M/S. THE BOMBAY DYEING AND MFG. CO. LTDNER OF CENTRAL EXCISE vs. THE COMMISSIONER OF CENTRAL EXCISE

CIVIL APPEAL No. 5297/2008Supreme Court[2019] 17 S.C.R. 105709 December 2019Bench: 2 JudgesAuthor: A.M. KHANWILKAR, DINESH MAHESHWARI32 pages
AI SummaryDismissed

What were the facts?

The appellant, M/s. The Bombay Dyeing and Mfg. Co. Ltd., engaged in manufacturing fabrics, filed writ petitions seeking a direction that excise duty was not payable on yarn processed further in its composite mills. The High Court granted interim relief, and the appellant executed bonds in Form B-13 under Rule 9B of the 1944 Rules and furnished a bank guarantee for the differential duty. The interim relief was modified on May 14, 1985, and the writ petitions were disposed of on March 10/12, 1993. The Assistant Collector of Central Excise initially stated Section 11A was not applicable. Subsequently, the appellant was asked to pay Rs. 35,92,234.67, failing which the bank guarantee would be enforced. After a personal hearing, the demand was confirmed. Appeals to appellate authorities and the High Court were dismissed. The appellant appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that Section 11A of the Central Excise Act, 1944, as applicable at the relevant time, pertains to the recovery of duties not levied, not paid, short-levied, or short-paid. However, the present case falls under the dispensation of Rule 9B of the 1944 Rules, which deals with provisional assessment. The appellant cannot approbate and reprobate by inviting the High Court to pass an interim order stipulating the execution of bonds under Rule 9B and filing monthly RT-12 returns with endorsements indicating provisional assessment, and then later claiming they had not submitted to provisional assessment due to the lack of a specific order. The Court found that the appellant voluntarily submitted to the process of provisional assessment by executing bonds in Form B-13 and furnishing bank guarantees. The High Court's order disposing of the writ petitions did not extricate the appellant from this process. Therefore, it was not a case of duty not levied or paid, nor was it an order undoing the obligation accepted by executing the bonds. The authorities acted in accordance with law for the period between May 25, 1981, and May 13/14, 1985. The appeal was dismissed.

What were the issues?

1. Whether Section 11A of the Central Excise Act, 1944, is applicable to cases of provisional assessment. The assessee argued that Section 11A was mandatory and that the department could not proceed without a notice under it. The revenue contended that Section 11A applies to recovery of duties not levied, not paid, short-levied, or short-paid. The assessee also relied on decisions like M/s. J.K. Cotton Spinning and Weaving Mills Ltd. to argue that a specific order for provisional assessment was required. The revenue argued that the assessee voluntarily submitted to provisional assessment by executing bonds under Rule 9B and filing RT-12 returns with endorsements indicating provisional assessment, thus estopping them from claiming otherwise. The assessee also argued that the High Court's order disposing of the writ petitions did not absolve them from the bonds and that the department could not take a contrary position to the High Court's directions. The revenue countered that the High Court's order did not prohibit them from proceeding in accordance with law.

Which sections of the Income-tax Act were involved?

Section 11A

AI-generated summary — verify with the full judgment below

A B C D E F G H 1057 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 – Per

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 11A

All 96 judgments and leading authorities on Section 11A →

Recent GST High Court judgments

Search GST case law →