TMI Blog2010 (8) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... - Writ Petition No. 533 of 2005 - - - Dated:- 24-8-2010 - V.C. Daga and R.M. Savant, JJ. Shri Pankaj Sutar with Agasti Vibhute, i/by M/s. Khaitan Jayakar, for the Petitioner. Shri R.V. Desai, Sr. Counsel with R.B. Pardeshi, for the Respondent. JUDGMENT By this Petition, filed under Article 226 of the Constitution of India, the Petitioners are challenging the order dated 28-11-1997 passed by the Respondent No. 2 herein i.e. the Commissioner of Central Excise, Pune-I, as also the order dated 21-5-2004 [2004 (170) E.L.T. 178 (Tri.-Mumbai)] passed by the Respondent No. 3 herein i.e. the Customs Excise Service Tax Appellate Tribunal, West Zonal Bench, Mumbai in the facts and circumstances more appropriately mentioned hereinunder. 2. The Petition principally raises a question as to whether elongated period mentioned under Section 11A of the Central Excise and Salt Act, 1944 (hereinafter referred to as the CESA Act 1944 ), is available to the Respondent No. l herein for demanding central excise duty for the goods cleared by the Petitioner during the period from December, 1992 to 15th March, 1995. 3. The facts involved in the above Petition can be stated in a nut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a further letter dated 5th July, 1995, the Petitioners informed the Superintendent in the office of the Respondent No. 2 of the debitting by them in the RG-23A Register against scrap generation at the sub-contractor s end where the material was sent for processing for the period January, 1994 to March, 1995. It appears that during the period 1994-95, the Excise Department also recorded the statements of the various officers of the Petitioner No. 1 including its Managing Director. 5. Thereafter the Respondents issued show cause notice dated 29th March, 1996 to the Petitioners. The gravaman of the allegations in the said show cause notice was that the Petitioners had wrongly classified the goods under Entry CH. 7326.19 whereas the goods were liable to be classified under Entry CHS. 8483.00 of the Central Excise Tariff. It was further alleged that the Petitioners were not entitled to the exemption under Notification No. 223/88 dated 23rd June, 1988. In so far as aspect of limitation is concerned, the Department had justified for invoking extended period of five years under Section 11A of the CESA Act, 1944 on the ground that the Petitioner had misdeclared the products as proof mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing an Appeal which numbered as E/628/89-Bom. The said Appeal was rejected by the Tribunal by its order dated 21st May the 2004 thereby confirming the order of the Respondent No. 2. As indicated above, it is against the said two orders that the instant Petition has been filed. 8. We have heard the learned counsel for the parties. On behalf of the Petitioners the learned counsel Mr. Sutar whilst justifying the classification made by the Petitioners of the goods in question under heading CH 7493.90 however submitted that fundamentally the issue that arises in the instant Petition is, as to whether the extended period of limitation as prescribed by the provisio of Section 11A of the CESA Act, 1944 is available to the Respondents. The learned counsel for the Petitioners submitted that considering the fact that audit of the Petitioners factory was carried out on three occasions between 1993 and 1995 which covered the period in question, it cannot be said that the Department was unaware of the activities of the Petitioners. The learned counsel for the Petitioners further submitted that both the authorities below though have concurrently held that the Petitioners are liable to pay duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) Ltd. as also the judgment of the Apex Court reported in 2007 (217) E.L.T. 330 (S.C.) in the matter of Mercantile Company v. Commissioner of Central Excise, Calcutta. The learned senior counsel relied upon Para-30 of the said judgment to contend that though the Petitioners had addressed the said letters as mentioned in the instant Petition to the Respondents, merely on the said ground it cannot be said that knowledge can be attributed to the Respondents of the activities of the Petitioners. Para-30 of the said judgment is reproduced hereinunder :- 30. On the question of limitation, the submission made by the counsel for the appellant that the letter dated 8th March, 1994 disclosed the entire facts to the authorities regarding the items manufactured by the appellant cannot be accepted. The letter dated 8th March, 1994 did not disclose the entire facts. The letter did not disclose the situation in its proper perspective. The authorities were not informed about the actual activity undertaken by the appellant. The authorities were also not informed that a new name has been given to the products. The applicability and functions of the new products was also not clearly stated. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars were substituted. (emphasis supplied) 11. As posited in the said section that only in the eventuality of the excise duty having not been levied or paid or has been short levied or short paid or erroneously refunded by the reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the CESA Act, 1944 or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, that the period of one year shall be substituted by the period of limitation of five years. In the said context it would be advantageous to refer to the judgments of the Apex Court cited on behalf of the Petitioners. In so far as the judgment in the case of Collector of Central Excise v. Chemphar Drugs Liniments (supra) is concerned, Paras 8 and 9 of the said judgment are material and are reproduced herein under :- 8. Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion, the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section 11A of the Act, it has to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how cause notice dated February 7, 1983 to indicate that the conditions prescribed in the proviso to Section 11A of the Central Excise Act for invoking the extended period of limitation were present. In the circumstances, it must be held that the proceedings initiated against the respondent on the basis of the show cause notice dated February 19, 1983 relating to payment of duty on single yarn manufacturing prior to February 28, 1983 was barred by limitation and were rightly dropped. On that view, it is not necessary to go into other questions raised in the appeal. The appeal is, therefore, dismissed. No order as to costs. In so far as the judgment in the case of Sarabhai M Chemicals v. Commissioner of Central Excise, Vadodara (supra) is concerned, para 21 of the said judgment is material and is reproduced herein under :- 21. A bare reading of the notification no. 234/86 indicates that the exemption in favour of bulk drugs falling under chapter 28 or chapter 29 of the schedule annexed to the Central Excise Tariff Act, 1985 is not an unconditional exemption. The said notification had a proviso. Under the proviso, the manufacturer was required to furnish to the Competent Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, the department was right in raising the aforestated demand. 12. As can be seen from the reading of the said judgments the underlying thread of the said judgments is that for the Department to have benefit of extended period of limitation, the requirements of Section 11A of the CESA Act have to be satisfied inasmuch as there has to be a willful mis-statement or suppression of facts or fraud or contravention of any of the provisions of CESA Act, 1944 or of the rules made thereunder. It would be therefore have to be seen whether in the instant case the requirements for availing of the benefit of the extended period of five years is available to the Respondents. 13. It is an undisputed fact that in so far as the Petitioners are concerned, audit of the Petitioners factory was carried out on three dates i.e. 6th September, 1993, 1st November, 1995 and 2nd September, 1994. The Petitioners vide their letter dated 6th September, 1993 have recorded the visit of the audit party and have also replied to the audit objections raised by the said audit party in respect of scrap generated and have informed the authorities that they were debiting Rs. 80,000/- at the rate of Rs. 1,000/- p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88. It has been contended by them that in their application for removal of goods under Rule 57F(3) they had mentioned the process of turning, milling there. Mention of these processes in the application for removal of goods under Rule 57F(3) cannot amount to bring to the knowledge of the Department that they are carrying out these processes and claiming concessional rate of duty under Notification No. 223/88. Any reference to anything anywhere will not put the Department on notice as their application under Rule 57F(3) is dealt with for a specific purpose and not for the purpose of classification, etc. It is not their case that they have mentioned these processes in their classification list. Further, their claim itself that in their 57F(3) application, they have mentioned in clear manner various processes like turning, milling, grinding, proof machining, etc. is wrong. Against the column, Nature of Manufacture/Process operations to be done, they had simply mentioned machining, checking, grooving, etc. The statement made by them in their reply to the show-cause-notice is therefore absolutely wrong. It has also been claimed by them that the Department was informed of the fact of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstant case. 17. In so far as the judgment cited on behalf of the Department by the learned senior counsel is concerned, in the facts of the case in Mercantile Company v. Commissioner of Central Excise, Calcutta before the Apex Court, that the Apex Court recorded a finding that the authorities cannot be said to have full knowledge about the activities undertaken by the Appellant in the said case. In so far as judgment of the Division Bench of this Court in the case of Commissioner of Central Excise Raigad v. Ramply (India) Ltd. is concerned, the Division Bench of this Court relied upon the judgment of the Apex Court in Commissioner of Central Excise v. Vora Products reported in 2008 (221) E.L.T. 321 wherein the Apex Court, in the facts of the said case, an assessee was using the brand name of another and had not disclosed the same in the classification list and had contended that it was done in ignorance of law, has held that the predicates were satisfied and that the assessee was liable. Thus the judgment cited on behalf of the Respondents were revolving on the facts of the respective cases which were before the Apex Court. 18. In the instant case, as indicated herein above, o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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