M.H Beg, J.— The National Tobacco Co. of India Limited (hereinafter referred to as “the Company”), the respondent in the appeal before us, manufactures cigarettes, at its Factory in Agarpara, upon which Excise duty is levied by the appellant, the Assistant Collector of Central Excise, Calcutta Division (hereinafter referred to as “the Collector”). The rates at which the Excise duty was imposed upon the cigarettes of the Company under the provisions of the Central Excise and Salt Act of 1944 (hereinafter referred to as “the Act”) were varied, from time to time, by the provisions of Finance Acts of 1951 and 1956 and the Additional Duties of Excise (Goods of Special Importance) Act of 1957. The Collector maintained an office at the factory itself for the levy and collection of tax. The Company was required to furnish quarterly consolidated price-lists which used to be accepted for purposes of enabling the company to clear its goods, but, according to the Collector, these used to be verified afterwards by obtaining evidence of actual sales in the market before issuing final certificates that the duty had been fully paid up. The particulars of the cigarettes to be cleared were furnished by the Company on forms known as A.R.I forms required by Rule 9 of the Central Excise Rules. For facilitating collection of duty, the Company maintained a large sum of money in a current account with the Central Excise Authorities who used to debit in this account the duty leviable on each stock of cigarettes allowed to be removed. This current account, known as “personal ledger account”, was maintained under the third proviso to Rule 9 which lays down:
“9. (1) * * *
Provided also that the Collector may, if he thinks fit, instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or from a store-room or warehouse duly approved, appointed or licensed by him keep with any person dealing in such goods an account-current of the duties payable thereon and such account shall be settled at intervals not exceeding one month and the account-holder shall periodically make deposit therein sufficient in the opinion of the Collector to cover the duty due on the grounds intended to be removed from the place of production, curing, manufacture or storage.”
2. It appears that the company used to furnish its quarterly price-lists to the Collector on forms containing nine columns including one to show the “distributors selling price”. Until July, 1957, so long as this form was used by the Company, no difficulty seems to have been experienced in checking the prices. But, after this column was dropped from the new form of six columns, the Excise Authorities seem to have encountered some difficulty in valuing the cigarettes for levying excise duty. They, therefore, changed the basis of assessment itself from “the Distributors' Selling Price” to “the wholesale cash selling price at which stockists or agents are selling the same to an independent buyer in the open market”. They held the view that such a change could be made having regard to the provisions of Section 4 of the Act. The Deputy Superintendent of Central Excise informed the Company of this change of basis on November 5, 1958, by a letter which also asked the Company to furnish its price-lists immediately “for determining the correct assessable value” of its cigarettes. On November 7, 1958, the Deputy Superintendent served a notice upon the Company demanding payment of a sum of Rs 1,67,072.40 as basic Central Excise duty and Rs 74,574.85 as additional Central Excise duty on account of short levy for a certain brand of cigarettes cleared from the Company's factory from August 10, 1958 to November 5, 1958. On November 12, 1958, the Deputy Superintendent sent another notice demanding payment of a sum of Rs 6,16,467.49 as basic Central Excise duty and Rs 2,10,492.15 as additional Central Excise duty for short levy in respect of some brands of cigarettes cleared from the factory between November 1, 1957 to August 9, 1958. On November 13, 1959, the Deputy Superintendent sent a third notice to the Company under Rule 10-A of the Central Excise Rules, 1944, demanding payment of Rs 40,726.48 as basic Central Excise duty and Rs 16,958.50 as additional duty for short levy in respect of various brands.
3. The Company applied to the Calcutta High Court under Article 226 of the Constitution against the three notices mentioned above, one of which specifically under Rule 10-A and the other two under Rule 10 of the Central Excise Rules. A learned Single Judge of that Court quashed the notices by his order of February 15, 1960, on the ground that the Company had not been given any opportunity of being heard so as to be able to meet the material collected behind its back which formed the basis of the demands under the aforesaid three notices. On a joint request of both sides, the High Court did not decide the question whether notices of demand were time barred. But the learned Judge said:
“Nothing in this order will prevent the respondent from proceeding to take any step that may be necessary for such assessment or for the realisation of the revenue in accordance with the law.”
4. The learned Judge had also held that neither the basis adopted by the company nor that put forward by the Collector was correct. The learned Judge pointed out the correct basis which was considered by him to be in consonance with the provisions of Section 4, sub-section (a) of the Act. He indicated the various factors required by Section 4 of the Act which had to be taken into account and held:
“The determination as to whether a wholesale market exists at the site of the factory or the premises of manufacture or production, etc., or which is the nearest wholesale market, or the price at which the goods or goods of like kind and quality are capable of being sold must necessarily be a complicated question and must be determined carefully upon evidence and not arbitrarily. Such determination cannot wholly be made ex parte, that is to say, behind the back of the assessee. A satisfactory determination can only be made by giving all information to the assessee and after giving the assessee an opportunity of establishing his own point of view, or checking and/or challenging any material or evidence upon which the Excise Authorities wish to depend.”
5. As no appeal was filed by either side against this decision, it became final and binding between parties before us so that the question whether the High Court has correctly interpreted Section 4 of the Act in determining the basis on which the excise duty leviable could be assessed is not under consideration here.
6. When the case went back to the Collector, he issued a fresh notice on April 24,1960. As the validity of this notice is the real question now in issue in the appeal before us, it may be reproduced in toto here. It runs as follows:
Registered A/D.
“GOVERNMENT OF INDIA
Collectorate of Central Excise Office of the Assistant Collector of Central Excise, Calcutta I Division (5, Clive Row), Calcutta,
NOTICE
C. No. VI(b) 14/3/58/3886
Dated April 21, 1960.
To
M/s National Tobacco Co. (India) Ltd.,
Agarpara,
24, Parganas.
1. In connection with the assessment of Central Excise duties for the periods —
(i) from October 1, 1957 to November 5, 1958, in respect of 316,885,000 of ‘No. Ten’ brand Cigarettes.
(ii) from January 1, 1958 to January 28, 1958, in respect of 66,00,000 of ‘D. L.T Nag’ Cigarettes.
(iii) from January 1, 1958 to February 5, 1958, in respect of 95,94,000 of ‘May Pole’ Cigarettes.
(iv) from January 1, 1958 to February 7, 1958, in respect of 31,43,500 ‘Carltons Gold Seal’ Cigarettes.
(v) from January 1, 1958 to January 31, 1958, in respect of 14,71,250 of ‘John Peal’ Cigarettes.
(vi) from January 1, 1958 to January 16, 1958, in respect of 82,00,000 of ‘Light House’ Cigarettes.
(vii) from January 1, 1958 to January 16, 1958, in respect of 90,70,000 of ‘Gold Link’ Cigarettes.
Please note that a sum of Rs 10,05,133.25 np. (Rupees ten lakhs, five thousand one hundred thirty-three and twenty-five naya paise only) as basic Central Excise duty and a total sum of Rs 3,43,208.25 np. (Rupees three lakhs forty-three thousand two hundred eight and twenty-five naya paise only) as additional duty had been provisionally debited in your account on the basis of the price lists supplied to us by you for the quarters —
(i) beginning October, 1957, dated October 17, 1957.
(ii) beginning January, 1958, dated nil.
(iii) beginning April, 1958, dated April 14, 1958 and
(iv) beginning July, 1958, dated July 14, 1958.
(v) beginning October, 1958, dated nil.
2. We now propose to complete the assessments for the said period from the evidence in our possession from which it appears —
(i) that there is no wholesale market for the goods covered by your price lists in or near the factory or the place of manufacture and that the nearest wholesale market for the sale is the Calcutta market,
(ii) the wholesale cash price of the articles in question at the time of sale and/or removal of the goods at the Calcutta market at which goods of like kind or quality are sold or are capable of being sold have been ascertained by us and the evidence at our disposal reveals that the prices quoted by you in your price lists are not correct.
3. The prices are as per chart annexed hereto which has been prepared on the basis of available evidence in terms of Section 4(a) of the Central Excise and Salt Act, 1944. The vouchers mentioned in the chart are available for your inspection at any time next week during office hours. After obtaining inspection of the vouchers please attend at our office at 5 Clive Row, Calcutta on May 2, 1960, at 10.30 a.m for the purpose of discussing the points mentioned above.
4. We are prepared to give you a personal hearing with regard to all the points indicated above. If you have any evidence in support of your contention you are at liberty to produce the same at the time of hearing. Thereafter please note that we propose to make the final assessment in accordance with law.
(sd.)
N.D Mukherjee
Assistant Collector of Central Excise,
Calcutta I Division, Calcutta.”
7. The Company challenged the validity of this notice by means of a second petition for writs of prohibition and mandamus against the Collector on the ground that the notice was barred by time and was issued without jurisdiction so that no proceedings founded on it could be taken. It was prayed that the Collector may be ordered to cancel the notice. The petition was allowed by a learned Single Judge of the Calcutta High Court on January 3, 1964, on the ground that such a notice was barred by the provisions of Rule 10 of the Central Excise Rules because the notice was held to be fully covered by Rule 10 and by no other rule. A Division Bench of the High Court confirmed this view on September 8, 1966, and dismissed the Collector's appeal. The case having been certified, under Article 133(a), (b) and (c), for an appeal to this Court, this question is before us now.
8. The learned Single Judge as well as the Division Bench of the Calcutta High Court said that there was not enough material on record to conclude that there was any “provisional assessment” under Rule 10-B ^deleted on August 1, 1959, and substituted by Rule 9-B) which laid down:
“10-B. Provisional Assessment of duty.— (1) Notwithstanding anything contained in these rules —
(a) where the owner of any excisable goods makes and subscribes a declaration before the proper Officer to the effect that he is unable for want of full information to state precisely the real value or description of such goods in the proper form; or
(b) where the owner of any goods has furnished full information in regard to the real value or description of the goods, but the proper Officer requires further proof in respect thereof; or
(c) where the proper Officer deems it expedient to subject any excisable goods to any chemical or other test,
the proper Officer may direct that the duty leviable on such goods may, pending the production of such information or proof or pending the completion of any such test, be assessed provisionally.
(2) When the owner of any goods in respect of which the duty has been assessed provisionally under sub-rule (1) has paid such duty, the proper Officer may make an order allowing the goods to be cleared for home consumption or for exportation, as the case may be and such order shall be sufficient authority for the removal of the goods by the owner:
Provided that before making any such order the proper Officer shall require the owner to furnish a bond in the proper form binding the owner to pay the differential duty when the final assessment is made.
(3) When the duty leviable on such goods is assessed finally in accordance with the provisions of these rules, the duty provisionally assessed shall be adjusted against the duty finally assessed, and if the duty provisionally assessed, falls short of, or is in excess of, the duty finally assessed, the owner of the goods shall pay the deficiency or be entitled to a refund, as the case may be.”
9. No order directing provisional assessment, contemplated by Rule 10-B, (applicable at the relevant time) has been placed before us. Nor was the Company asked by the Collector to furnish a bond to pay up the difference after making a final assessment as was required under Rule 10-B. It was, however, contended for the Collector that the execution of a bond, for the satisfaction of the Collector, could be dispensed with in a case where the Company kept a large sum of money in deposit in the “personal ledger account” to guarantee its ability to meet its liabilities. It was also pointed out that the learned Single Judge as well as the Division Bench had found that the practice of provisionally approving the price-lists supplied by the Company, pending acceptance of their correctness after due verification, had been established as a matter of fact. It was submitted that this was substantially a “provisional assessment” covered by Rule 10-B, although it may not conform to the technical procedural requirements of such an assessment.
10. Even if the making of debit entries could, on the fact of the case, be held to be merely provisional we think that what took place could not be held to be a “provisional assessment” within the provisions of Rule 10-B which contemplated the making of an order directing such as “assessment” after applying the mind to the need for it.
11. Before proceeding further we will deal with the question whether the Division Bench correctly refused to permit an argument that the impugned notice of April 24, 1960, fell under Rule 10-A. The ground given for this refusal was that such a case was neither taken before the learned Single Judge nor could be found in the grounds of appeal despite the fact that the appellant had ample opportunity of amending its Memorandum of appeal. The appellant has, however, relied on a previous intimation given to the counsel for the respondent that such a contention would be advanced at the hearing of the appeal and also on an application, dated March 21, 1966, praying for permission to add the alternative ground that the impugned notice fell under Rule 10-A. We think that this refusal was erroneous for several reasons. Firstly, the Company having come to Court for a Writ of Prohibition on the ground that the impugned notice was issued without jurisdiction had necessarily to establish the case, which it set up in para 25 of its writ petition, that the notice was not authorised by the rules including Rule 10-A. As the notice of April 21, 1960, was followed on May 4, 1960, by a correction by another notice of certain statements both the notices were assailed in para 25(ii) in the following words:
“The respondent has mala fide and without jurisdiction issued the said impugned notices pretending to falsely state that the aggregate sum therein mentioned has been provisionally debited in your petitioner's account and pretending to intimate to your petitioner that the respondent proposed to complete the assessment, and thereby, he is seeking, under the guise of completing an alleged assessment which had already been completed and duty in respect whereof had already been paid, to do indirectly what he could not do directly inasmuch as Rule 10-A of the said Rules has no application to the facts of the case and inasmuch as recovery of any duty which might have been short-levied under Rule 10 of the Rules is barred by limitation.”
12. This assertion was met by a categorical denial by the Collector in para 26(ii) of the Collector's affidavit in reply where it was stated that it was denied “that Rule 10-A of the said Rules had no application to the facts of the case as alleged or that the recovery of any duty which had been short-levied was barred by limitation under Rule 10 of the said Rules as alleged or at all”. Thus, the applicability of Rule 10-A was very much in issue. Secondly, we find, from the Judgment of the learned Single Judge that, as the burden lay upon the petitioning Company to demonstrate, for obtaining a Writ of Prohibition, that the impugned notice was not authorised by any rule, its counsel had contended, inter alia, that the notice did not fall under Rule 10-A. The question was thus considered by the learned Single Judge. Thirdly, the question whether the Collector did or did not have the power to issue the impugned notice under or with the aid of Rule 10-A was a question of law and of jurisdiction, going to the root of the case, which could be decided without taking further evidence. Indeed, as the burden was upon the petitioning Company to show that the impugned notice was issued without jurisdiction, a finding that the notice did not fall even within Rule 10-A was necessary before a writ of prohibition could issue at all. We think that the Division Bench ought to have permitted the question to be argued, subject to giving due opportunity to the petitioning Company to meet it on such terms as the Court thought fit, even if the point was not taken in the grounds of appeal. Therefore, we will consider this question also.
Rule 10 of the Central Excise Rules, ran as follows:
“10. Recovery of duties or charges short-levied, or erroneously refunded.— When duties or charges have been short-levied, through inadvertence, error, collusion or mis-construction on the part of an officer, or through mis-statement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short-levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account-current, if any, or from the date of making the refund.”
Rule 10-A reads as follows:
“10-A. Residuary powers for recovery of sums due to Government.— Where these Rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been short-levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify.”
13. The two rules set out above occur in Chapter III of the Central Excise Rules, 1944 headed “Levy and Refund of, and Exemption from duty”. Rule 7 merely provides that the duty leviable on the goods will be paid at such time and place and to such person as may be required by the rules. Rule 8 deals with power to authorise exemptions in special cases. Rule 9(1) provides for the time and manner of payment of duty. This rule indicates that ordinarily the duty leviable must be paid before excisable goods are removed from the place where they are manufactured or stocked, and only after obtaining the permission of the officer concerned. The third proviso to Rule 9 has already been set out above. Rule 9(2) provides for the recovery of duty and imposition of penalty in cases where Rule 9 sub-rule (1) is violated. Rule 9-A specifies the date with reference to which the duty payable is to be determined. We are not concerned here with Rules 11 to 14 dealing with refunds, rebates, exports under bonds and certain penalties for breaches of Rules.
14. Rules 52 and 52-A, found in Chapter V, dealing with a number of matters relating to “Manufactured Goods”, may also be cited here:
“52. Clearance on payment of duty.— When the manufacturer desires to remove goods on payment of duty, either from the place or a premise specified under Rule 9 or from a store-room or other place of storage approved by the Collector under Rule 47, he shall make application in triplicate (unless otherwise by rule or order required) to the proper officer in the proper Form and shall deliver it to the Officer at least twelve hours (or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow) before it is intended to remove the goods. The officer, shall, thereupon, assess the amount of duty due on the goods and on production of evidence that this sum has been paid into the Treasury or paid to the account of the Collector in the Reserve Bank of India or the State Bank of India, or has been despatched to the Treasury by money-order shall allow the goods to be cleared.
52-A. Goods to be delivered on a Gatepass.— (1) No excisable goods shall be delivered from a factory except under a gatepass in the proper form or in such other form as the Collector may in any particular case or class of cases prescribe signed by the owner of the factory and countersigned by the proper officer.”
15. It will be noticed that in Chapter III, the term “assessment” was used only in the former Rule 10-B, corresponding to the present Rule 9-B, while dealing with provisional assessment of duty. But, Rule 52 shows that an “assessment” is obligatory before every removal of manufactured goods. The rules, however, neither specify the kind of notice which should precede assessment nor lay down the need to pass an assessment order. All we can say is that rules of natural justice have to be observed for, as was held by this Court in K.T.M Nair v. State of Kerala, AIR 1961 SC 552, (1961) 3 SCR 77 at 94, (1961) 2 SCJ 269 “the assessment of a tax on person or property is at least of a quasi-judicial character”.
16. Section 4 of the Act lays down what would determine the value of excisable goods. But, the Act itself does not specify a procedure for assessment presumbly because this was meant to be provided for by the rules. Section 37(1) of the Act lays down that “the Central Government may make rules to carry into effect the purposes of this Act”. Section 37, sub-section (2), particularises “without prejudice to the generality of the foregoing power” that “such rules may provide for the assessment and collection of duties of excise, the authorities by whom functions under this Act are to be discharged, the issue of notice requiring payment, the manner in which the duty shall be payable, and the recovery of duty not paid”. It is clear from Section 37 that “assessment and collection of duties of excise” is part of the purposes of the Act, and Section 4, dealing with the determination of value for the purposes of the duty, also seems to us to imply the existence of a quasi-judicial power to assess the duty payable in cases of dispute. “Collection”, seems to be a term used for a stage subsequent to “assessment”. In a case where the basis of a proposed assessment is disputed or where contested questions of fact arise, a quasi-judicial procedure has to be adopted so as to correctly assess the tax payable. Rule 52 certainly makes an “assessment” obligatory before removal of goods unless the procedure for a “provisional assessment” under Rule 10-B (now Rule 9-B) is adopted. But, if no quasi-judicial proceeding, which could be described as an “assessment” either under Rule 52 or “provisional assessment” under Rule 10-B (now Rule 9-B) takes place at the proper time and in accordance with the rules, is the Collector debarred completely afterwards from assessing or completing assessment of duty payable? That seems to us to be the real question to be decided here.
17. One of the arguments on behalf of the Collector was that no “assessment”, for the purpose of determining the value of excisable goods, having taken place in the case before us, there could be no “levy” in the eye of law. It was urged that, even if there was no “provisional assessment”, as contemplated by Rule 10-B, whatever took place could, at the most, be characterised as an “incomplete assessment”, which the Collector could proceed to complete even after the removal of the goods. It was contended that such a case would be outside the purview of Rule 10 as it was not determined whether there actually was a short levy. Hence, it was submitted, there was no question of a proceeding barred by the limitation prescribed for making a demand for a short levy in certain specified circumstances. The Division Bench, while repelling this contention, held:
“In the present case, it appears that the procedure adopted was that the respondents issued a price list quarterly. In that price list, they gave their own estimate as to the value of the goods. For the time being, the Excise Authorities accepted the value so given, and gave a provisional certificate to that effect, intending to check the market-value and then finally determine the value later on. The procedure for issuing price list of approving the same provisionally and accepting payment therefore according to the estimate of the manufacturer, is a procedure which is not to be found either in the Act or the Rules.”
18. It may be observed that this finding, that the procedure of a provisional acceptance of the Company's estimates was adopted, seems inconsistent with another finding that what took place was a final adjustment of accounts within the purview of the 3rd proviso to Rule 9, set out above, constituting a “levy” according to law. The Division Bench appears to have regarded this procedure of an almost mechanical levy as equivalent to a complete assessment followed by the payment of the tax which constituted a valid “levy”. Hence, it concluded that, there being a legally recognised levy, the only procedure open to the Collector for questioning its correctness was one contemplated by Rule 10 so that a demand for a short levy had to be made within three months of the final “settlement of accounts” as provided specifically by Rule 10. The Division Bench considered this procedure to be an alternative to an assessment under Rule 52 at the proper time and also to a provisional assessment in accordance with the procedure laid down in Rule 10-B. But, to regard the procedure under Rule 10 as an alternative to an assessment would be to overlook that it presupposes an assessment which could be reopened on specified grounds only within the period given there.
19. The term “levy” appears to us to be wider in its import than the term “assessment”. It may include both “imposition” of a tax as well as assessment. The term “imposition” is generally used for the levy of a tax or duty by legislative provisions indicating the subject-matter of the tax and the rates at which it has to be taxed. The term “assessment”, on the other hand, is generally used in this country for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Division Bench appeared to equate “levy” with an “assessment” as well as with the collection of a tax when it held that “when the payment of tax is enforced, there is a levy”. We think that, although the connotation of the term “levy” seems wider than that of “assessment”, which it includes, yet, it does not seem to us to extend to “collection”. Article 265 of the Constitution makes a distinction between “levy” and “collection”. We also find that in N.B Sanjana, Assistant Collector of Central Excise, Bombay v. Elphinstone Spinning and Weaving Mills Co. Ltd. (1971) 1 SCC 337, AIR 1971 SC 2039 at 2045 this Court made a distinction between “levy” and “collections” as used in the Act and the rules before us. It said there with reference to Rule 10:
“We are not inclined to accept the contention of Dr Syed Mohammad that the expression ‘levy’ in Rule 10 means actual collection of some amount. The charging provision Section 3(1) specifically says: There shall be levied and collected in such a manner as may be prescribed the duty of excise…. It is to be noted that sub-section (i) uses both the expressions ‘levied and collected’ and that clearly shows that the expression levy has not been used in the Act or the Rules as meaning actual collection.”
20. We are, therefore, unable to accept the view that, merely because the “account current”, kept under the third proviso (erroneously mentioned as second proviso by the Division Bench) to Rule 9, indicated that an accounting had taken place, there was necessarily a legally valid or complete levy. The making of debit entries was only a mode of collection of the tax. Even if payment or actual collection of tax could be spoken of as a de facto “levy” it was only provisional and not final. It could only be clothed or invested with validity after carrying out the obligation to make an assessment to justify it. Moreover, it is the process of assessment that really determines whether the levy is short or complete. It is not a factual or presumed levy which could, in a disputed case, prove an “assessment”. This has to be done by proof of the actual steps taken which constitute “assessment”.
21. Undoubtedly, a mechanical adjustment and ostensible settlement of accounts, by making debit entries, was gone through in the case before us. But, we could not equate such an adjustment with an assessment, a quasi-judicial process which involves due application of mind to the facts as well as to the requirements of law, unless we were bound by law to give such an unusual interpretation to the term “assessment”. Here, we do not find any such definition of assessment or any compelling reason to hold that what could at most be a mechanical provisional collection, which would become a “levy” in the eye of law only after an “assessment”, was itself a levy or an assessment.
22. Rules 10 and 10-A, placed side by side, do raise difficulties of interpretation. Rule 10 seems to be so widely worded as to cover any “inadvertence, error, collusion or mis-construction on the part of an officer”, as well as any “mis-statement as to the quantity, description or value of such goods on the part of the owner” as causes of short levy. Rule 10-A would appear to cover any “deficiency in duty if the duty has for any reason been short levied”, except that it would be outside the purview of Rule 10-A if its collection is expressly provided for by any rule. Both the rules, as they stood at the relevant time, dealt with collection and not with assessment. They have to be harmonised. In N. B. Sanjana case, this Court harmonised them by indicating that Rule 10-A, which is residuary in character, would be inapplicable if a case fell within a specified category of cases mentioned in Rule 10.
23. It was pointed out in N.B Sanjana case , that the reason for the addition of the new Rule 10-A was a decision of the Nagpur High Court in Chhotabhai Jethabhai Patel & Co. v. Union Of India AIR 1952 Nag 139 so that a fresh demand may be made on a basis altered by law. The Excise Authorities had then made a fresh demand, under the provisions of Rule 10-A, after the addition of that rule, the validity of which challenged but upheld by a Full Bench of the High Court of Nagpur. This Court, in Chhotabhai Jethabhai Patel and Co. v. Union of India AIR 1962 SC 1006, 1962 Supp (2) SCR 1 also rejected the assessee's claim that Rule 10-A was inapplicable after pointing out that the new rule had been specifically designed “for the enforcement of the demand like the one arising in the circumstances of the case”.
24. We think that Rule 10 should be confined to cases where the demand is being made for a short levy caused wholly by one of the reasons given in that rule so that an assessment has to be reopened. The findings given by the Calcutta High Court do not show that, in the case before us, there was either a short levy or that one of the grounds for a short levy given in Rule 10 really and definitely existed. No doubt the Division Bench gave a reason for the way in which the claims became time-barred, in the following words:
“It is quite possible, that the Excise Authorities, in an attempt to help the appellants by facilitating the movements of goods, inadvertently allowed the claims to be barred by limitation. That, however, is not a matter which can affect the question of limitation. The bar of limitation has been imposed by statute. The morality of the case or the conduct of the parties is therefore irrelevant unless the law provides that the Court on that ground can afford relief.”
25. This finding was presumably given to show that the impugned notice fell within the purview of Rule 10 because the demand was due to a short levy caused by “inadvertence” of the officer concerned. It will be noticed that the Division Bench did not go beyond finding a “possibility” of such inadvertence. This is not a finding that it was definitely due to it. No finding which could clearly relate the case to any cause for short levy found in Rule 10 was given. Moreover, we find that there was no case taken up by the Company in its petition before the High Court that any short levy resulted from an inadvertence of the officer concerned in the process of assessment. The case set up was that of a levy after completed assessment, in accordance with law, which could not, according to the Company, be reopened. If, therefore, as we find from the conclusions recorded by the High Court itself, what took place was not an “assessment” at all in the eye of law, which could not be reopened outside the provisions of Rule 10, we think that the case will fall beyond Rule 10 as it stood at the relevant time.
26. The notice set out above does not purport to be issued under any particular rule probably because the Collector, in the circumstances of the case, was not certain about the rule under which the notice could fall. But, as was pointed out by this Court in N.B Sajana case , the failure to specify the provision under which a notice is sent would not invalidate it if the power to issue such a notice was there.
27. The notice alleges that it is a case of “incomplete assessment”. The allegations contained in it have been characterised by the learned counsel for the Company as a change of front intended to cover up the neglect of the Collector in failing to comply with the correct procedure of making either an assessment before delivery contemplated by Rule 52 or a provisional assessment under Rule 10-B. We are unable to hold, either upon the findings given by the High Court or upon facts transpiring from the affidavits filed by the parties that the notice was a mere cloak for some omission or error or inadvertence of the Collector in making a levy or an assessment.
28. We may point out that Rule 10 itself has been amended and made more reasonable in 1969 so as to require a quasi-judicial procedure by serving a show-cause notice “within three months from the date on which the duty or charge was paid or adjusted in the owner's account current, if any”. This amendment, made on October 11, 1969, indicates that the quasi-judicial procedure, for a finding on an alleged inadvertence, error, collusion, or mis-construction by an officer, or mis-statement by the assessee, as the cause of an alleged short levy resulting from an assessment, can now be embarked upon and not necessarily completed within the prescribed period. We are, however, concerned with the procedure before this amendment took place. At that time, it was certainly not clear whether a case would fall under Rule 10 even before the short levy or its cause was established. Furthermore, in the present case, the reason for an alleged short levy could be a change of basis of proposed assessment under instructions from higher authorities mentioned above. Even that change of basis was held by the High Court to be erroneous. Until the High Court indicated the correct basis there was an uncertainty about it. Such a ground for an alleged short levy would be analogous to the reason for the introduction of Rule 10-A itself which, as pointed out in N. B. Sanjana case , was a change in the law. One could go back still further and come to the conclusion that the real reason for the alleged short levy was a failure of the Company to supply the fuller information it used to supply previously and not just a mis-statement. If the case does not clearly come within the classes specified in Rule 10, this rule should not be invoked because, as was rightly contended for the appellant, a too wide construction put on Rule 10 would make Rule 10-A useless. The two rules have to be read together.
29. It is true that Rule 10-A seems to deal only with collection and not with the ascertainment of any deficiency in duty or its cause by a quasi-judicial procedure. If, however, it is read in conjunction with Section 4 of the Act, we think that a quasi-judicial proceeding, in the circumstances of such a case, could take place under an implied power. It is well-established rule of construction that a power to do something essential for the proper and effectual performance of the work which the statute has in contemplation may be implied [See Craises on Statute Law (Fifth Edition) p. 105].
30. The question whether there was or was not an implied power to hold an enquiry in the circumstances of the case before us, in view of the provisions of Section 4 of the Act, read with Rule 10-A of the Central Excise Rule, was not examined by the Calcutta High Court because it erroneously shut out consideration of the meaning and applicability of Rule 10-A. The High Court's view was based on an application of the rule of construction that where a mode of performing a duty is laid down by law it must be performed in that mode or not at all. This rule flows from the maxim: “Expressio unius ast exclusio alterius”. But, as was pointed out by Wills, J., in Colguoboun v. Brooks (1888) 21 QBD 52 this maxim “is often a valuable servant, but a dangerous master….”. The rule is subservient to the basic principle that Courts must endeavour to ascertain the legislative intent and purpose, and then adopt a rule of construction which effectuates rather than one that may defeat these. Moreover, the rule of prohibition by necessary implication could be applied only where a specified procedure is laid down for the performance of a duty. Although Rule 52 makes an assessment obligatory before goods are removed by a manufacturer, yet, neither that rule nor any other rule, as already indicated above, has specified the detailed procedure for an assessment. There is no express prohibition anywhere against an assessment at any other time in the circumstances of a case like the one before us where no “assessment”, as it is understood in law, took place at all. On the other hand, Rule 10-A indicates that there are residuary powers of making a demand in special circumstances not foreseen by the framers of the Act or the rules. If the assessee disputes the correctness of the demand an assessment becomes necessary to protect the interests of the assessee. A case like the one before us falls more properly within the residuary class of unforeseen cases. We think that, from the provisions of Section 4 of the Act, read with Rule 10-A, an implied power to carry out or complete an assessment, not specifically provided for by the rules, can be inferred. No Writs of Prohibition or Mandamus were, therefore, called for in the circumstances of the case.
31. Consequently, we allow this appeal and set aside the orders of the Calcutta High Court. The Collector may now proceed to complete the assessment. In the circumstances of the case, the parties will bear their own costs throughout.
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