# M/S. THE BOMBAY DYEING AND MFG. CO. LTD v. THE COMMISSIONER OF CENTRAL EXCISE

- **Citation:** [2019] 17 S.C.R. 1057
- **Court:** Supreme Court of India
- **Decided:** 2019-12-09
- **Case number:** Civil Appeal No. 5297 of 2008
- **Bench:** A. M. Khanwilkar, Dinesh Maheshwari
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-the-bombay-dyeing-and-mfg-co-ltd-v-the-commissioner-of-central-excise-33624
- **Pages:** 32

## Headnote

Central Excise Act, 1944 - s.11A - If applicable to cases of
provisional assessment - Appellant, engaged in manufacture of
cotton and man-made fabrics, filed writ petitions inter alia seeking
direction that excise duty is not payable in respect of yarn
processed further in it's composite mills in the manufacture of
fabrics - Also sought interim reliefs - Granted by High Court -
Appellant executed bonds in Form B-13 referable to r.9B, 1944
Rules and also furnished Bank guarantee (BG) for equivalent
amount of the differential duty in respect of the fabric in question
- Interim relief modified on 14.05.85 - Writ petitions disposed of
on 10/12.03.93 - Assistant Collector of Central Excise informed
the appellant that s.11A was not applicable to the facts of the
present case - Appellant asserted that the Show Cause Notice
u/s.11A was mandatory - Appellant was called upon to pay
Rs.35,92,234.67/- in view of order dtd. 14.05.85 failing which the
department was to take steps to enforce the BG - Personal hearing
given to the appellant - Demand of excise duty confirmed by
Assistant Collector of Excise - Appeals by the appellant before
appellate authorities were dismissed - High Court also dismissed
the appeal - Held: s.11A as applicable at the relevant time, would
apply to cases of recovery of duties not levied or not paid or shortlevied or short-paid etc. - Case at hand, however, would come
within the dispensation predicated by r.9B, 1944 Rules, which deals
with provisional assessment to duty - Appellant cannot be allowed
to approbate and reprobate- for inviting the High Court to pass
interim order stipulating that the appellant would execute bonds
in Form B-13 referable to r.9B of the Rules and continue to file
monthly RT-12 returns from time to time, on which endorsements
were made indicating that it is a case of provisional assessment -
Appellant cannot now be permitted to urge that it had not submitted
to the process of provisional assessment as such for lack of a
 [2019] 17 S.C.R. 1057
1057
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specific order of the concerned authority in that behalf - Stand
taken by the parties as recorded in order dtd. 10/12.03.93, is
limited to accepting the fact that if notice is required to be given,
it will be given and it will be open to the appellant to file response
and the authorities would take decision after giving opportunity
- Nothing more can be read into it - Said order in no way
extricated the appellant from the process to which it had voluntarily
submitted itself at its own volition, namely, u/r.9B of the Rules -
Thus, it was not a case of duty not levied or not paid or shortlevied or short-paid - It is certainly not an order to undo the
obligation accepted by voluntarily executing the bonds in the
prescribed format i.e. Form B-13 referable to r.9B- to treat the
process as provisional assessment until the disposal of the writ
petitions - Also, authorities later on passed the final order after
the disposal of the writ petitions - A priori, they did not violate any
direction contained in order dtd. 10/12.03.93 and for having
proceeded in accordance with law for the period between 25.05.81
to 13/14.05.85 - Order of the High Court is to be understood in
proper perspective and not to give undue advantage to or bestow
favour on the appellant and deprive the legitimate State exchequer
- Central Excise Rules, 1944 - r.9 r/w r.49 ; r.9B - Excise Duty.
Dismissing the appeal, the Court
HELD: 1.1 In the writ petitions, the appellant had asserted
that the fabric manufactured by the appellant was not amenable
to excise duty as it was not removed from the premises within
the meaning of Rules 9 and 49 of the Rules. Indisputably, the
purport of the stated Rules has been finally answered by
Supreme Court in M/s. J.K. Cotton Spinning and Weaving Mills
Ltd. & Anr. vs. Union of India & Ors. after resolving the
conflicting opinions of different High Courts including of the High
Court of Delhi.

## Text

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M/S. THE BOMBAY DYEING AND MFG. CO. LTD.
v.
THE COMMISSIONER OF CENTRAL EXCISE
(Civil Appeal No. 5297 of 2008)
DECEMBER 09, 2019
[A. M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Central Excise Act, 1944 - s.11A - If applicable to cases of
provisional assessment - Appellant, engaged in manufacture of
cotton and man-made fabrics, filed writ petitions inter alia seeking
direction that excise duty is not payable in respect of yarn
processed further in it's composite mills in the manufacture of
fabrics - Also sought interim reliefs - Granted by High Court -
Appellant executed bonds in Form B-13 referable to r.9B, 1944
Rules and also furnished Bank guarantee (BG) for equivalent
amount of the differential duty in respect of the fabric in question
- Interim relief modified on 14.05.85 - Writ petitions disposed of
on 10/12.03.93 - Assistant Collector of Central Excise informed
the appellant that s.11A was not applicable to the facts of the
present case - Appellant asserted that the Show Cause Notice
u/s.11A was mandatory - Appellant was called upon to pay
Rs.35,92,234.67/- in view of order dtd. 14.05.85 failing which the
department was to take steps to enforce the BG - Personal hearing
given to the appellant - Demand of excise duty confirmed by
Assistant Collector of Excise - Appeals by the appellant before
appellate authorities were dismissed - High Court also dismissed
the appeal - Held: s.11A as applicable at the relevant time, would
apply to cases of recovery of duties not levied or not paid or shortlevied or short-paid etc. - Case at hand, however, would come
within the dispensation predicated by r.9B, 1944 Rules, which deals
with provisional assessment to duty - Appellant cannot be allowed
to approbate and reprobate- for inviting the High Court to pass
interim order stipulating that the appellant would execute bonds
in Form B-13 referable to r.9B of the Rules and continue to file
monthly RT-12 returns from time to time, on which endorsements
were made indicating that it is a case of provisional assessment -
Appellant cannot now be permitted to urge that it had not submitted
to the process of provisional assessment as such for lack of a
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specific order of the concerned authority in that behalf - Stand
taken by the parties as recorded in order dtd. 10/12.03.93, is
limited to accepting the fact that if notice is required to be given,
it will be given and it will be open to the appellant to file response
and the authorities would take decision after giving opportunity
- Nothing more can be read into it - Said order in no way
extricated the appellant from the process to which it had voluntarily
submitted itself at its own volition, namely, u/r.9B of the Rules -
Thus, it was not a case of duty not levied or not paid or shortlevied or short-paid - It is certainly not an order to undo the
obligation accepted by voluntarily executing the bonds in the
prescribed format i.e. Form B-13 referable to r.9B- to treat the
process as provisional assessment until the disposal of the writ
petitions - Also, authorities later on passed the final order after
the disposal of the writ petitions - A priori, they did not violate any
direction contained in order dtd. 10/12.03.93 and for having
proceeded in accordance with law for the period between 25.05.81
to 13/14.05.85 - Order of the High Court is to be understood in
proper perspective and not to give undue advantage to or bestow
favour on the appellant and deprive the legitimate State exchequer
- Central Excise Rules, 1944 - r.9 r/w r.49 ; r.9B - Excise Duty.
Dismissing the appeal, the Court
HELD: 1.1 In the writ petitions, the appellant had asserted
that the fabric manufactured by the appellant was not amenable
to excise duty as it was not removed from the premises within
the meaning of Rules 9 and 49 of the Rules. Indisputably, the
purport of the stated Rules has been finally answered by
Supreme Court in M/s. J.K. Cotton Spinning and Weaving Mills
Ltd. & Anr. vs. Union of India & Ors. after resolving the
conflicting opinions of different High Courts including of the High
Court of Delhi. The stand taken by the appellant in the writ
petition has been negatived by this Court, in the said decision.
Thus, the question relating to liability to pay excise duty was
not and could not have been disputed by the appellant at least
after this decision. [Para 18] [1077-C-D]
1.2 The appellant voluntarily furnished requisite bonds in
Form B-13 referable to Rule 9B supported by bank guarantee
for equivalent amount of the differential duty. It is not an
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undertaking filed pursuant to the order of the Court. Concededly,
the order disposing of the writ petitions does not absolve the
appellant from the said bonds ; nor the endorsements made
thereon and on the monthly RT-12 returns, indicating that it was
a provisional assessment have been ordered to be effaced. The
order dated 10/12.3.1993 passed by the High Court of Delhi,
disposing of the writ petitions filed by the appellant in no way
extricate the appellant from the process to which the appellant
had voluntarily submitted itself at its own volition, namely, under
Rule 9B of the Rules. Thus, it was not a case of duty not levied
or not paid or short-levied or short-paid. The understanding of
the parties was absolutely clear that the appellant was liable to
pay excise duty, but for the exposition of the High Court of Delhi
in J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors.. The
appellant is obliged to fulfill its statutory obligations including
those arising from the undertaking/bonds in Form B-13 and
cannot resile from the process to which it had submitted itself
without any demur, namely under Rule 9B of the Rules. [Para
20] [1077-G-H; 1078-A-D]
J.K. Cotton Spinning & Weaving Mills Co. Ltd. & Ors.
v. Union of India & Ors. (1981) 8 ELT 887 (Del.) -
referred to.
1.3 In Rohit Mills Ltd., the Supreme Court dealt with two
situations referred to therein. First, where Show Cause Notices
under Section 11A of the Act have been served and the claim
does not cover any period beyond six months from the date of
receipt of the notices. Second, where there is dispute as to
whether the notice under Section 11A had been issued or not.
In the present case, none of the above is attracted ; and for the
same reason the exposition in paragraphs 30 to 33 of M/s. J.K.
Cotton Spinning and Weaving Mills Ltd. on which reliance has
been placed by the appellant, would be of no avail to the
appellant. Section 11A of the Act as applicable at the relevant
time, would apply to cases of recovery of duties not levied or
not paid or short-levied or short-paid etc. The case at hand,
however, would come within the dispensation predicated by Rule
9B of the Rules, which deals with provisional assessment to
duty.[Paras 20-22] [1078-D-G; 1082-D]
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE
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Rohit Mills Ltd. & Ors. v. Union of India & Ors.
(1988) 18 ECR 17 SC ; M/s. J.K. Cotton Spinning and
Weaving Mills Ltd. & Anr. v. Union of India & Ors.
(1987) (Supp) SCC 350 : [1988] 1 SCR 700 - held
inapplicable.
1.4 The stand taken by the parties as recorded in the order
dated 10/12.3.1993, is limited to accepting the fact that if notice
is required to be given, the same will be given and in that case
it will be open to the appellant to file response thereto and
further, the authorities would take decision after giving
opportunity to the assessee. Nothing more can be read into the
order dated 10/12.3.1993 passed by the High Court of Delhi. It
is certainly not an order to undo the obligation accepted by the
assessee by voluntarily executing the bonds in the prescribed
format, namely, Form B-13 referable to Rule 9B of the Rulesto treat the process as provisional assessment until the disposal
of the writ petitions. The authorities later on passed the final
order after the disposal of the writ petitions. A priori, the
authorities have not violated any stipulation or direction
contained in the order dated 10/12.3.1993 passed by the High
Court of Delhi and for having proceeded in accordance with law
for the period between 25.5.1981 to 13/14.5.1985. [Paras 24, 25]
[1084-B-D]
1.5 Similarly, the exposition of this Court in Metal Forgings
and Hindustan National Glass & Industries Ltd. to urge that
specific order was required to be passed before an assessment
is treated as a provisional assessment, will be of no avail
considering the execution of bonds in Form B-13 by the
appellant-assessee at its own volition, which is referable to
provisional assessment procedure under Rule 9B of the Rules.
Once the appellant submitted itself to that procedure without
any demur pending disposal of the writ petitions, it is not open
to later on resile therefrom. Permitting the assessee to do so,
would inevitably result in giving undue advantage and favour to
the assessee, who had invoked the remedy under Article 226
of the Constitution of India and sought interim protection on
offering to execute bonds in Form B-13 as is noted in the Prayer
clause (a) of the civil miscellaneous petition(s). For the same
reason, the circular issued by the Government of India pressed
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into service will be of no avail to the appellant.The appellant
cannot be allowed to approbate and reprobate - for inviting the
High Court of Delhi to pass interim order stipulating that the
appellant would execute bonds in Form B-13 referable to Rule
9B of the Rules and continue to file monthly RT-12 returns from
time to time, on which endorsements have been made indicating
that it is a case of provisional assessment. The appellant cannot
now be permitted to urge that it had not submitted to the process
of provisional assessment as such for lack of a specific order of
the concerned authority in that behalf. The order passed by the
High Court of Delhi on 10/12.3.1993, will have to be understood
in proper perspective and not to give undue advantage to or
bestow favour on the appellant and thereby deprive the
legitimate State exchequer. [Paras 31, 32] [1087-H; 1088-A-DF]
The Bhopal Sugar Industries Ltd. v. The Income Tax
Officer, Bhopal [1961] 1 SCR 474 ; R.B.F. Rig
Corporation, Mumbai v. Commissioner of Customs
(Imports), Mumbai (2011) 3 SCC 573 : [2011] 2 SCR
691 ; Metal Forgings & Anr. v. Union of India & Ors.
(2003) 2 SCC 36 ; Kalabharati Advertising v. Hemant
Vimalnath Narichania & Ors. (2010) 9 SCC 437 :
[2010] 10 SCR 971 ; Jagmittar Sain Bhagat & Ors. v.
Director, Health Services, Haryana & Ors. (2013) 10
SCC 136 : [2013] 8 SCR 77 - held inapplicable.
J.K. Cotton Spinning and Weaving Mills Co. Ltd. v.
Collector of Central Excise (1998) 3 SCC 540 : [1998]
2 SCR 102 ; The Jam Shri Ranjitsinghji Spg. & Wvg.
Mills Co. Ltd. & Anr. v. Union of India & Ors. (2007)
109 Bom LR 2167 ; Commissioner of Central Excise,
Calcutta v. Hindustan National Glass & Industries Ltd.
(2005) 3 SCC 489 : [2005] 2 SCR 744 ; Coastal
Gases and Chemicals Pvt. Ltd. v. Assistant Collector
of Central Excise, Visakhapatnam & Ors. (1997) 7
SCC 223 - referred to.
Case Law Reference
(1981) 8 ELT 887 (Del.)
referred to
Para 1
(1988) 18 ECR 17 SC
held inapplicable
Para 6
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE
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(2007) 109 Bom LR 2167
referred to
Para 11
[1961] 1 SCR 474
held inapplicable
Para 15
[2011] 2 SCR 691
held inapplicable
Para 15
(2003) 2 SCC 36
held inapplicable
Para 15
[1998] 2 SCR 102
referred to
Para 15
[2005] 2 SCR 744
referred to
Para 15
[2010] 10 SCR 971
held inapplicable
Para 15
[2013] 8 SCR 77
held inapplicable
Para 15
(1997) 7 SCC 223
referred to
Para 15
[1988] 1 SCR 700
held inapplicable
Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5297
of 2008.
From the Judgment and Order dated 13.09.2007 of the High
Court of Judicature at Bombay in Central Excise Appeal No. 237 of
2006.
Kavin Gulati, Sr. Adv., Mrs. Nandini Gore, Ms. Tahira
Karanjawala, Ms. Natasha Sahrawat, Arjun Sharma, Mrs. Manik
Karanjawala, Advs. for the Appellant.
A.K. Sanghi, Arijit Prasad, Sr. Advs., B.V. Balaram Das,
Mullapudi Ram Babu, Ms. Alka Agrawal, B. Krishna Prasad, Advs.
for the Respondent.
The Judgment of the Court was delivered by
A. M. KHANWILKAR, J.
1. This appeal is directed against the judgment and order dated
13.9.2007 passed by the High Court of Judicature at Bombay in Central
Excise Appeal No. 237 of 2006. Briefly stated, the appellant is engaged
in manufacture of cotton and man-made fabrics. According to the
appellant, the fabric manufactured by the appellant was not amenable
to excise duty since it was for captive consumption and not to be
removed for the purposes of sale or for consumption as envisaged under
Rule 9 read with Rule 49 of the Central Excise Rules, 1944 (for short,
'the Rules'). On this assertion and relying on the decision of the High
Court of Delhi in J.K. Cotton Spinning & Weaving Mills Co. Ltd. &
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Ors. vs. Union of India & Ors.1, the appellant filed two writ petitions
under Article 226 of the Constitution of India before the High Court of
Delhi being Civil Writ Petition Nos. 1234/1981 and 1235/1981. The
reliefs claimed in both petitions are identical except that they pertain to
separate periods. We may reproduce the reliefs claimed in Writ Petition
No. 1235/1981, for the sake of convenience. The same read thus: -
"(a) Issue a suitable writ, order or direction declaring that
duty of excise is not payable in respect of yarn (Cotton
and man made) processed further in the petitioner's
composite mills in the manufacture of fabrics:
(b) Issue writ of certiorari or any other suitable writ, order
or direction in the nature thereof quashing and setting
aside the decisions and directives of the Central Board
of Excise, respondent No.2, contained in circular letters
dated 6.10.1976 (Annexure A), 24.9.1980 (Annexure B)
and to quash the notices dated 23.4.1981 (Annexure C)
and all similar notices referred to in the statement
(Annexure D), dated 7.1.1981 (Annexure G) and dated
9.3.1981 (Annexure H):
(c) Issue a writ of mandamus or any other appropriate writ,
order or direction in the nature thereof, restraining the
respondents from levying or collecting duty of excise in
respect of yarn obtained by the petitioner at an
intermediary stage in its composite mill for further
processing in the manufacture of fabrics and to direct
the Board, respondent No.2, to cancel and/or withdraw
the decisions and directives contained in circular letters
dated 6.10.76 (Annexure A) and 24.9.80 (Annexure B)
and to direct respondent 3 and 4 to cancel and/or
withdraw the notice dated 23.4.1981 (Annexure C),
23.2.81 (Annexure G) and all similar notices referred
to in the statement (Annexure D), dated 7.1.1981
(Annexure G) and 9.3.1981 (Annexure H) and to
restrain defendants 3 and 4 from taking any steps or/
proceedings pursuant to and in accordance with the
aforesaid directives and notices.
1 1981 (8) ELT 887 (Del.)
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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(d) Issue a writ of prohibition or any other appropriate writ,
order or direction in the nature therefore, restraining the
respondent from collecting duty of excise on yarn
obtained by the petitioner in its composite mill which is
further processed in the manufacture of fabrics.
(e) Issue appropriate writ, order or direction directing the
respondent to refund the amount of duty illegally
recovered from the petitioner in respect of yarn obtained
in the petitioner's composite mills and further processed
in the manufacture of fabrics for the period commencing
from 15.7.1977 in respect of cellulosic spun yarn and
non-cellulosic spun yarn and from 17.3.1972 and in
respect of cotton yarn and from 15.7.77 upto the date
of disposal of the present writ petition and in particular
the amounts referred to in statement (annexure E)
together with interest at the rate of 12% p.a. and in the
alternative to direct Respondents No.3 and 4 to grant
the refund as per refund claims dated 13.5.1981 (colly.);
(f) In the alternative and without prejudice to the aforesaid
prayers, to issue a writ of mandamus or any other writ,
order or direction in the nature thereof direction the
respondent not to collect duty of excise in respect of
yarn upon sizing thereof processed in the manufacture
of fabrics.
(g) In the alternative and without prejudice to the aforesaid
prayers, issue writ of prohibition or any other writ, order
or direction in the nature thereof, restraining the
respondents from levying or collecting duty of excise in
respect of yarn processed within the petitioner's
composite mills on the basis of the weight of yarn after
sizing thereof.
(h) To pass such other and further orders as may be
deemed just and proper in the facts and circumstances
of this case; and
(i) Award costs of the writ petition in favour of the
petitioner."
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2. During the pendency of the aforementioned writ petitions, the
appellant filed Civil Miscellaneous Petition Nos. 1698/1981 and 1699/
1981 in the concerned writ petitions, praying for interim reliefs. For
the sake of convenience, the reliefs claimed in Civil Miscellaneous
Petition No. 1699/1981 filed in Writ Petition No. 1235/1981 are
reproduced below: -
"(a) grant order of stay permitting the petitioners forthwith
to further process and use cellulose and non-cellulosic
spun yarn, man-made filament yarn and cotton yarn in
its composite mill in the manufacture of man-made
fabric, cotton fabric and woollen fabric at nil rate of duty
and to clear cotton fabrics forthwith upon payment of
duty in respect of cotton fabric only (without payment
of duty on cotton yarn) upon the petitioners undertaking
to furnish the requisite bond in Form B-13 Rule 9B
supported by a bank guarantee for an amount equivalent
to 25% of the differential duty in respect of such yarn
within three weeks hereof and to restrain the respondent
3 to 4 from taking any action or proceedings pursuit to
the directives of the Board, respondent No.2 (Annexures
A and B to the writ petition) and notices dated 23.4.1981
(Annexure C to the writ petition), and all similar notices
referred to in the Statement (Annexure D), dated
7.1.1981 (Annexure G to the Writ Petition) and 9.3.1981
(Annexure H to the Writ Petition):
(b) grant exparte ad interim stay in terms of prayer (a)
hereinabove : and
(c) pass such other and further orders as may be deemed
just and proper."
3. The High Court of Delhi vide order dated 25.5.1981, while
issuing notice on the said miscellaneous petitions, granted interim relief
in terms of Prayer clause (a) reproduced above. In furtherance of the
said interim relief, the appellant furnished an undertaking dated 2/
10.3.1983 in order to secure the payment of differential tax to the
Department of Revenue, Ministry of Finance (for short, 'the
Department') in the event of dismissal of its writ petitions. The format
of that undertaking was in conformity with the prescribed undertaking
in Form B-13 referable to Rule 9B of the Rules, submitted by the
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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assessee in the case of provisional assessment. Later on, the High
Court modified the interim relief on 14.5.1985. The relevant portion of
the modified interim relief reads thus: -
"...there will be no stay with regard to future payments. During
the pendency of the Writ Petition, where will be stay in respect
of 50% of the disputed amount of duties claimed by the
respondents as arrears on the condition that the applicant furnish
Bank Guarantees or renew the Bank Guarantees already
furnished and keep it in force till the disposal of the writ petition.
With regard to the balance of 50% of the arrears of duty which
is disputed, 25% of it shall be paid within 3 months from today.
With regard to the remaining 25%, the parties will pay the same
in two equal installments of 121⁄2% each in every succeeding
quarter. The 25% payment which is the first payment shall be
made on or before 14th August, 1985, the second installment shall
be made on or before 14th November, 1985 and the third and
the last installment to complete the 50% will be paid on or before
20th February, 1986.
There arrears of disputed duty which are required to be paid is
only in respect of unsized yarn. Any duty claimed on sized yarn
will not be paid by virtue of this order.
There will be no duty payable on the sized yarn even for future
till disposal of the writ petition.
If any payments have been made through disputed, the same
would be adjusted in accordance with what is provided in the
order passed by us today......"
4. Pursuant to the modified interim relief, the appellant deposited
50% of its liability towards central excise duty in installments and
continued to make future payments. The writ petitions were eventually
disposed of on 10/12.3.1993 in the following terms: -
"Counsel for the parties are agreed that this case is covered by
the orders and directions issued by the Supreme Court in Civil
Miscellaneous Petitions No.8869 of 1988 and others in Civil
Appeals Nos.323 of 1984 and others in Rohit Mills Ltd. v. Union
of India, dated 28th April, 1988 and it will be open to the petitioner
to raise such other contention available to it before the adjudicating
authority in response to the show-cause notices.
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Accordingly, we dispose of the writ petition in terms of the
aforesaid orders of the Supreme Court, which should be read as
part of our order. No order as to costs."
5. Consequent to the disposal of the writ petitions, the Assistant
Collector of Central Excise vide letter dated 26.3.1993 addressed to
the appellant, informed the appellant that Section 11A of the Central
Excise Act, 1944 (for short, 'the Act') was not applicable to the facts
of the present case. For, the amount was secured by the bank
guarantee furnished by the assessee in terms of the interim order passed
by the High Court of Delhi. Yet an opportunity was offered to the
appellant to send its response. The said letter of the Assistant Collector
reads as follows: -
"OFFICE OF THE ASSTT. COLLECTOR OF CENTRAL
EXCISE: DIVISION F-I 2ND FLOOR, MADHU INDUS
ESTATE: P.B. MARG, WORLI, BOMBAY-13
F.No.FI/FI/V(18)-3/81/1735 Bombay, the 26th March, 1993
M/s. Bombay Dyeing & Manufacturing Co. Ltd.,
(spring Mills),
G.D. Ambedkar Road,
Bombay-14.
Gentlemen,
Sub
Delhi High Court CW.P. No.1235/81
 M/s. Bombay Dyeing & Mfg. Co. Ltd.
Versus
 Union of India and OTHERS
Please refer to various correspondences exchanged on the above
said state subject.
I have been directed to inform you that the aforesaid case was
listed on 12.3.93 before Hon'ble the Chief Justice and Hon'ble
Mr. Justice Anil Dev Singh, Delhi High Court, New Delhi.
The aforesaid case is decided in view of the orders passed by
the Supreme Court of India in the case of M/s. Rohit Mills Ltd. (copy
attached herewith for your information and for further action please).
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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Before complying the aforesaid orders of the Supreme Court of
India in case of M/s. Rohit Mills Ltd., on which case the Delhi
High Court has disposed of the instant writ petition, this office
would like to bring to your notice as under:
'As regards applicability of Section 11A and encashment of Bank
Guarantee, it is pertinent to refer to the Hon'ble Supreme Court's
order in Writ Petition No.848 of 1984 filed by M/s. Bhilwara
Processor Ltd. and others, wherein the issue was in dispute i.e.,
whether department can enforce Bank Guarantees executed in
terms of Court's order without issuing Show Cause cum Demand
Notice under section 11A. In the above case, also, an interim
order was passed on 20.2.84 by the Hon'ble Supreme Court of
India restraining the department from levying and recovering the
disputed portion of the duty of excise on the condition that
petitioners of the case shall furnish the bank guarantee. The Bank
guarantee was furnished and the writ petition was dismissed by
the Hon'ble Supreme Court of India on 4.11.88. Thereafter the
department asked the petitioners to take steps to enforce the
Bank guarantee. Aggrieved with this action, they filed a
Miscellaneous Writ Petition before Supreme Court of India stating
that since no Show Cause cum Demand Notice was issued under
Section 11A, no recovery beyond the period of 6 months can be
effected. The above petition of M/s. Bhilwara Processors Ltd.
was dismissed by Hon'ble Supreme Court of India by its order
dated 29.11.88 (reported in Judgment Today Vol. (4) November
Part 1988 (83) 330).
The similar order was passed by Rajasthan High Court vide order
dt. 9.12.1988 in C.W.P. No.4441/88. In this case under similar
circumstances, M/s. Modern Suitings also made the same
grievances before Rajasthan High Court. The Hon'ble Rajasthan
High Court placing reliance on the order dt. 29.11.1988 passed
by the Hon'ble Supreme Court of India in the case of
M/s. Bhilwara Processors Ltd. observed as under:-
"Be that as it may, we are of the opinion that once orders of a
Court, stay order is sought in respect of recovery of Excise Duty
or any other duty for that matter and the stay order is conditional,
on furnishing Bank Guarantee, if ultimately the writ petition is
dismissed and stay order is vacated, the Bank guarantee can
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become encashable immediately. Therefore, we need not go into
this question as to whether Section 11A is or is not attracted,
we are of the opinion that because the petitioner furnished the
Bank guarantee, makes secured a stay order which was
conditional as a result of which levy and recovery was stayed
once writ petition has been dismissed and the stay order has been
dismissed ....... The Bank guarantee has become encashable,
neither it will be proper nor equitable for this Court to say or
make an order that the Bank guarantee should not be
encashed.............."
With the above observation, we dismiss the writ petition with no
order as to cost."
In view of the facts of the case discussed above, the Section
11A is not applicable in the instant case since the amount was
secured by the Bank guarantee furnished by the assessee in
terms of the stay order of Hon'ble Delhi High Court."
However, complying the orders given by the Supreme Court of
India in case of M/s. Rohit Mills Ltd., this office would like to
know whether petitioner desires Show Cause cum Demand
Notice to be issued by the respondent i.e., Union of India, for
the recovery of outstanding dues. If yes, the same may be
confirmed by 31.3.93 so as to enable this office to take the action
as directed by the Hon'ble Supreme Court of India in case of
M/s. Rohit Mills Ltd. However, it will be nothing but the
postponement of payment of Central Excise Duty, which is
legitimate right of the Union of India, which was deprived by you
by filing the instant writ petition, since 1981. If no, the consent
letter should be submitted to this office for encashment of Bank
guarantees, as early as possible.
Your early reply is awaited in this matter.
Yours faithfully,
Sd/- Illegible
(C.K. NIRBHAVANE)
ASSISTANT COLLECTOR
CENTRAL EXCISE DN. FI
BOMBAY-I"
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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SUPREME COURT REPORTS
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6. The appellant in its response sent on 11.5.1993, asserted that
the Show Cause Notice under Section 11A of the Act was mandatory
and moreso in light of the decision of this Court dated 28.4.1988 in Rohit
Mills Ltd. & Ors. vs. Union of India & Ors.2 The said
communication reads thus: -
"OUR RE. NO. SM/E-1
11th May, 1993
The Assistant Collector of Central Excise,
Division F-1, IInd Floor,
Madhu Industrial Estate,
P.B. Marg, Worli,
Bombay-400013.
Dear Sir,
Your Ref. F.No.IV/CL-VI/30-84/FI/93/2295
Dated 2nd April, 1993.
Sub:
Delhi High Court
Writ Petition No.1235/1981
Bombay Dyeing & Mfg. Co. Ltd.
(Spring Mill Unit) Vs. UOI & Ors.
1. This has reference to your above letter whereby you have
intimated the date of hearing for finalizing the classification list
in respect of cotton yarn and man made Yarn. Your attention is
also drawn to your earlier letter F.No.FI/PI/V(18)-3/81/1705 dated
26.3.1993, whereby you desired us to intimate whether your would
like a show cause notice to be issued u/s 11A of the Act.
2. We would draw your kind attention to the order passed by
the Hon'ble High Court of Delhi dated 10.3.1993 whereby the
above writ petition was disposed of on the basis of the order
passed by the Hon'ble Supreme Court in the case of Rohit Mills
Ltd. For your ready reference, we enclose herewith a copy of
the aforesaid order passed in the case of Rohit Mills.
3. The directions issued by the Hon'ble High Court in the above
matter on the basis of the directions issued as in the case of Rohit
Mills contemplate that adjudication has now to be done pursuant
to a Notice under Section 11A of the Act. It is specifically
2 1988 (18) ECR 17 SC
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directed that in cases where such notice has been not issued,
the Assistant Collector may issue such notice which should not
go beyond 6 months. In the present case, no show cause notice
under Section 11A has been issued and as such, as per the
direction of the Hon'ble Supreme Court in the case of Rohit Mills
Ltd., which direction also forms part of the order of the Hon'ble
High Court disposing also forms part of the order of the Hon'ble
High Court disposing of the above writ petition, your are now
required to issue a Notice under Section 11A of the Act. On
receiving such a notice, we shall raise our objections thereto and
we reserve our right to do so.
4. You have kindly intimated that the hearing in the above matter
is now fixed for 11.5.1993. We may mention here that before
any hearing is taken up a show cause notice under Section 11A
will have to be first issued and an opportunity be given to us to
reply to the Notice. In this connection we may also mention that
as per the orders of the Hon'ble High Court dated 10.3.1993,
we have been given specific liberty to raise such other
contentions as are available, before the adjudicating authority in
respect to the show cause notice. We reserve our right to raise
such contention as may be advised, in reply to the said show
cause notice.
5. Although our contentions would be raised after the show cause
notice under Section 11A is issued, we may clarify here that, in
any event, no duty of excise is payable in respect of yarn after
it is sized. In other words, duty of excise is not payable on the
basis of the weight of the sized yarn. This has been clearly held
in several decisions including the decision of the Hon'ble Supreme
Court in the case of J.K. Cotton Spg. & Wvg. Mills Co. Ltd.
and another vs. UOI (1987 (32) ELT 234). The attempt earlier
made to levy duty of excise at the stage after yarn is sized, is
patently illegal in view of the aforesaid decisions. The reference
in your letter to provisional assessment is wholly irrelevant. In
the first place, as per the directions of the Hon'ble High Court,
adjudication has now to be done on the basis of show cause
notice under Section 11A of the Act. Secondly for the reason
that the provisionally if any, was in relation to dutiablity of yarn
at the stage and the condition after sizing and did not relate to
unsized yarn. In any event, the assessment has now to be done
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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in terms of the directions of the Hon'ble High Court, after issuing
a show cause notice under Section 11A of the Act. The
adjudication can only be gone in accordance with the directions
of the Hon'ble High Court.
6. We may mention here that although our contentions would be
raised as and when a show cause notice is received, we may
indicate that in any event, no duty of excise is payable in respect
of the yarn obtained at the intermediate stage which is further
processed within the factory, since it is not obtained at that stage
in a marketable condition. We have already paid certain amounts
towards duty of excise in respect of such yarn under protest
during the pendency of the writ petition and upon decision of this
issue, we would be entitled to claim refund thereof.
7. Further contentions would be taken in reply to the show cause
notice, which may be issued as per the directions of the Hon'ble
Supreme Court. Under these circumstances, we would request
you to first issue a show cause notice under Section 11A of the
Act and then give us an opportunity to file a reply thereto and a
hearing in that respect. The hearing already fixed for 11th May,
1993 may kindly be adjourned since the matter cannot be
adjudicated without issuing a show cause notice under Section
11A of the Act as per the directions of the Hon'ble High Court.
Yours faithfully,
Sd/- Illegible
[K.R. NAYAK]
MANAGER"
7. The Assistant Collector of Excise vide order-in-original dated
19.8.1993 noted that the appellant had filed classified lists for its products
which had been approved provisionally and the appellant had been
directed to pay excise duty. He also noted the objection of the appellant
about non-issue of a Show Cause Notice under Section 11A of the Act.
However, he proceeded to finalize the classification lists by noting that
the classification lists filed earlier by the assessee were treated as
provisional.
8. In furtherance of the said order of the Assistant Collector, the
Range Superintendent sent a letter dated 27.9.1993 to the appellant
stating that all the RT-12 returns for the period of May, 1981 to May,
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1985 for the items 18A, 18-III and 18E which had been assessed
provisionally by the then Range Superintendent are assessed finally. By
the same communication, he called upon the appellant to pay an amount
of Rs.35,92,234.67 (Rupees thirty five lakhs ninety two thousand two
hundred thirty four and sixty seven paise only) pursuant to the order
dated 14.5.1985 passed by the High Court of Delhi. This was followed
by a notice dated 7.10.1993 from the Assistant Collector of Central
Excise addressed to the appellant reiterating the position that pursuant
to the interim order passed by the High Court of Delhi, provisional
assessments had been made and necessary endorsements to that effect
were made on the classification lists, monthly RT-12 returns, etc.
Further, the appellant was obliged to make good the arrears of disputed
duty amounting to Rs.35,96,235/- (Rupees thirty five lakhs ninety six
thousand two hundred thirty five only) for the period starting from
25.5.1981 to 13.5.1985, which had become payable. The appellant was
called upon to pay the said amount within ten days, failing which the
Department would take necessary steps to enforce the bank guarantees
and recover the dues from the appellant.
9. Subsequent to the above notice, an opportunity of personal
hearing was also given to the appellant on 19/20.10.1993 with respect
to the recovery of dues. It appears that during the hearing, the appellant
reiterated its stand that the Show Cause Notice under Section 11A of
the Act was essential, including in terms of the order of the High Court
of Delhi, dated 10/12.3.1993. The Assistant Collector of Excise,
however, vide order-in-original dated 7/15.12.1993, confirmed the
demand of excise duty. He held that in the present case, the duty liability
itself was in dispute and the assessment could be made final only when
the question of duty liability was decided by the High Court of Delhi,
and once that issue was resolved, the question of issuing notice under
Section 11A of the Act does not arise, especially when the appellant
itself had voluntarily executed B-13 bonds and the assessments were
treated as provisional, as evinced from the endorsements on monthly
RT-12 returns in that behalf.
10. The appellant carried the matter in appeal before the
Commissioner of Central Excise (Appeals), who in turn, rejected the
appeal vide order-in-appeal dated 31.5.2000. The Commissioner of
Central Excise (Appeals) also upheld the demand for excise duty and
rejected the plea taken by the appellant regarding the necessity to issue
a Show Cause Notice under Section 11A of the Act.
M/S. THE BOMBAY DYEING AND MFG. CO. LTD. v. THE
COMMISSIONER OF CENTRAL EXCISE [A. M. KHANWILKAR, J.]
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11. The appellant then unsuccessfully carried the matter in appeal
being Appeal No. E/2747/2000 before the Customs, Excise and Service
Tax Appellate Tribunal (for short, 'the CESTAT'). That appeal was
dismissed on 22.2.2006. Against that decision, the appellant filed
Central Excise Appeal No. 237/2006 before the High Court of
Judicature at Bombay under Section 35-G of the Act, which was
eventually dismissed on 13.9.2007 following the decision of the Division
Bench of the same High Court dated 7.9.2007 in First Appeal No. 2597/
2005 titled as The Jam Shri Ranjitsinghji Spg. & Wvg. Mills Co.
Ltd. & Anr. vs. Union of India & Ors.3.
12. To complete the narration of facts, it is relevant to mention
that the relied upon decision was assailed before this Court in Civil
Appeal No. 1551/2008 by the assessee therein, which was summarily
dismissed on 7.3.2008, presumably at the admission stage.
13. The sum and substance of the view taken in the relied upon
judgment, which involved similar facts, is that in a case such as this
where B-13 bonds have been executed by the assessee and clear
endorsement is made on the monthly RT-12 returns that it is a case of
provisional assessment, the question of issuing a Show Cause Notice
under Section 11A of the Act does not arise. The assessee in that case
had relied on the decisions of this Court, which have been distinguished
as inapplicable to the fact situation of the case under consideration. We
shall advert to the detailed reasons noted in this decision a little later.
14. We may now advert to the issues raised by the appellant in
the present appeal. According to the appellant, primarily two questions
arise for consideration, which are as follows: -
"1) Whether the demand for Central Excise for the period
25.05.1981 to 14.05.1985, as raised by the department, is barred
by limitation?
This question in turn is dependent upon the issue whether the
assessment in this case could be said to be provisional
assessment.
2) Could the respondent authorities have ignored the binding
directions of the Hon'ble High Court of Delhi vide its Order dated
12.03.1993 to hold that no Show Cause Notice (SCN) was
3 2007 (109) Bom LR 2167
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required in the present case as the assessments in question were
provisional?"
15. It is urged that the purport of the order dated 10/12.3.1993
passed by the High Court of Delhi, while disposing of the writ petitions
filed by the appellant clearly obliged the Department to issue a Show
Cause Notice under Section 11A of the Act and to proceed against the
appellant only in the manner permissible under the said provision in light
of the dictum of this Court in Rohit Mills Ltd. (supra). It is urged
that the dictum in Rohit Mills Ltd. (supra) formed part of the subject
order of the High Court of Delhi and for which reason, it was not open
to the Department to take a contrary stand.