. The explanation reads as follows:"Explanation- for the removal of doubts it is herebydeclared that no act or omission on the part of any personshall be punishable as an offence which would not havebeen so punishable if this Section had not come intoforce".14. Therefore, in terms of the Validation Act, the departmentwas entitled to demand duty even in case of approved classificationlist or price list. However, the department has been barred from https://hcservices.ecourts.gov.in/hcservices/ levying any penalty in cases where classification or price list hadbeen approved. It is to be noted that when the first respondentTribunal had passed the impugned order, the Finance Act, 2000, hadnot come into force. Even assuming that the Department had the rightto refer to the duty once the Act came into force, the question oflevy of penalty on the petitioner would not arise. Thus, theimpugned order of the first respondent is clearly without theauthority of law as it is in contravention of the specificprovisions of the Act.15. It has been stated that the extended period of limitationunder the proviso to Section 11A of the Central Excise and Salt Act,1944, cannot be invoked when clearance have been made with theknowledge of the Department, under an approved classification, asdecided by the Supreme Court in its various decisions relating tothe matter. Further, no differential duty can be demanded until thecorrectness of the approval of the price list has been questioned byissuing a show cause notice. The first respondent Tribunal hadclearly mislead itself in coming to the conclusion that there was nonecessity for a show cause notice to be issued to the petitionerCompany, with regard to the reclassification of the goods inquestion, since the petitioner had opted to file a classificationlist, after investigation had commenced in the year, 1993,classifying Alkyd Resins under chapter sub-heading 3208.40 and as ithad voluntarily paid the duty for the Period June, 1988 to February,1993, though 'under protest'. The first respondent Tribunal hasfailed to appreciate that by mere payment of duty for clearance,under the approved classification list or the filing of a revisedclassification list, with effect from March, 1993, would not changethe approved nature of the classification list for the period June,1988 to February, 1993. The approved classification list cannot bere-opened without issuing a show cause notice, as held by theSupreme Court in Madhumilan Syntex case. 16. The learned counsel had further submitted that the questionof short levy would not arise when clearances had been made underapproved classification lists. Hence, the finding of the firstrespondent Tribunal that the classification was changed at theinitiation of the petitioner and hence, no show cause notice,proposing a change of classification, was required to be issued, isclearly contrary to law. Further, the first respondent was holdingthat Alkyd Resins manufactured by the petitioner was classifiableunder heading 3208.40 is contrary to law. The very demand madeagainst the petitioner is contrary to the decisions of the SupremeCourt and the levy of penalty, is also illegal. 17. The learned counsel for the petitioner had submitted thatthe Finance Bill, 2000, which made substantial changes in Section11A of the Central Excise Act, 1944, due to the Supreme Court https://hcservices.ecourts.gov.in/hcservices/ Judgment, was introduced in the Lok Sabha, on 29.2.2000, but had notbeen passed as an Act,either at the time of the arguments before thefirst respondent Tribunal or at the time of the passing of the finalorder, on 18.4.2000. Therefore, the judgment of the Supreme Court,in Collector of Central Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC633), held the field on the date of the said order. According to thejudgment of the Supreme Court, in Collector of Central Excise,Baroda Vs. Cotspun Ltd. (1999(7) SCC 633), when the clearances arein terms of approved classification or price list there can be noshort levy. Even if it could be said that Collector of CentralExcise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633) had beenretrospectively invalidated in terms of the explanations to Clauses105 and 106 of the Finance Bill, no act or omission on the part ofany person shall be punishable as an offence, which would not havebeen so punishable if the Section had not come into force. UnderClause 106 all actions taken under Section 11A, even in case of anyapproval or acceptance of assessments, were validated. While theclauses gave retrospective effect to actions already taken underSection 11A, by way of an explanation it was clarified that nopenalty could be imposed due to the retrospective amendment. Inspite of all such issues having been raised, the first respondentTribunal had held that, except for the duty demand confirmed for theperiod exceeding five years from the date of issue of show causenotice, there was no other infirmity in the Order-in-Original, dated6.11.97. Therefore, the final order of the first respondentTribunal, dated 18.4.2000, made in Appeal No.E/441/98, is arbitrary,contrary to law and liable to be set aside.18. The learned counsel for the petitioner had furthersubmitted that the issue of classification of the product by therespondents is not being pressed. However, it has been stated thatthe show cause notice issued by the respondents, with regard to theimposition of penalty on the petitioner, is contrary to law and theprinciples of natural justice. The first respondent Tribunal hadmisled itself in rejecting the contentions raised on behalf of thepetitioner that the levy of penalty on the petitioner, by therespondents, is illegal since the duty had been paid even prior tothe issue of show cause notice. The learned counsel for thepetitioner had further stated that the first respondent Tribunal hadnot considered the substantial changes made in the Finance Bill,2000, in Section 11 of the Act. Even though the Bill had not becomean Act, either at the time of the making of the arguments before theTribunal or at the time of the passing of the order, on 19.4.2000,the judgment of the Supreme Court, in Collector of Central Excise,Baroda Vs. Cotspun Ltd. (1999(7) SCC 633), was holding the field onthe date of the order. In terms of the said judgment, when theclearances are made in terms of approved classification or pricelists, there can be no short-levy. Even assuming, without admitting,that the judgment of the Supreme Court, in Collector of Central https://hcservices.ecourts.gov.in/hcservices/ Excise, Baroda Vs. Cotspun Ltd. (1999(7) SCC 633), had beenretrospectively invalidated in terms of the explanations to Clauses105 and 106 of the Finance Bill, 2000, no act or omission on thepart of any person shall be punishable as an offence, which wouldnot have been so punishable if the Section had not come into force.The said clauses had sought to amend Section 11A of the Act andunder Clause 106, all actions taken under Section 11A, even in caseof any approval or acceptance of assessments, were validated. Whilethe clauses gave retrospective effect to actions already taken underSection 11A, by way of explanation it was categorically clarifiedthat no penalty could be imposed due to the retrospective amendment.In spite of the fact that the above contentions had been raisedbefore the first respondent Tribunal it did not consider the same,while passing its order confirming the penalty levied on thepetitioner. Therefore, the petitioner had filed a Miscellaneousapplication before the first respondent Tribunal and by an order,dated 28.11.2000, the Tribunal had rejected the same by stating thatthe petitioner had not shown sufficient grounds to recall the finalorder passed earlier and to pass fresh orders based on the groundsraised by the petitioner. With regard to the contention of thesecond respondent that the writ petition is not maintainable beforethis Court, the learned counsel for the petitioner had submittedthat the said contention is not sustainable since the impugned orderhad been passed by the first respondent Tribunal at Chennai andtherefore, this Court has the territorial jurisdiction in respect ofthe present writ petition filed by the petitioner. 19. Per contra, the learned counsel appearing on behalf of thesecond respondent had submitted that the petitioner had notdisclosed certain vital facts to the Customs and the Central ExciseDepartment. In the letter, dated 16.11.92, the petitioner hadmentioned that Polyester based on alkyds are only modified by dryingoil fatty acids. It did not disclose that the final product is ablend of alkyd resins with other resins. However, it was evidentthat the final product manufactured by the petitioner wasessentially used as insulating varnish for imparting electricalinsulating properties and mechanical strength, such as surfaceproduction and therefore, the final product ought to have beenclassified as insulating varnish, under the sub heading 3208.40 ofthe Central Excise Tariff, Act, 1985. Instead the petitioner hadclassified the final product as Alkyd Resin, classifiable under3907.50 of the Act. In such circumstances, a detailed investigationhad been taken up by the Central Excise Department and afterregistering a case, a show cause notice had been issued to theassessee, in accordance with law. Since the assessee had willfullysuppressed certain vital information, with an intention to evadepayment of duty, the proviso to Section 11A had to be invoked by theDepartmental authorities. Therefore, the question of the demandbeing time barred does not arise. The asseeee had neither declared https://hcservices.ecourts.gov.in/hcservices/ the correct classification of the product nor made the complete dataavailable to the Department to classify the product correctly. Thenon submission of the relevant information and the wrong descriptiongiven to the product by the assessee had led the department toclassify the product under 3907.50. However, when the investigationwas in progress the assessee had classified the product under3208.40 and started paying the duty at the rate applicable to theheading 3208.40 of the Central Excise Tariff Act, 1995. Since thewrong classification of the product by the assessee had resulted inshort-payment, which is liable to be demanded, under the proviso toSection 11A of the Central Excise and Salt Act, 1944, whichenvisages payment of duty short-paid for an extended period of fiveyears, the show cause notice, dated 24.11.93, issued to thepetitioner, relating to the duty demand and the penalty under theCentral Excise Act and the Rules framed thereunder, for the period1.6.88 to 28.2.93, is valid, as it has been issued in accordancewith law. 20. It was further stated that the first respondent Tribunalhad passed the final order, dated 18.4.2000, taking into account allthe relevant aspects, based on the written submissions of theassessee. Since the grounds urged before the first respondentTribunal in the subsequent application filed by the assessee werefresh grounds, which had not been raised at the time of the passingof the final order, dated 18.4.2000, the application filed by theassessee had been rejected by the first respondent Tribunal, by itsorder, dated 28.11.2000. In such circumstances, the writ petition isliable to be dismissed. 21. With regard to the jurisdiction of this Court to entertainthe writ petition the learned counsel for the petitioner had reliedon the following decisions in support of his contentions. 1) In Kusum Ingots and Alloys Limited Vs. Union of India [2004(168) E.L.T. 3 (S.C.)], the Supreme Court in Paragraph-27 has heldas follows:"When an order, however, is passed by a Court orTribunal or an executive authority whether underprovisions of a statute or otherwise, a part of cause ofaction arises at that place. Even in a given case, whenthe original authority is constituted at one place and theappellate authority is constituted at another, a writpetition would be maintainable at both the places. Inother words, as order of the appellate authorityconstitutes a part of cause of action, a writ petitionwould be maintainable in the High Court within whosejurisdiction it is situate having regard to the fact thatthe order of the appellate authority is also required tobe set aside and as the order of the original authoritymerges with that of the appellate authority." https://hcservices.ecourts.gov.in/hcservices/ 2) A Division Bench of this Court in ORJ Electronics OxidesLimited Vs. CESTAT, Chennai, (2008(225) E.L.T. 202 Mad.) atparagraphs 11 and 12 has held as follows:"11. A Full Bench of this Court in Sanjos JewellersV. Syndicate Bank 2007(5) CTC 305, has held that a writpetition challenging the order of the Debts RecoveryAppellate Tribunal which is situated within theterritorial limits of this Court, while the original Courtis situated in another State, is maintainable. Similar isthe view taken by a Division Bench of the Bombay HighCourt, to which one of us (A.P.Shah, C.J.) was a party inKishore Rungta V. Punjab National Bank (2003(151(E.L.T.502(Bom.)]. In that case, it was held that the order of theDebts Recovery Tribunal in Jaipur merged in the order ofthe Debts Recovery Appellate Tribunal at Mumbai. TheCourts in Jaipur would have no jurisdiction to entertainthe writ petition which challenged the order of the DebtsRecovery Appellate Tribunal, Mumbai. Even otherwise, thewrit petition was maintainable in the Bombay High Courtwithin whose jurisdiction the appellate authority isbased. Part of the cause of action having arisen inMumbai, the Bombay High Court had the jurisdiction toentertain the writ petition in view of Article 226(2) ofthe Constitution. 12. In the light of decided cases, it is clear thatthe territorial jurisdiction of the Court and the `causeof action' are interlined. To decide the question ofterritorial jurisdiction, it is necessary to finding outthe place where the `cause of action' arose. It is notdisputed that in the present case, the order impugned wasissued by the Tribunal at Chennai. The appellant isaggrieved by the order, which has been passed in Chennai.The grievance of the appellant arose at Chennai, and assuch Principal Bench has the jurisdiction to deal with thematter."22. The learned counsel for the petitioner had also relied onthe following decisions of the Supreme Court in support of hiscontentions:22.1. In Union of India and others Vs. Madhumilan Syntex Pvt.Ltd [1988 (35) E.L.T. 349 (S.C.)], it has been held as follows:"Section 11A of the Central Excises and Salt Act,1944, clearly proceeds that prior show cause Notice mustbe issued to the person against whom any demand on groundof short-levy or non-levy of payment of excise duty isproposed to be made. Therefore a post facto Show CauseNotice cannot be regarded as adequate in law." (Para 4) https://hcservices.ecourts.gov.in/hcservices/ "If the approved Classification List has beenmodified by the Assistant Collector without anyopportunity and the Show Cause Notice is given only withregard to quantification of the amount of the short-levy,such a Show Cause Notice cannot be regarded as formodification of Classification List hence it is notcovered under Section 11A of the Central Excises and SaltAct, 1944, and the period of six month is also notavailable. However, such a Show Cause Notice can beregarded proper for the period subsequent to its issue."(Para 6)22.2. In ITW Signode India Ltd., Vs. Collector of CentralExcise [2003(158) E.L.T. 403 (S.C.)] it has been held as follows:"Section 11 A deals with a case when inter aliaexcise duty has been levied or has been, short-levied orshort-paid. The word "such" occurring after the words"whether or not" refers to non-levy, non-payment, short-levy or short-payment or erroneous refund. It is,therefore, no correct to contend that the word "such"indicates only such short-levy which has been held to benon-existent in Cotspun having regard to Rule 173B. Suchshort-levy or non-levy may be on the basis of anyapproval, acceptance or assessment relating to the rate ofduty on or valuation of excisable goods. Thus, anyapproval made in terms of Rule 10, in the event, anymistake therein is detected, would also come within hepurview of the expression "such short-levy or short-payment". Such notice is to be served on the personchargeable with duty which inter alia has been short-levyor short-paid." (Para 49)"A statute may be enacted prospectively orretrospectively. A retrospective effect indisputably canbe given in the case of curative and validating statute.In fact, curative statutes by their very nature areintended to operate upon and affect past transactionshaving regard to the fact that they operate on conditionsalready existing. However, the scope of the Validating Actmay vary from case to case. (Para 55)22.3. In Commissioner of Central Excise, Madras Vs.T.K.K.Pharma Ltd. (2006 (198) E.L.T. 481 (S.C.), it has been held asfollows:"Order of Assistant Collector approvingclassification list not a mere cursory reasoning but adetailed investigation into facts and conclusion reachedon basis of those facts – Assistant Collector may be wrongin approving classification of product, but it cannot be https://hcservices.ecourts.gov.in/hcservices/ said that he did not consider relevant material or thatthere was any suppression of fact."22.4. In Continental Foundation Jt.Venture Vs. Commr. Of C.Ex.,Chandigarh-I [2007(216) E.L.T. 177(S.C.)], it has been held inParagraphs-10, 11 and 12 as follows:"10. The expression "suppression" has been used inthe proviso to Section 11A of the Act accompanied by verystrong words as `fraud' or "collusion" and, therefore, hasto be construed strictly. Mere omission to give correctinformation is not suppression of facts unless it wasdeliberate to stop the payment of duty. Suppression meansfailure to disclose full information with the intent toevade payment of duty. When the facts are known to boththe parties, omission by one party to do what he mighthave done would not render it suppression. When theRevenue invokes the extended period of limitation underSection 11A the burden is cast upon it to provesuppression of fact. An incorrect statement cannot beequated with a willful misstatement. The latter impliesmaking of an incorrect statement with the knowledge thatthe statement was not correct. 11. Factual position goes to show the Revenue reliedon the circular, dated 23.5.97 and dated 19.12.97. Thecircular dated 6.1.98, is the one on which appellantplaces reliance. Undisputedly, CEGAT in ContinentalFoundation joint Venture case (supra) was held to be notcorrect in a subsequent larger Bench judgment. It is,therefore, clear that there was scope for entertainingduobt about the view to be taken. The Tribunal apparentlyhas not considered these aspects correctly. Contrary tothe factual position, the CEGAT has held that no plea wastaken about there being no intention to evade payment ofduty as the same was to be reimbursed by the buyer. Infact such a plea was clearly taken. The factual scenarioclearly goes to show that there was scope for entertainingdoubt, and taking a particular stand which rules outapplication of Section 11A of the Act.12. As far as fraud and collusion are concerned, itis evident that the intent to evade duty is built intothese very words. So far as mis-statement or suppressionof facts are concerned, they are clearly qualified by theword `wilful', preceding the words "mis-statement orsuppression of facts" which means with intent to evadeduty. Thenext set of words `contravention of any of theprovisions of this Act or Rules' are again qualified bythe immediately following words `with intent to evadepayment of duty.' Therefore, there cannot be suppressionor mis-statement of fact, which is not wilful and yet https://hcservices.ecourts.gov.in/hcservices/ constitute a permissible ground for the purpose of theproviso to Section 11A. Mis-statement of fact must bewilful."23. With regard to the period of limitation and the impositionof penalty the learned counsel for the petitioner had relied on thefollowing decisions: 23.1. In Collector of Central Excise Vs. H.M.M.Limited [1995(76) E.L.T. 497(S.C.)], wherein it has been held as follows:"2. The assessee contended before the AdditionalCollector of Central Excise that the show cause notice wastime barred under the main part of Section 11A since itwas issued after the expiry of the period of six monthsstipulated therein but the Additional Collector sustainedhe notice on the ground that it was within five yearsimpliedly holding that the purported action was under theproviso to Section 11A of the Act. There is no disputethat the show cause notice cannot be sustained under sub-section (1) of Section 11A unless the proviso isattracted. Admittedly, it is beyond the period oflimitation of six months prescribed under Section 11A(1)but it is within the extended period of 5 years under theproviso to that sub-section. Now in order to attract theproviso it must be shown that the excise duty escapedpayment by reason of fraud, collusion or wilful mis-statement or suppression of fact or contravention of anyprovision of the Act of of the Rules thereunder withintent to evade payment of duty. In that case the periodof six months would stand extended to5 years as providedby the said proviso. Therefore, in order to attract theproviso to Section 11A (1) it must be alleged in the showcause notice that the duty of excise had not been leviedor paid by reason of fraud, collusion or wilful mis-statement or suppression of fact on the part of theassessee or by reason of contravention of any of theprovisions of the Act or of the Rules made thereunder withintent to evade payment of duties by such person or hisagent. There is no such averment to be found in the showcause notice. There is no averment that the duty of excisehad been intentionally evaded or that fraud or collusionhad been noticed or that the assessee was guilty of wilfulmis-statement or suppression of fact. In the absence ofsuch averments in the show cause notice it is difficult tounderstand how the Additional Collector while concedingthat the notice had been issued after the period of sixmonths prescribed in Section 11A(1) of the Act hadproceeded to observe that there was wilful action ofwithholding of vital information apparently for evasion ofexcise duty due on this waste/by-product but counsel for https://hcservices.ecourts.gov.in/hcservices/ the assessee contended that in the absence of any suchallegation in the show cause notice the assessee was notput to notice regarding specific allegation under theproviso to that sub-section. The mere non-declaration ofthe waste-by-product in their classification list cannotestablish any wilful withholding of vital information forthe purpose of evasion of excise duty due on the saidproduct. There could be, counsel contended, bonafidebelief on the part of the assessee that the said waste orby-product did not attract excise duty and hence, it maynot have been included in their classification list. Butthat per se cannot go to prove that there was theintention to evade payment of duty or that the assesseewas guilty of fraud, collusion, mis-conduct or suppressionto attract the proviso to Section 11A(1) of the Act. Thereis considerable force in this contention. If theDepartment proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to noticewhich of the various commissions or omissions stated inthe proviso is committed to extend the period from sixmonths to 5 years. Unless the assessee is put to notice,the assessee would have no opportunity to meet the case ofthe department. The defaults enumerated in the proviso tothe said sub-section are more than one and if the excisedepartment places reliance on the proviso it must bespecifically stated in the show cause notice which is theallegation against the assessee falling within the fourcorners of the said proviso. In the instant case thathaving not been specifically stated the AdditionalCollector was not justified in interfering (merely becausethe assessee had failed to make a declaration in regard towaste or by-product) an intention to evade the payment ofduty. The Additional Collector did not specifically dealwith this contention of the assessee but merely drew theinference that since the classification list did not makeany mention in regard to this waste product it could beinferred that the assessee had apparently tried to evadethe payment of excise duty. 3. For the above reason, we see no merit in thisappeal and dismiss the same with no order as to costs."23.2. In Additional Collector of C.Ex., Bombay-II Vs. Mahindra& Mahindra Ltd., (2000 (120) E.L.T. 290 (S.C.), it has been held asfollows:"Extended period of five years invoked by Departmentdespite goods having been cleared on the basis of approvedPrice List- As per S.C. Decision in Cotspun's case [1999(113) E.L.T. 353 (S.C.)], differential duty not demandableuntil correctness of such approval is questioned by issue https://hcservices.ecourts.gov.in/hcservices/ of Show Cause Notice hence duty demandable only from thedate of Show Cause Notice."23.3. In Rashtriya Ispat Nigam Ltd., Vs. Commissioner of C.Ex.,Visakhapatnam [2003 (161) E.L.T.285 (Tri.-Bang.)], it has been heldas follows:"Duty deposited before issue of show cause notice –Penalty not impossible under Section 11AC of CentralExcise Act, 1944, as well as under Rule 173 Q of erstwhileCentral Excise Rules, 1944."24. In Pahwa Chemicals Private Limited VS Commissioner ofC.Ex., Delhi [2005 (189) E.L.T. 257 (S.C.)], it has been held inparas 3, 4 and 5 as follows:"Demand- Limitation -Extended period-Mere failure todeclare does not amount to misdeclaration or willfulsuppression – Some positive act on part of party toestablish either willful misdeclaration or willfulsuppression is must – When all facts are within knowledgeof Department and a party in the belief that affixing of alabel makes no difference does not make a declaration,then there would be no willful misdeclaration or willfulsuppression – Section 11A(1) of Central Excise Act, 1944"25. In Collector of Central Excise, Baroda Vs. Cotspun Ltd.(1999(7) SCC 633), it has been held that the levy of excise duty onthe basis of an approved classification list is the correct levy, atleast until the correctness of the approval is questioned by theissuance of a show-cause notice to the assessee. It is only when thecorrectness of the approval is challenged that an approvedclassification list ceases to be such. The levy of excise duty onthe basis of an approved classification list is not a short-levy.Differential duty cannot be recovered on the ground that it is ashort-levy. Rule 10 has then no application. So the Tribunal wasright in holding that the revised assessment could be made effectiveonly prospectively from the date of the show-cause notices and notwith reference to earlier removals made under approvedclassification lists.26. The learned counsel appearing for the second respondent hadrelied on the following decision reported in Collector of CentralExcise, Baroda Vs. L.M.P.Precision Eng. Co. Ltd ([2004 (163 E.L.T.290 (S.C.)], wherein it has been held as follows:"18. The next issue is whether the extended period oflimitation could be invoked by the appellant for thepurpose of raising the impugned demand against therespondent. Rule 173B of the Rules requires inter aliathat every assessee shall file with the proper officer for https://hcservices.ecourts.gov.in/hcservices/ approval a list in such form as the Collector may directshowing the "full description" of the goods manufactured.The form in which the application is required to besubmitted has been prescribed as the C.L.I. Form. The Formrequires "a full description of each item of the goodsproduced, manufactured with warehouse together with thedescription as would appear from the invoice". Admittedly,the description of the goods given in the C.L.I. Form bythe appellant for the period in question did not tallywith the description in the invoices for the same period.The content of the C.L.I. Form has been excerpted in theTribunal's order and it is clear therefrom that no attemptwas made to describe the goods at all, let alone fully ortruly. The requirement for disclosure was clear,unambiguous and categoric. There was no scope formisunderstanding or misinterpretation. The respondent'sreliance on diverse decisions of this Court in which itwas held that there could be said to be no suppression orwilful misstatement related to cases where it wasnecessary to interpret a particular provision of law.Where the assessee had proceeded on a misinterpretation foa legal provision, this Court appears to have held thatthe bona fides could not be called into question. Thosedecisions are distinguishable since in this case there wasno question of the assessee failing to comply with therequirement of the Rule by reason of any allegedmisinterpretation of the Rule. Had the assessee given afull description of the excisable goods but claimedclassification under a wrong Tariff heading, the principleenunciated by this Court and as relied upon by therespondent may have been applied but that has not happenedhere.19. Apart from this we cannot ignore the fact thatthe respondents had, consequent upon the issuance of theexemption notification of 1.3.1988, itself, classified thegoods under Tariff Heading 87.05 and given a fulldescription of the goods for the first time while claimingthe exemption. It is true that subsequent to the amendmentNotification, dated 14.2.1988, the respondent had repliedfor reclassification under Tariff Heading 84.30. But thiswill not detract from the initial claim of the respondentthat its goods were properly classifiable under Heading87.05 nor does it explain why the respondent did notdescribe the goods fully in its application for approvalof its classification list for the relevant period." 27. With regard to the aspect of extended period of limitationand the penalty leviable on the assessee, the learned counsel hadrelied on the following decisions: https://hcservices.ecourts.gov.in/hcservices/

27.1. In Indian Petrochemicals Corporation Ltd. Vs. Collectorof C.Ex. ([1992 (57) E.L.T. 485 (Tribunal)], it has been held thatthat where the assessee disclosed manufacture of petroleum resin,obtained L-4 licence for it and got its classification determinedbut not disclosed that raw naphtha obtained under Chapter xprocedure would be utilised for its manufacture via `C8C9 cut'- Suchuse being against the terms of exemption Notification Nos.75/84-C.E., dated 1.3.1984 and 27/89-C.E., dated 1.3.89, charge ofsuppression of fact and evasion of duty proved, the extended periodof limitation was invokable and the penalty is leviable by invokingSection 11A of the Central Excises and Salt Act, 1944 and Rule 173Qof the Central Excise Rules, 1944. (paras 38 and 39)27.2. In Vapi paper Mills Ltd., Vs. Collector of Central Excise[1993(67) E.L.T. 109 (Tribunal)], it was held that where theassessee clearing board but mis-declaring it as kraft paper inclassification list and clearance and sale documents in order toavail the benefit of concessional rate applicable to paper, thecharge of suppression and intent to evade duty proved and therefore,the extended period of limitation was applicable in accordance withProviso to Section 11A(1) of the Central Excises and Salt Act, 1944.27.3. In Utkal Galvanizers Pvt. Ltd., Vs. Collector of CentralExcise, BBSR [1999 (107) E.L.T. 70 (Tribunal), it was held that theextended period of limitation, invokable under Section 11A of theCentral Excise Act, 1944, would apply when there is suppression ofrelevant facts by the non-inclusion of cost of raw materials andthat the determination of assessable value is made only by takinginto account the job charges. 27.4. In Synthetics & Polymer Industries Vs. collector ofC.Ex., Ahmedabad (1998(104) E.L.T. 659 (Tribunal), it has been heldas follows:"We are unable to accept these arguments- theappellants who are the manufacturers of the product cannotdisclaim knowledge that their product is a chemicallymodified phenol formaldehyde. They have not furnished anybasis for their belief that the disputed product waschemically and commercially as the same phenolformaldehyde. In these circumstances, the charge ofmisclassification is sustainable. It is not mere inactionon the part of the appellants but a positive act ofconcealment of the fact that the disputed product was achemically modified phenol formaldehyde resin. The reasonfor the deliberate misclassification is not far to see –the appellants' intention is clear from their claim to thebenefit of Notification 133/86 which prescribes rate ofduty of 15% ad valorem ( as against the tariff rateof 25%)which is available to only phenol formaldehyde failingunder sub-heading 3909.51 and not to chemically modifiedvariety classifiable under CETA 3909.59 which we have heldto be the appropriate classification in our finding in the https://hcservices.ecourts.gov.in/hcservices/ para above. The case law cited by the learned counsel isdistinguishable as in that case, the Tribunal held thatthe respondents therein had not suppressed any materialfact regarding the description of the goods, while in thepresent case, the appellants are guilty ofconcealment/deliberate non-disclosure of the descriptionof goods as chemically modified phenol formaldehyde. We,therefore, hold that the extended period of limitation hasbeen rightly invoked and that the demand is not hit bytime bar. We also hold that penalty is warranted in thefacts and circumstances of the case. In the light of theabove, we uphold the impugned order and reject theappeal." 28. Even though the learned counsel for the petitioner hadraised a number of issues said to be in favour of the petitioner,relying on various decided cases, he had submitted, at this stage ofthe hearing of the writ petition, that it would suffice if the finalorder of the first respondent Tribunal, dated 18.4.2000, made inAppeal No.E/441/98, is set aside and the matter is remitted back tothe first respondent Tribunal with a direction to dispose of theAppeal No.E/441/98, on merits and in accordance with law,considering, afresh, the issues arising for adjudication, inparticular, the issue as to whether the concerned authorities of theCustoms and Central Excise Department could invoke the provisions ofSection 11A of the Central Excise Act, 1944, to make the duty demandand to levy the penalty, as per the order (Original) No.C.Ex.84/97,dated 6.11.97, passed by the Commissioner of Central Excise,Hyderabad. 29. In view of the submissions made by the learned counselsappearing on behalf of the petitioner, as well as the secondrespondent and on a perusal of the records available, it is clearthat the preliminary objection raised on behalf of the secondrespondent is devoid of merits. When the order impugned has beenpassed by the first respondent Tribunal, which is located atChennai, it cannot be said that this Court would not have thejurisdiction to decide the writ petition pending on the file of thisCourt, as held by the Supreme Court in Kusum Ingots and AlloyLimited Vs.Union of India [2004(168) E.L.T. 3 (S.C.)].30. In view of the fact that it has been stated that the firstrespondent Tribunal had not considered all the issues arising forits decision, especially, the applicability of the first proviso toSection 11A of the Central Excise Act, 1944, to the petitioner, inthe light of the decision of Collector of Central Excise, Baroda Vs.Cotspun Ltd. (1999(7) SCC 633), decided by the Supreme Court and theeffect of the amendments brought about by the Finance Act, 2000,which was in the form of a Bill in the Finance Bill, 2000, at the https://hcservices.ecourts.gov.in/hcservices/ time when the final order was passed by the first respondentTribunal, and in view of the limited prayer of the learned counselappearing on behalf of the petitioner and considering the fact thatcertain aspects, as noted above, had not been considered, when thefirst respondent Tribunal had passed the impugned order, dated18.4.2000, the final order of the first respondent Tribunal, dated18.4.2000, made in Appeal No.E/441/98, is set aside and the firstrespondent Tribunal is directed to pass appropriate orders, onmerits, and in accordance with law, considering all the relevantissues, in particular, the applicability of the first proviso toSection 11A of the Central Excise Act, 1944, to the petitioner,uninfluenced by its findings in its earlier decision, dated18.4.2000. Accordingly, the writ petition is disposed of, with theabove directions. No costs. Sd/-Asst. Registrar./true copy/Sub Asst. Registrar.cshTo1. The Customs, Excise and Gold (Control)Appellate Tribunal, Chennai.2. The Commissioner of Central Excise Hyderabad.1 cc to Mr.S.M. Deenadayalan, CGSC, Sr. 72074Writ Petition No.3081 of 2001JP (CO)kk 7/1