Madurai Power Corporation (Pvt) LimitedFlat G-1, No.1 Seshadri Road, AlwarpetChennai-18 v. Nadu

W.P.No.40902 of 2005Samalpatti Power Company (P) Limited"Sreyas Virat" 1st floor,No.14, Third Cross Road, Raja Annamalaipuram,Chennai-28 represented by its Chief Financial Officerand Company Secretary Mr.K.S.Kasturirangan.. Petitionervs1. Union of India represented by Ministry of Finance, Department of Revenue, North Block, New Delhi.2. The Assistant Commissioner of Central Excise Hosur I Division, No.29, Thalli Road, Hosur-635 126.3. The Additional Director General Directorate General of Central Excise Intelligence South Zonal Unit, C-3,"C" Wing Rajaji Bhavan Besant Nagar, Chennai-90.4. The Commissioner of Central Excise Chennai III Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.5. The Chief Commissioner of Central Excise Chennai III Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.6. Government of Tamil Nadu represented by Secretary to Government, Energy Department, Fort St. George, Chennai-9.7. Tamil Nadu Electricity Board represented by its Chairman, 800, Anna Salai, Chennai-2.... Respondents https://hcservices.ecourts.gov.in/hcservices/ W.P.No.40903 & 40904 of 2005G.M.R. Power Corporation (Pvt) LimitedPullianthope High Road, Basin BridgeChennai-12 represented by its Associate VicePresident Mr.I.Venkataramana ... Petitioner in writ both Petitionsvs1. Union of India represented by Ministry of Finance, Department of Revenue, North Block, New Delhi.2. The Deputy Commissioner of Central Excise "B" Division, Chennai I Commissionerate No.317, Anna Salai, Chennai-18.3. The Commissioner of Central Excise Chennai III Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.4. The Chief Commissioner of Central Excise Chennai I Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.5. Government of Tamil Nadu represented by Secretary to Government, Energy Department, Fort St. George, Chennai-9.6. Tamil Nadu Electricity Board represented by its Chairman, 800, Anna Salai, Chennai-2. .. Respondents in both petitions. https://hcservices.ecourts.gov.in/hcservices/ For appellant :: Dr. Mr.Abhishek Singhvi in WP 45294/2002 Senior counsel for40903 & 40904 for M/s R. Raghavan and R.Venkatavaradhan For appellants :: Mr.Arvind P.Datar in WP 40902 senior counsel forof 2005 for M/s R. Raghavan and R.VenkatavaradhanFor Respondents 1 to 3 in WP.45294/05 :: Mr.V.T.Gopalan, Additional Solicitor General assisted by Mr.K.Ramakrishna Reddy.For respondent :: Mr.Raja Kalifulla Govt.PleaderNo.6 in WP 40902 assisted by Mr.V.R.ThangaveluNo.4 in WP 45294 Govt. AdvocateNo.5 in WP 40903& 40904/2002 For 5th respondent :: Mr.C. Rameshin WP 45294/2002For 7th respondent : Mr. S.N.Kirubanandam in WP 40902 and6th respondent in40903 & 40904 Writ Petition No.45294/2002 filed under Article 226 of theConstitution of India praying this Court to issue a writ ofprohibition, prohibiting the respondents 1 to 3 from proceeding withthe SCN No.Nil dated "Nil" (received on 2nd December,2002) demandingexcise duty of Rs.20,80,69,750.24 for quantity of 1,37,489.557 metrictons of Low Sulphur Heavy Stock (LSHS) procured in terms of AnnexureI during the period July,2001 to August 2002.Writ Petition No.40902/2005 filed under Article 226 of theConstitution of India praying this Court to issue a writ ofprohibition, prohibiting the respondents 2 to 5 from proceeding withthe show cause notice No.13/2003 dated 4.4.2003 of the 3rd respondentseeking to demand duty of Rs.41,86,70,124/-[Rupees Forty One CroresEighty Six lakhs seventy thousand one hundred and twenty four only]Writ Petition No.40903/2005 filed under Article 226 of theConstitution of India praying this Court to issue a writ ofprohibition, prohibiting the respondents 2 to 4 from proceeding withthe show cause notice No.4/2003 dated 5.11.2003 of the 3rd respondent https://hcservices.ecourts.gov.in/hcservices/ seeking to demand duty of Rs.14,42,37,805/-[Rupees Fourteen Croresforty two lakhs thirty seven thousand eight hundred and five only]Writ Petition No.40904/2005 filed under Article 226 of theConstitution of India praying this Court to issue a writ ofprohibition, prohibiting the respondents 2 to 4 from proceeding withthe show cause notice No.3/2003 dated 24.9.2003 of the 3rd respondentseeking to demand duty of Rs.138,32,96,154/-[Rupees one hundredthirty eight Crores thirty two lakhs ninety six thousand one hundredand fifty four only]COMMON ORDER(COMMON ORDER THE COURT WAS MADE BY THE HONOURABLETHE CHIEF JUSTICE)Writ Petition No. 45294 of 2002 is filed by Madurai PowerCorporation (Pvt.) Limited. The other writ petitions are filed bydifferent petitioners. But, since the issues involved in all the writpetitions are identical all these writ petitions have been heardtogether and are being disposed of by this common order. 2. Madurai Power Corporation (Pvt.) Ltd., i.e., petitioner inW.P.No. 45294 of 2002 is engaged in generation of electricity throughits generating station situate at Paravai Village, Madurai. Thecompany requires Low Sulphur Heavy Stock (LSHS) for using the same asthe primary fuel in the generation of electricity. NotificationNo.3/2001 came to be issued under Section 5-A(1) of the CentralExcise Act, 1944 whereby Low Sulphur Heavy Stock (LSHS) and FurnaceOil (FO) were exempted from excise duty for the use of powergeneration by the electricity undertakings owned by or controlled bythe Central Government, or any State Government or any StateElectricity Board or any Local Authority or a person licensed underPart II of Indian Electricity Act, 1910, to supply electrical energyor a person who has obtained sanction under Section 28 of IndianElectricity Act, 1910, to engage in the business of supplyingelectrical energy, except those who produce electrical energy not forsale, but produce it for their own consumption. The petitionercompany applied for exemption from duty under the said Notificationand a Registration Certificate was issued by the Competent Authorityfor procurement of LSHS at concessional duty for generatingelectricity in favour of the petitioner vide Registration No.AACCM7661 CX M0001 (RC No.1/2001) dated 11.05.2001 and 18.5.2001. TheCompetent Authority thereafter issued Annexure-I certificate infavour of the petitioner allowing the petitioner to remove the goodsat concessional duty on execution of B-8 security bond and onfurnishing a bank guarantee. Based on this Annexure-I certificate,the petitioner has been procuring LSHS without payment of duty fromvarious installations of Indian Oil Corporation Limited. https://hcservices.ecourts.gov.in/hcservices/

3. A show cause notice dated 07.02.2002 was issued to thepetitioner company by the Assistant Commissioner of Central Excise,Madurai-I Division, Madurai asking the company to show cause as towhy Annexure-I certificate dated 30.08.2001 (as amended on30.12.2001) issued to the company for procurement of LSHS should notbe cancelled and as to why the exemption granted under NotificationNo.3/2001 should not be denied to the company as the company is noteligible for exemption under Notification No.3/2001. The petitionersubmitted a reply dated 18.02.2002 contending inter alia that as thepetitioner by virtue of Section 26-A of the Electricity Supply Act,1948 has satisfied all the conditions for issue of license underPart-II of the Indian Electricity Act, 1910, it must be deemed topossess a license under Part-II of the Indian Electricity Act, 1910without the same being issued and that the company being under thecontrol of the Tamil Nadu State Electricity Board is entitled toclaim exemption. A personal hearing was granted by the AssistantCommissioner of Central Excise wherein the petitioner company throughits counsel made submissions. However, no orders were passed inrespect of these proceedings initiated vide show cause notice dated2.7.2002. Thereafter, the Assistant Commissioner of Central Excise,Madurai-I Division, Madurai issued another notice dated 15.4.2002 onthe same ground requiring the petitioner company to show cause as towhy Annexure –I issued in terms of Notification No.3/2001 should notbe cancelled. The petitioner company filed reply to the said notice,and the said proceedings remain pending in the files of therespondent. The Deputy Commissioner of Central Excise issued yetanother show cause notice dated nil (received on 2.12.2002) callingupon the petitioner to show cause as to why the excise duty amountingto Rs.20,80,69,750/- (Rupees twenty crores eighty lakhs sixty ninethousand and seven hundred fifty only) payable on the LSHS procuredby the petitioner, as detailed in Annexure-B to show cause notice,should not be demanded from the petitioner company under the provisioto sub-section (1) of Section11-A of the Central Excise Act, 1944 forthe period from July 2001 to August 2002. The legality and proprietyof the show cause notice is questioned by the petitioner company inthe present writ petition on the ground that the same is arbitrary,illegal and wholly without jurisdiction. It is also alleged by thepetitioner that the notice has been issued in mala fide exercise ofpower only with a purpose of meeting the revenue target on the basisof totally absurd view of the legal position especially when nodecision has been taken on the earlier show cause notices issued tothe petitioner.4. W.P.Nos. 40902 of 2005, 40903 and 40904 of 2005 are filed bySamalpatti Power Company (Pvt) Limited and GMR Power Corporation(Pvt) Limited respectively. Both the companies are involved ingeneration of electricity and have been issued RegistrationCertificates for procurement of LSHS for generation of electricity on https://hcservices.ecourts.gov.in/hcservices/ concessional duty. Based on the Annexure-I certificate, the companieshave been procuring LSHS without payment duty from variousinstallations of Bharat Petroleum Corporation Limited. Similarnotices have been issued to the petitioners under provisio to sub-section (1) of Section 11-A of the Central Excise Act, 1944 to showcause as to why the excise duty payable on LSHS procured by thepetitioner, as detailed in Annexure-B to show cause notice, shouldnot be demanded from the petitioners. In W.P.No. 40902 of 2005, thepetitioner has challenged the show cause notice demanding payment ofexcise duty of Rs. 41,86, 70,124 (Rupees Forty one crores eighty sixlakhs seventy thousand and one hundred and twenty four only) for theperiod from December, 2000 to February, 2003. In W.P.Nos.40903 and40904 of 2005, the challenge is to show cause notices, one for theperiod from September, 1998 to September, 2002 for demanding paymentof excise duty of Rs. 14,42,37,805 (Rupees fourteen crores forty twolakhs thirty seven thousand and eight hundred and five only) andanother for the period from October, 2002 to February, 2003 fordemanding payment of excise duty of Rs. 14,42,37, 805 (Rupeesfourteen crores forty two lakhs thirty seven thousand and eighthundred and five only). 5. In order to appreciate the controversy raised, it would benecessary to take note of the factual background. In view of thelarge gap between the demand and supply position of electricity andState Electricity Boards not being able to meet the requirements ofindustries and general public, the Government of India inconsultation with the State Electricity Boards decided to allowIndependent Power Producers (IPPs for short) to enter powergeneration area under the control of the respective State ElectricityBoards and in this regard, to enter into Power Purchase Agreement(PPA for short) in terms of which supply the entire power sogenerated to the grids of State Electricity Boards. Under Section43-A of the Electricity Supply Act, 1948, the tariff structure of theIPPs is governed by the Central Government Notification. TheMinistry of Power, Government of India, accordingly issuedNotification dated 30.3.1992 stipulating various terms which wouldgovern the PPA to be entered into between power generating companiesand the State Electricity Boards. The PPAs entered into between thepetitioners and the Tamil Nadu State Electricity Board are as per theterms of the said Notification dated 30.03.1992 and the entireelectricity generated by the petitioners is to be supplied to theTamil Nadu State Electricity Board (for short TNSEB).6. The case of the petitioners is that the generation ofelectricity by the petitioner companies is fully controlled by theTNSEB, inasmuch as the petitioner companies cannot generateelectricity, except in terms of the PPAs and in terms of Section 18of the Electricity Supply Act, 1948, the statutory control regardingoperations of generating stations vests with the respective State https://hcservices.ecourts.gov.in/hcservices/ Electricity Boards. Even the location of the petitioner companies isstipulated by the TNSEB. The projects of the petitioner companieshave been approved by the TNSEB and in terms of the PPAs, theGovernment of Tamil Nadu has guaranteed to the companies the dues ofthe TNSEB under the said projects. The maintenance and unit wiseclosure of the units are controlled by the TNSEB and there is nopermission to the petitioners to generate and supply to others,except TNSEB. As per the PPAs at the expiry of the PPA period, thepetitioners’ generating companies shall be made over only to theTNSEB. The petitioners, therefore, contend that they are under thecontrol of the TNSEB and can legitimately claim exemption under therelevant notification. It is, further, contended by the petitionersthat by virtue of Section 26-A of the Electricity Supply Act, 1948they possess license under Part-II of the Indian Electricity Act,1910 and the same is a “deemed license”. It is, further, urged by thepetitioners that the respondents are attempting to deny the exemptionand when once the petitioner companies have been declared aslicensees by the Government of Tamil Nadu and the State ElectricityBoard, the excise authorities cannot treat it as a non-license anddeny the benefit. It is urged that none of the requirements ofproviso to Section 11-A are satisfied in the present case, and thus,the benefit of longer period of limitation under the proviso is notavailable to the Department. In any event, the recourse to Section11-A is not permissible unless Annexure-I certificate and theexemption are set aside and cancelled by the appropriate authority inaccordance with the provisions of the Central Excise Act. 7. The respondents have filed separate counters to the writpetitions. The sum and substance of the defence is that thepetitioner companies are allowed to remove the procured electricitywithout payment of duty based on the respective claims and the “bondundertakings” given by the petitioner companies to the effect thatthey will observe all the provisions of the Central Excise Rules andall such amendments there to as may be issued from time to time, sofar as they relate to the use of excisable goods for industrialpurpose without payment of the whole of duty, and the registrationCertificates have been issued to facilitate the smooth functioning ofthe power generating units of the petitioners. However, consequent tothe enquiries conducted and verifications made with reference to thestatus of the Units and the eligibility of the petitioner companiesto the claim for exemption under Notification No.3/2001 dated1.3.2001, as provided under Section 11 A of Central Excise Act, 1944and in consonance with the principles of natural justice, thepetitioners were issued with relevant notices to show cause as to whythe Registration Certificates issued to them under the Rules shouldnot be cancelled. The petitioner companies are not “deemed licensees”by virtue of Section 26-A of the Electricity Supply Act, 1948. On theother hand, a careful reading of the said section would disclose thatthe petitioner companies are exempted from obtaining license from the https://hcservices.ecourts.gov.in/hcservices/ authority appointed under Indian Electricity Act, 1910 by virtue ofhaving drawn the authority directly from another Act of theParliament namely Electricity Supply Act, 1948. Therefore, it cannotbe contended that the petitioner companies are "deemed licensees"under the State Electricity Board. It is, further, contended that thepetitioner companies are not owned by the Central Government/StateGovernment/ Local Authority/State Electricity Board. The petitionersare private limited companies. Neither the Central Government/StateGovernment nor any Local Authority or Tamil Nadu State ElectricityBoard has any shareholding in the petitioner companies and therefore,it does not have any control over the companies as such and in termsof PPAs the petitioners are being merely regulated by the TNSEB inrespect of power supply to TNSEB. It is contended that the word“controlled by” is preceded by the word “owned by” in the saidnotification and it has to be construed that the word “controlled”must have a similar meaning to that of the word “owned”. Hence, thepetitioner companies cannot be said to be controlled by TNSEB. On thequestion of limitation, it is submitted that the question whether theextended period of five years under the proviso to Section 11-A couldbe invoked has to be first determined by the authority and theauthority cannot be said to be totally lacking in jurisdiction evento embark upon the enquiry or investigation of this issue so as towarrant interference in writ jurisdiction even at show cause noticestage. It is submitted that the impugned notices have been issued interms of Section 11-A of the Act and there is no illegality inissuing the impugned notices. Hence, the writ petitions are notmaintainable. 8. Mr.Abishek Singhvi and Mr.Arvind P.Datar, learned seniorcounsel appearing for the respective writ petitioners submitted thatin all the cases permission to purchase goods without payment of dutywas granted after satisfaction of the competent authority and aspecific approval was granted under the Central Excise (Removal ofGoods at concessional rate of duty for manufacture of excisablegoods) Rules, 2001 (for short ‘2001 Rules’). Learned counselsubmitted that once the order is passed by the competent authorityunder 2001 Rules that could be rectified only through the appealmechanism provided under Section 35E(2) of the Central Excise Act andunless the order is set aside under Section 35E(2) no recovery couldbe made under Section 11-A of the Central Excise Act. According tothe learned counsel, Section 35E(2) covers situations where decisionsor orders are granted after application of mind and these will bevalid and binding till it is set aside in appeal. By invoking Section11-A, the department is attempting to do indirectly what it cannot dodirectly and since, the remedy under Section 35E is barred bylimitation, it now seeks to invoke the larger period underSection11A. 9. In reply, learned Additional Solicitor General appearing forthe respondents submitted that the impugned show cause notices are https://hcservices.ecourts.gov.in/hcservices/ perfectly in conformity with the provisions of Section 11-A of theCentral Excise Act and there is no illegality in the issue of suchshow cause notices and there is no need to refer to Section 35E(2) ofthe said Act. He submitted that after the amendment to Section 11-Awhich was necessitated on account of the judgment of the ConstitutionBench in Collector of Central Excise, Baroda vs Cotspun Limited, 1999(7) SCC 633 the power has been given to the authorities to issueshow cause notices, despite the fact that non-levy or non-payment orshort levy was short levy was on the basis of any approval,acceptance or assessment obviating the need to have the earlier orderset aside before issuing the show cause notices. Therefore, the termsof Section 11A, as it now stands, will be a complete answer to thepetitioners’ objection and the validity of Section 11A has not beenquestioned. He submitted that even otherwise Section 11A and Section35E (2) are two separate fields and are intended for differentpurposes. The object of Section 11A is to enable recovery of dues forthe period during which the assessee had cleared the goods on thebasis of the approved classification list/price list or on the basisof any approval/acceptance or assessment. As far as Annexure-Icertificate is concerned, he submitted that the authorities arerequired to find out as to whether the same is in the prescribedform, requisite bond had been given and declarations and undertakingswere made. The self-assessment procedure and the Annexure-Icertificate containing the undertakings to comply with the conditionsof exemption notification and bond taken towards the value of theduty for such compliance normally excludes the procedure for makingthe assessment by the authorities and in any event, according to him,as per the terms of Section 11, it is open to the authorities even inthe face of any approval, acceptance or assessment relating to therate of duty to issue the impugned show cause notice.10. It is well settled that under Article 226 of the Constitutionof India, this Court having regard to the facts of the case has adiscretion to entertain or not to entertain a writ petition. But, theCourt has imposed upon itself certain restrictions one of which isthat if an effective and efficacious remedy is available, this Courtwould not normally exercise its jurisdiction. But the alternativeremedy will not operate as a bar in at least three contingenciesnamely, where a writ petition has been filed for enforcement of anyof the fundamental rights or where there has been violation ofprinciples of natural justice or where the order or proceeding arewholly without jurisdiction or the vires of the Act is challenged(see Calcutta Discount Com. Ltd., vs ITO, Companies Distt.., AIR 1961SC 372), East India Commercial Company Limited, Calcutta vs Collectorof Customs, Calcutta, 1983 ELT 1342(SC), Whirpool Corporation vsRegistrar of Trade Marks, Mumbai and others, 1998 (8) SCC 1.). Thus,the question to be examined in these proceedings is as to whether theimpugned show cause notices issued under Section 11- A of the Act arewholly without jurisdiction. https://hcservices.ecourts.gov.in/hcservices/

11. The submission of the learned senior counsel appearing forthe petitioners is that once an order is passed by the adjudicatingauthority under 2001 Rules that could be rectified only through anappeal mechanism provided under Section 35E(2) of the Central ExciseAct, and it is not permissible for the department to invoke Section11-A. The amendment of Section 11-A does not contain an non-obstanteclause nor the amended Section 11A over-ride or nullify Section 35E.Section 35E has to be read harmoniously with Section 11A. If there isno case of approval, acceptance or assessment, the Central ExciseOfficer can straightaway invoke Section 11A and demand duty for oneyear/five years, as the case may be. Section 11A does not over rideSection 35E and both sections have to co-exist and read harmoniously.It is only where short-levy, short payment, non-levy or non-paymentoccurs either on account of the approvals relating to rate of duty orvaluation, demands can be sustained under Section 11A itself withouthaving recourse to Section 35E. So far as 2001 Rules are concerned,recovery can be made if there is misuse of goods and does not concernwith the person who has purchased the goods. 12. In Collector of Central Excise, Baroda vs Cotspun Limited(supra), the Constitution Bench of the Supreme Court held as follows:- (SCC page 637 paras.14 & 15)“ The levy of excise duty on the basis of anapproved classification list is the correct levy,at least until such time as to the correctness ofthe approval is questioned by the issuance to theassessee of a show-cause notice. It is only whenthe correctness of the approval is challengedthat an approved classification list ceases to besuch. The levy of excise duty on the basis of anapproved classification list is not a short levy.Differential duty cannot be recovered on theground that it is a short levy. Rule 10 has thenno application.13. Parliament has amended Section 11A of the Central Excise Actby Finance Act, 2000 (10of 2000) with effect from 17.11.1980, and theamended Section 11A reads as follows: -“ 11A. Recovery of duties not levied or not paidor short-levied or short paid or erroneouslyrefunded: (1) When any duty of excise has notbeen levied or paid or has been short levied orshort paid or erroneously refunded, whether ornot such non-levy or non-payment, short-levy orshort payment or erroneous refund, as the casemay be, was on the basis of any approval,acceptance or assessment relating to the rate of https://hcservices.ecourts.gov.in/hcservices/ duty on or valuation of excisable goods under anyother provisions of this Act or the rules madethereunder a Central Excise Officer may, withinone year from the relevant date, serve notice onthe person chargeable with the duty which has notbeen levied or paid or which has been short-levied or short-paid or to whom the refund haserroneously been made, requiring him to showcause why, he should not pay the amount specifiedin the notice:Provided that where any duty of excise hasnot been levied or paid or has been short-leviedor short paid or erroneously refunded by reasonof fraud, collusion or any willful mis-statementor suppression of facts, or contravention of anyof the provisions of this Act or of the rulesmade thereunder with an intent to evade paymentof duty, by such person or his agent, theprovisions of this sub-section shall have effectas if, for thw words “one year”, the words “fiveyears” were substituted. Explanation: Where the service of the notice isstayed by an order of a Court, the period of suchstay shall be excluded in computing the aforesaidperiod of one year or five years, as the case maybe.” 14. The Statement of Objects and Reasons for amending Section 11-A reads thus: -“Clause 106 seeks to validate certain action takenunder Section 11-A of the Central Excise Act withretrospective effect from 17-11-1980, so as toprescribe that the notices issued under the saidsection for non-recovery or short-recovery orerroneous refund of duties for a period of six monthsor five years in certain situations will prevailnotwithstanding any approval, acceptance orassessment of duty under the provisions of theCentral Excise Rules. The clause also seeks tovalidate actions taken in the past on this basis inconformity with the legislative intention. Thisamendment has become necessary to overcome certainjudicial pronouncements.” 15. Further, Section 110 of the Finance Act validating actionstaken under Section 11-A provides as under: “110. (1) Any notice issued or served on anyperson under the provisions of Section 11-A of theCentral Excise Act during the period commencing on https://hcservices.ecourts.gov.in/hcservices/ and from the 17th day of November, 1980 and endingon the date on which the Finance Act, 2000receives the assent of the President (hereinafterreferred to as the said period) demanding duty onaccount of non-payment, short payment, non-levy,short-levy or erroneous refund within a period ofsix months or five years, as the case may be, fromthe relevant date as defined in clause ( ii ) ofsub-section (3) of that section shall be deemed tobe and to always have been, for all purposes,validly and effectively issued or served underthat section, notwithstanding any approval,acceptance or assessment relating to the rate ofduty on or value of, the excisable goods by anyCentral Excise Officer under any other provisionof the Central Excise Act or the rules madethereunder. (2) Any action taken or anything done orpurporting to have been taken or done underSection 11-A of the Central Excise Act at any timeduring the said period shall be deemed to be andto have always been, for all purposes, as validlyand effectively taken or done as if sub-section(1) had been in force at all material times and,accordingly, notwithstanding anything contained inany judgment, decree or order of any court,tribunal or other authority,— ( a ) all duties of excise levied, assessed orcollected during the period specified in sub-section (1) on any excisable goods under theCentral Excise Act, shall be deemed to be andshall be deemed to always have been, as validlylevied, assessed or collected as if sub-section(1) had been in force at all material times; ( b ) no suit or other proceedings shall bemaintained or continued in any court, tribunal orother authority for the refund of, and noenforcement shall be made by any court of anydecree or order directing the refund of any suchduties of excise which have been collected andwhich would have been validly collected if sub-section (1) had been in force at all materialtimes; ( c ) recovery shall be made of all such duties ofexcise which have not been collected or, as thecase may be, which have been refunded but which https://hcservices.ecourts.gov.in/hcservices/ would have been collected or, as the case may be,would not have been refunded, if sub-section (1)had been in force at all material times. Explanation:—For the removal of doubts, it ishereby declared that no act or omission on thepart of any person shall be punishable as anoffence which would not have been so punishable ifthis section had not come into force.” 16. The scope of the amended Section 11A was considered by athree-Judge Bench of the Supreme Court in ITW Signode India Ltd vsCollector of Central Excise, 2003 (158) ELT 403 (SC). The Court heldas follows: -“48. The Statements of Objects and Reasons forenacting a statute can be read for a limited purpose.In Cotspun (supra) this Court held that Rule 10 doesnot deal with classification list or relate toreopening of the approved classification list.According to the Constitution Bench, the same isexclusively provided by Rule 173B.49. Section 11A deals with a case when interalia excise duty has been levided or has been, short-levied or short-paid. The word "such" occuringafter the words"whether or not" refers to non-levy,non-payment, short-levy or short-payment orerroneous refund. It is, therefore, not correct tocontend that the word "such" indicates only suchshort-levy which has been held to be non-existent inCotspun having regard to Rule 173B. Such short-levyor non-levy may be on the basis of any approval,acceptance or assessment relating to the rate of dutyon or valuation of excisable goods. Thus, anyapproval made in terms of Rule 10, in the event, anymistake therein is detected, would also come withinthe purview of the expression "such short-levy orshort-payment". Such notice is to be served on theperson chargeable with the duty which inter alia hasbeen short-levy or short-paid. 51.The procedure laid down under Rule 173B ofthe Rules has specifically been included in the Act.Furthermore, by reason of the amended Act a provisionhas been made for reopening the approvedclassification lists. It is a procedural provisionin terms whereof statutory authorities are requiredto determine as to whether the earlierclassification was correctly done or not. The said https://hcservices.ecourts.gov.in/hcservices/ authority upon giving an opportunity of hearing theparties may come to the conclusion that decision onthe approval granted need not be reopened and even ifthe same is reopened, the reasons therefor are to bestated. As the provision of Section 11A is arecovery provision as regards non-levy or non-paid orshort-levy or short-paid or erroneously refundedduties by reason of the said amendment the Parliamenthad merely provided that an approval on the basis ofa classification list inter alia in case of a short-levy can be recovered if a finding is arrived at thatthe goods had undergone a short-levy. For theaforementioned purpose, Clause 110 of the FinanceAct, validating actions taken under Section11A can betaken into consideration whereby and whereunder alegal friction is created.54. Cotspun (supra) was decided when the mattersrelating to classification, approval thereof as alsoshort-levy or upon detection of a mistake wheregoverned by the rules. Rule 10 and Rule 173B were tobe read in conjunction with each other and theConstitution Bench merely followed the said principleof interpretation of statute. A different situationhas arisen now having regard to the fact that notonly the substantive provision dealing with theconsequence of non-levy, non-payment or short-levy orshort-payment or erroneous refund but also has laiddown the procedure therefor.The Bench held that Section 11A, as amended, of the Act is a validpiece of legislation. 17. The question is whether by virtue of amendment to Section11A the procedure prescribed under Section 35E is rendered nugatory. 18. Section 35 of the Central Excise Act provides appealmechanism for the assessee. Section 35E confers power of Committeeof Chief Commissioner of Central Excise or Commissioner of CentralExcise to pass certain orders. Section 35 E(2) empowers theCommissioner of Central Excise to call for and examine the record ofany proceeding in which an adjudicating authority subordinate to himhas passed any decision or order under this Act for the purpose ofsatisfying himself as to the legality or propriety of any suchdecision or order and may by order, direct such authority to apply tothe Commissioner (Appeals) for the determination of such pointsarising out of the decision or order as may be specified by theCommissioner of Central Excise in his order. The question is whetherthe amending Section 11A has superseded the mechanism provided underSection35E giving power to the Competent Authority to reopen the https://hcservices.ecourts.gov.in/hcservices/ case. After amendment, recovery can be made even if there is non-levy, non-payment or short-levy or short-payment or erroneous refundon the basis of any approval, acceptance or assessment. The basicperiod is increased from six months to one year and the larger periodcontinues to be five years for fraud, suppression, wilfulmisstatement etc. The intention of the Legislature was that recoverycan be enforced for a period of one year or 5 years as the case maybe notwithstanding any approval, acceptance or assessment of dutyunder the provisions by the Assessing Officer. It is well settledthat the statute has to be read as a whole to find out the realintention of the Legislature. In SULTANA BEGUM VS PREM CHAND (1977(1) SCC373) two Judge Bench of the Supreme Court held as follows:“On a conspectus of the case-law indicatedabove, the following principles are clearlydiscernible:(1) It is the duty of the Courts to avoid ahead-on clash between two sections of the Act andto construe the provisions which appear to be inconflict with each other in such a manner as toharmonise them.(2) The provisions of one section of astatute cannot be used to defeat the otherprovisions unless the court, in spite of itsefforts, finds it impossible to effectreconciliation between them;(3) It has to be borne in mind by all thecourts all the time that when there are twoconflicting provisions in an Act, which cannot bereconciled with each other, they should be sointerpreted that, if possible, effect should begiven to both. This is the essence of the rule of"harmonious construction".(4) The courts have also to keep in mindthat an interpretation which reduces one of theprovisions a "dead letter"or "useless lumber"is not harmonious construction.(5) To harmonise is not to destroy anystatutory provision or to render it otiose"19. In COLLECTOR OF CENTRAL EXCISE, KANPUR VS FLOCK(INDIA) LTD( 2000(120) ELT 285(SC) the consequence of non-challenge of anappealable order passed under Central Excise and Salt Act, 1944arose for determination. The question in that case was where theAssistant Collector of Central Excise passes an order classifying aproduct under a particular tariff item and the said order thoughappealable is not challenged by the assessee in appeal, whether inthe application for refund of the duty paid the assessee is entitledto question the order of the Assistant Collector as erroneous. TheCourt held that Section 35A lays down the procedure to be followed https://hcservices.ecourts.gov.in/hcservices/ in disposal of the appeal and Section 35B(1)(b) makes an order passedby the Collector (Appeals) under Section 35A appealable to theappellate tribunal. It was held that right of appeal is creature ofthe statute and it is a substantive right. 20. This issue was again considered by another two Judge Bench inPriya Blue Industries Ltd., V. Commissioner of Customs (Preventive),2004 (172) ELT 145 (SC) wherein the Court following the decision inFlock (India)’s case observed that once an order of assessment ispassed the duty would be payable as per the order and unless theorder has been reviewed under Section 28 and/or modified in an appealthat order stands. So long as the order of assessment stands the dutywould be payable as per that order of assessment. A refund claim isnot an appeal proceeding. The officer considering a refund claimcannot sin in appeal over an assessment made by a competent officer.The officer considering the refund claim cannot also review anassessment order. 21. In ASIAN PAINTS (INDIA) LTD VS COLLECTOR OF CENTRALEXCISE,BOMBAY ( 2002 (9) SCC 515) the Supreme Court has observedthat Sections 35-E and 11-A operate in two different fields and areinvoked for different purposes. Different time limits are,therefore, set out therein. Therefore, the Court rejected thecontention that recovery of excise duty cannot be made pursuant to anappeal filed after invoking the provisions of Section 35-E, if thetime limit provided in Section 11-A has expired. It was observed thatto so read the provisions, would be to render Section 35-E virtuallyineffective, which would be impermissible. 22. In COMMERCIAL TAXATION OFFICER VS RAJASTHAN TAXCHEM LITD( 2007(2) SCALE 120), the respondent was engaged in the business ofmanufacture of polyester yarn and for the said purpose, it purchaseddiesel and used it for manufacturing electricity by D.G.-sets. Therespondent claimed a benefit under Section 10(1) of Rajasthan SalesTax Act, 1994 claiming that diesel purchased is a raw material forthe manufacture of the ultimate final product-polyester yarn.Under the notification issued under Section 10(1) of the said Act,purchase of raw material for manufacture of final product is entitledto a concessional rate of tax at 3% instead of the normal tax of 4%.The appellant contended that diesel is not a raw material for themanufacture of polyester yarn and therefore, eligible to tax at 4%.The Court noted that before purchasing any goods as raw material, itis necessary for the purchaser to apply to the Assessing Officerconcerned for issuance of registration certificate specificallymentioning such items as raw material. In that case the respondentaccordingly approached the appellant who granted the registrationcertificate after considering all the aspects of the matter andtaking a conscious decision. The Court observed that it is not thecase of the appellant that at the time of grant of such registrationcertificate all facts were not placed before the appellant and that https://hcservices.ecourts.gov.in/hcservices/ there is concealment of any material facts and in fact theregistration certificate so issued has been in effect during theconcerned period and has not been cancelled, revoked or modified. TheCourt referred to the decision of a Division Bench of Rajasthan HighCourt in COMMERCIAL TAXES OFFICER VS HINDUSTAN RADIATOR ( 1962 STC374) wherein the Division Bench held that “We agree with the viewtaken in Bowen Press case 2 that the entry in the registrationcertificate of the assessee dealer that certain articles are rawmaterial for the manufacture of goods is conclusive and in face ofthe entry in the registration certificate, it is not open to theassessing authority to contend that though a particular article hasbeen mentioned in the registration certificate as raw material, isnot in fact a raw material within the meaning of Section 2( mm ) ofthe Act and if any cancellation or modification is sought in respectof that entry, then, it is only by following the procedure laid downunder the Act and the Rules framed thereunder that entry can becancelled or modified 23. In our opinion, there is no nexus between Section 11A andSection 35E. Section 11A does not indicate that the legislatureintended to override Section 35E. Both sections have to be readharmoniously. In the present case, Annexure-I certificate has beenissued in favour of the petitioners from time to time on executing B-8 security bond and on furnishing a bank guarantee. The departmenthas to follow the procedure under Section 35E for setting aside theAnnexure-I certificate. Unless, the Annexure-I certificate iscancelled or rejected by the competent authority, by following theprocedure under Section 35E, it is not permissible for therespondents to invoke Section 11A of the Act. Therefore, we are ofthe considered opinion that the issuance of show cause notices arewithout jurisdiction and is liable to be struck down. 24. As regards, the issue of limitation, the question is whetherthe benefit of longer period of limitation under the proviso toSection 11A is available to the Department. In order to avail thebenefit of longer period of limitation, the department has toestablish willful suppression of fact. Proviso to Section 11A readsas under: -" Provided that where any duty of excise has notbeen levied or paid or has been short-levied orshort-paid erroneously refunded by reason offraud, collusion or any wilful mis-statement orsuppression of facts, or contravention of any ofthe provisions of this Act or of the rules madethereunder with intent to evade payment of duty,by such person or his agent, the provisions ofthis sub-section shall have effect , Collector ofCentral Excise five years" https://hcservices.ecourts.gov.in/hcservices/

25. From the admitted facts of this case, there can be no doubtthat none of the requirements of the above quoted proviso issatisfied in the present case to give to the Department the benefitof the larger period of limitation. The removal of the goods was inaccordance with the approved classification list and all the materialfacts were before the authorities concerned, procurement of goodswas done after obtaining exemption and as per the notification, allthe materials were placed before the authorities concerned. Thepetitioners are private generating companies and they applied to theauthorities disclosing all the facts with necessary particulars asprescribed in the form as per Rules. It is also seen from therecords that the Department was aware of the PPAs executed betweenthe petitioners and the Tamil Nadu State Electricity Board. Inthese circumstances, it is not possible to hold that there wassuppression of facts .26. In M/S PADMINI PRODUCTS LTD VS COLLECTOR OF CENTRALEXCISE, BANGALLORE ( 1989 (4) SCC 275) the Supreme Court observedthat something positive other than mere inaction or failure on thepart of the manufacturer or producer of conscious or deliberatewithholding of information when the manufacturer knew, is required tobe established before it is saddled with any liability beyond theperiod of limitation. Suppression of facts is not failure todisclose the legal consequences of a certain provision. The provisoto Section 11 A is clearly not attracted to the facts of the presentcase. It is settled law that mere change of opinion of the AssessingOfficer cannot give rise to a cause of action to invoke the benefitof the extended period of limitation under the proviso to Section 11-A of the Act. Therefore, the impugned notices are barred bylimitation.27. For the foregoing reasons, all the writ petitions are allowedand the impugned show cause notices are quashed. Learned AdditionalSolicitor General seeks leave to appeal to the Supreme Court whichrequest is granted. No costs. Consequently, connected M.Ps areclosed.Sd/-Asst. Registrar./true copy/Sub Asst. Registrar. Vbs/pv https://hcservices.ecourts.gov.in/hcservices/ To1. The Deputy Commissioner of Central Excise Bibikulam, Madurai I Division, Madurai-625 002.2. The Commissioner of Central Excise Bibikulam, Madurai-625 002.3. The Chief Commissioner of Central Excise 6/7, ATD Street, Race Course Road, Coimbatore 641 018.4. The Secretary to Government, Government of Tamil Nadu Energy Department, Fort St. George, Chennai-9.5. The Chairman, Tamil Nadu Electricity Board represented 800, Anna Salai, Chennai-2.6. Union of India represented by Ministry of Finance, Department of Revenue, North Block, New Delhi.7. The Assistant Commissioner of Central Excise Hosur I Division, No.29, Thalli Road, Hosur-635 126.8. The Additional Director General Directorate General of Central Excise Intelligence South Zonal Unit, C-3,"C" Wing Rajaji Bhavan Besant Nagar, Chennai-90.9. The Commissioner of Central Excise Chennai III Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.10 The Chief Commissioner of Central Excise Chennai III Commissionerate 26/1 (121) Mahatma Gandhi Road Nungambakkam, Chennai-34.11. The Deputy Commissioner of Central Excise, “B” Division, Chennai I Commissionerate No.317, Anna Salai, Chennai 18. https://hcservices.ecourts.gov.in/hcservices/

12. The Chief Commissioner of Central Excise, Chennai I Commissionerate, 26/1[121] Mahatma Gandhi Road, Chennai 34.+ 5 CCs to Mr.R.Venkatavaradan, Advocate SR Nos.49664, 49434+ 1 CC to the Government Pleader SR NO 49701+ 1 CC To Mr.S.N.kirubanandam, Advocate SR NO.49540+ 1 CC To M/s.P.Buvaneswari, SCCSG, SR NO.50253+ 1 CC To M/s.K.Ramakrishna Reddy, Advocate SR NO.49473W.P.Nos.45294 of 2002 and 40902 to 40904 of 2005bsk[co]gp/13.5.