MR. JUSTICE (RETD.) ABDUL MAJEED TIWANA, CHAIRMAN.-(1). This appeal arose out of the order, dated 30.4.1998 (dispatched on 2.5.1998) by which the learned Collector (Appeals), Lahore, setting aside the order, dated 7.3.98, passed by the Additional Collector, Central Excise, Faisalabad, remanded the case to him for de novo consideration in order to reverify and examine the relevant record of the appellants to ascertain the fact: whether or not the Collector of Customs and Central Excise, Faisalabad, was misled by his staff or by the appellants before granting permission to the appellants for the clearance of excess quantity of sugar produced by them during the crushing season of 1990-91 at the concessionary rate of 1.08 per kg central excise duty? While passing this order of remand, the learned Collector (Appeals), Lahore, applied it also to similar appeals of Facto Sugar Mills, Hussain Sugar Mills and Chishtia Sugar Mills. The Additional Collector, Central Excise, Faisalabad, had vide order, dated 9.3.98, directed the appellants to pay short-levied central excise duty amounting to Rs. 81,58,536/- and a penalty of Rs. 50000/-.
2. Facts leading up to this appeal are that the appellants herein had, during the crushing season of 1990-91, produced in this unit 7624.800 metric tons of excess quantity of sugar as compared to their production of sugar during the preceding year 1989-90 and sought its clearance at the concessionary rate of Rs. 1.08 per k.g. Of central excise duty under SRO 555(I)/79, dated 28.6.79, as amended by SRO 505(I)/90, dated 7.6.90. Their claim of Rs. 8158536/- was scrutinized by the Assistant Collector, Central Excise, Sargodha and on his report it was sanctioned by the Collector of Customs and Central Excise, Multan, vide his order, dated 1.9.1991. The appellants availed of this concession and the matter ended.
3. As it appears from the record, Superintendent, Central Excise, Jhang Circle, Jhang, pursuant to some information, visited the appellants' mills some time during the year, 1997 and on the inspection of their record found that during the crushing season of the year 1989-90 the unit had actually worked for 157 days instead of the minimum statutory duration of 160 days and for that reason the appellants could not available of concessionary rate of central excise duty. He, therefore, drew up a contravention report and sent it up to the Additional Collector, Central Excise, Faisalabad, for further legal action. The Additional Collector, vide show cause notice, dated 20.5.1997, alleging violation of the aforesaid notifications, demanded from the appellants a sum of Rs. 8158536/- as short-paid central excise duty recoverable under rule 10 of the Central Excise Rules, 1944 and proposed the penal action under rule 210 thereof.
4. The appellants contested the show cause notice on various grounds, including limitation, retrospective operation of the amending notifications providing for minimum duration of crushing season in terms of specified number of days and jurisdictional incompetence of the Superintendent, Central Excise and Additional Collector, Central Excise, Faisalabad to reopen the case finalized by the Collector, Customs and Central Excise, Multan. In short, the appellants denied their liability and asserted the correctness of the concession availed of by them.
5. The adjudicating officer passed the Order-in-Original, dated 9.3.98, without recording his findings on the question of show cause notice being time-barred and without dealing with question of retrospectivity or otherwise of amending notifications namely, SRO 823(I)/91, dated 20.8.91 and SRO 1264(I)/91, dated 23.12.99 which added 'Explanation' to clause (g) of item of SRO 555(I)/79 dated 28.6.79, to elucidate 'full crushing seasons' on the basis of appellants' themselves in their record having mentioned 157 days as duration of crushing season instead of the prescribed minimum' 160 days. Aggrieved by it, the appellants filed an appeal which the Collector (Appeals), Lahore, disposed of by the impugned. Order, giving rise to the appeal in hand.
6. We have heard the learned counsel representing the appellants in different sets. Of appeals involving common questions of law and facts as also the learned departmental representative assisted by his team and perused the record with their assistance.
7. On the question . Of limitation, the contention of the appellants' counsel was that Collector Customs and Central Excise, Multan, had as for back as 1991 allowed the appellants to clear of 7624.800 M.T. Of excess quantity of sugar at the concessionary rates of duty produced by them during in the crushing season of 1990-91 as compared to their production during the crushing season of the preceding year and the department raised the impugned demand in the show cause notice, dated 20.5.1997, after such a long time while the period prescribed in rule 10(1) of 1944 Rules, which could possibly be applied, was only one year and as such the show cause notice was hopelessly time-barred. Learned D.R. Had tried to bring the case under rule 10(2) but it had no relevancy. In the show cause notice only rule 10 was mentioned and in the absence of any specific allegation with reference to any sub-rale, only sub-rale (1) of rale 10 could be relevant which prescribed a period of one year. This period, if counted after 1991, had elapsed long ago and the show cause notice was drastically time-barred. Both the fora below were fully conscience of this lacuna and purposely avoided to record a finding thereon.
8. The next argument of the learned counsel for the entire lot of appellants in different appeals was that during the crashing season 1990-91 notification SRO 555(I)/79, dated 28.6.79 as amended by SRO 505(I)/90, dated 7.6.1990 was holding the field and clause (g) so added did not specify the duration of 'full crushing season' in the preceding year and the condition of 160 days to signify full crushing season, as added by SRO 823(I)/91, dated 20.8.91 and SRO 1264(I)/91, dated 23.12.91, had no retrospective effect to specify the duration of full crushing season in 1989-90 at 160 days. Learned D.R, on the contrary, submitted that SRO 823(I)/91, dated 20.8.91, had added 'Explanation' to clause
(g) in SRO 555(I)/79, dated 28.6.79, with retrospective effect as it included deeming clause and as such the appellants could claim clearance of sugar at concessionary rate of Rs. 1.08 per k.g. Only if they had operated the factory during 1989-90 for full crushing season of at-least 160 days, but they operated only for 157 days as per their own record.
9. We find a good deal of substance in the submissions of appellants' counsel. There was no definition or explanation of the phrase 'full crushing season' figuring in clause (g) which was added in SRO 555(I)/79 dated 28.6.79 by SRO 505(I)/90, dated 7.6.90, and the appellants, while operating their unit in full swing during crushing season of 1990-91 to avail of incentive, were not aware of its implication as it was inserted subsequently by SRO 823(I)/91, dated 20.8.91 with retrospective effect by virtue of deeming clause, which remained in force till 23.12.91 when it was substituted by SRO 1264(I)/91 without deeming clause. Thus the condition of 160 days of full crushing season in the preceding year in the Punjab during 1989-90 remained in force from 20.8.1991 to 23.12.91 and since it created confusion, it was withdrawn perhaps for that reason. But if at all it had any adverse effect on the entitlement of the appellants, it stood nullified in view of our findings on the point of limitation.
10. The third and the last contention of the appellants' counsel was that the Additional Collector, Central Excise, Faisalabad, on the contravention report of the Superintendent, Central Excise, Jhang, could not reopen the appellants' case finalized by the Collector, Customs and Central Excise, Multan many years before. In our opinion, there could be no insurmountable bar against the reopening of the case if the national exchequer had been deprived of its lawful share of revenue by any of the reasons stated in rule 10 of the Central Excise Rules, 1944, but before taking that step of drastic nature, the matter needed to be examined thoroughly to avoid any possibility of causing double jeopardy to a tax payer. The safeguards in this respect are in-built in rule 10 ibid in the form of prescribed period of limitation depending upon the severity of each event. To ensure that one party does not take undue advantage over the other (i.e. The state over the tax-payer and vice versa) the propriety demands and the chain of command desires that before reopening a finalized Matter, it should be properly scrutinized at least by the authority equal to or higher than the one which previously finalized it.
11. In the instant case there was no justification for the Superintendent to dig out an old settled matter after the lapse of many years, nor for the Additional Collector to hurriedly raise the demand of a huge sum against the appellants and regrill them For years by giving start to a reckless litigation between the state functionaries and groups of private citizen engaged in lawful .Trade and business, especially when they had not done anything illegal and simply wanted to enjoy the fruits of their own efforts of increased production of sugar in the country. By their thoughtless acts the aforesaid two officers involved almost the entire sugar industry in the protracted and useless litigation wasting precious public time and money of the official agencies, including this Tribunal, as also the time and money of business community engaged in a commercial activity so important for the revival of sagging economy of the country. It is high time that the CBR take necessary measures to contain and restrain then- adventurous officials like the two mentioned above, especially when the limitation had effectively intervened.
12. In view of the above, we accept the appeal and not only set aside the remand order dated 30.4.1998, passed by the learned Collector (Appeals) Lahore but also the Order-in-Original dated 9.3.98 passed by the Additional Collector, Central Excise, Faisalabad.
13. This judgment shall also apply to the following appeals involving identical or similar questions of facts and law and for the reasons stated herein all these appeals are accepted and the impugned remand orders together with orders-in-original are set aside:-- S. No.Title & No. of Appeal Disputed PeriodNo. & Dt. Of SCN No. & Dt. of O-N-ONo.& Dt.of Appellate Order of Collector (Appeals)
1. Kamalia Sugar Mills (280/00) 1989 to 1991 007/97/Adj/CE/499, 7.3.9730/99, 30.11.99246 to 249/2000, 15.5.2000.
2. Ittefaq Sugar Mills (281/Q0) 1989 to 1991 C. No. 232, 4.3.199655/99, 09.12.99246 to 249/2000, 15.5.2000.
3. Husein Sugar Mills (306/98) 1989 to 1991 C.No.8/97/Ad/CE/414, 25.2.79.03/98, 24.2.98223 to 226/98, 2.5.98..
4. Cresent Sugar Mills (351/00) 1989 to 1991 C. No. /97/Ad/Ex/453, 4.11.9908/98, 3.3.98246 to 249/2000, 15.5.2000.
5. Kohinoor Sugar Mills(406/00) 1991 to 1994 C.No.5/98/Ad/Ex/889, 21.3.9828/99, 26.11.99276/2000, 24.5.2000.
6. -do- (407/00) 1989 to 1991 C.No.4/97/Ad/Ex/325, 13.2.9733/99, 30.12.99246-249/2000, 15.5.2000.
7. Shakarganj Sugar Mills(444/00)1991 to 1994 C,No.28/27/Ad/CE/6342, 30.11.9988/00, 30.06.00Nil.
8. Chishtian Sugar Mills (839/00).1991 to 1993 C. No. 1 /97/Ad/Ex/321, 12.02.9726/FD/00, 12.08.00Nil.
9. Phalia Sugar Mills (1 177/00) 1995 to 1997 C.No.IV -CE-A(8) /99/4243, 26.03.991/2000, 18.09.00Nil.