Circular No. 537/33/2000-CX

F.NO.167/1/99-CX.4
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs

New Delhi, the 18th July, 2000

Subject: Assessments kept pending in view of the case of Cotspun Limited  pending before larger Bench of Supreme Court -

I am directed to refer to Board's Circular No. 452/18/99-CX.4 dated 7.4.99, wherein with reference to the question as to whether demand arising from a change in the classification accures from the date of show-cause notice or from the past period as provided under Section 11A of the Act, the Board had clarified that pending decision of the larger Bench of the Supreme Court in case of Cotspun Limited, demand notices under Section 11A may be issued for the permisible past period in pursuance of Section 37B Order but not be enforced.

2.    Hon'ble Apex Court has taken a view in COTSPUN case that prior to 95, in view of the wording of Section 11 A and provisions of Rule 173 B/C of Central Excise Rules, the change in approved classification will have to be made effective from the date of show cause notice and differential duty for the earlier period could not be recovered as the clearances were effected on the basis of approved classification list. However your attention is invited in this regard to the retrospective changes made in wording of Section 11A of the Central Excise Act by Section 97 of the Finance Act, 2000 and validation Section 110 of the Finance Act, 2000 as approved by Parliament. Considering the revised provisions, there will be no bar now in proceeding for recovery action even for past period as provided in Section 11 A, in cases involving short levy, short payment etc. Accordingly, you are requested to finalise necessary actions on the show-cause notices kept pending in view of above said instructions of the Board at the earliest.

3.    Para 2 of the Circular dated 7.4.99 may be treated as modified to the above extent.
4.    Receipt of this Circular may please be acknowledged.
5.    Hindi version will follow.

(S.C. Bhatia)
Under Secretary to the Govt. of India.