TMI Blog2009 (1) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants have never asked for the same.- demand is sustainable – since in so many case laws it has been held that Goods manufactured for execution of work contract, will be dutiable, plea of bonafide belief is not acceptable – penalty is imposable - A decision is an authority for what decides and not what can logically be deduced therefrom. The ratio of any decision must be understood in the back ground of the facts of that case. A case is only an authority for what it actually decides and not what logically follows from it. Even a difference in one fact can make a world of difference and the outcome may be totally different. An opinion of the court on any issue, not necessary for deciding the dispute, cannot be considered as ratio of that case. Ratio decidendi is a rule deductible from the application of law to the facts and circumstance of a case and not some conclusion based upon facts which may appear to be similar. - E/751/1991-Mum - A/14/2009-WZB/C-II/EB - Dated:- 20-1-2009 - S/Shri P.G. Chacko, Member (J) and K.K. Agarwal, Member (T) S/Shri E.P. Bharucha, Sr. Advocate with Manoj Sanklecha, Advocate, for the Appellant. Shri N.A. Sayeed, JDR, for the Respondent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of JSL Industries - 1999 (109) E.L.T. 316 (Tri.), wherein it was held that show cause notice issued long after knowledge was barred as invocation of extended period on account of suppression of facts is not sustainable. Similarly in Gammon India - 2002 (146) E.L.T. 173 (Tribunal), it has been held that delay in issuing show cause notice after completion of enquiry would not entitle the department to invoke extended period of limitation on account of suppression. It also further held that construction of bridge was before the general public and therefore no suppression could be alleged. This decision has been upheld by the Supreme Court as reported at 2002 (146) E.L.T. A313. Reference was thereafter invited to the Supreme Court decision in the case of Nizam Sugar Factory reported in 2006 (197) E.L.T. 465 (S.C.) = 2008 (9) S.T.R. 314 (S.C.). In para 9 of this decision, the Apex Court has held that it is not open to the department to issue show cause notice alleging suppression of facts already known to them as is evident by the earlier show cause notice issued to the parties. It was submitted that the above decision, reverses the view of the larger bench of the tribunal in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch decision of the Tribunal was overruled by the Apex Court. 7. It was further submitted that no particulars of any deliberate suppression with intent to evade duty has been set out in the show cause notice and in such a case extended period cannot be invoked as has been held by the Tribunal in the case of Gowtami reported in 2007 (207) E.L.T. 694. The appellant was under the bona fide belief that no excise duty was payable on RCC pipes being used in the execution of work of construction of marine outfalls for sewerage at Worli and Bandra as the production was part of works contract and not liable to duty. This was also stated by their legal advisor, whose statement was recorded in September 1987. This was the law on the subject as generally understood during the relevant time. The view has only be settled by the Larger Bench decision in the case of Asian Tec - 2005 (189) E.L.T. 420 to the effect the duty is payable. The earlier view was reflected in the decision of the Tribunal in the case of Aruna Industries - 1986 (25) E.L.T. 580 (Tri), Dodsal Limited - 1987 (28) E.L.T. 352 and National Asphalt - 1999 (105) E.L.T. 87 wherein it was held that no such duty is payable in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cannot be invoked merely on presumption. In the Tribunal decision in the case of Sparr Engg. - 2007 (207) E.L.T. 545 relied upon by the department, two show cause notice were issued as a result of common investigation and the Tribunal held that the second show cause notice is not barred on the ground that extended period of demand had been invoked for the subsequent period. It was submitted that Tribunal has not correctly appreciated the Supreme Court decision and the Larger Bench decision in Nizam Sugar Factory case and therefore this decision is distinguishable. Reference was also made to another Tribunal decision relied upon by the department in the case of Mukund Ltd. - 2007 (218) E.L.T. 120 (Tri.) = 2007 (7) S.T.R. 159 (Tri.) wherein a show cause notice issued after more than a year, after date of knowledge, was held to be valid and it was submitted that this view was taken by relying upon Larger Bench decision in Nizam Sugar Factory case and by holding that the Supreme Court decision in Nizam Sugar Factory was not relevant. The Karnataka High Court decision in Bripanil Synthetics was not considered as the same was not brought to the knowledge of the Tribunal. 11. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal held that what had been decided in Penn-Texas (1) was not part of the ratio of the case, because the ruling was not necessary for the decision. The result of the case would have been the same if the ruling had gone the other way. The House of Lords did not consider the observation of the court regarding order for production of a specifically identified documents, a the ratio of the case. 13. It was submitted that Hon'ble Supreme Court in the case of CC v. Toyota Kirloskar reported in 2007 (213) E.L.T. 4 had an occasion to examine the scope of ratio decidendi. It observed in para 30 as under :- "30. The observations made by this Court in Essar Gujarat Limited (supra) in Paragraph 18 must be understood in the factual matrix Involved therein. The ratio of a decision, as is well-known, must be culled out from the facts involved in a given case. A decision, as is well-known, is an authority for what it decides and not what can logically be deduced therefrom. Even in Essar Gujarat Limited (supra), a clear distinction has been made between the charges required to be made for pre-importation and post-importation. All charges levied before the capital goods were in ported were held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes into existence as a unit only when the component parts are fixed in position and erected at the site, but at that stage it becomes the property of the customer because it is permanently embedded in the land belonging to the customer. The Hon'ble High Court held that the decision of the Supreme Court in the Ramsingh case was in a different context as in that case the question which fell for consideration was whether fabrication and erection of an electrical overhead traveling crane was a contract for work and labour or a contract for sale and the Apex Court held that it was a contract of works and not sale and that was the ratio of that case. It referred to the decision of the Apex Court in the case of Regional Manager v. Pawan Kumar Dubey - AIR 1976 SC 1766 wherein it was laid down that ratio decidendi is the rule deductible from the application of the law to the facts and circumstances of a case and not some conclusion based upon facts which may appear to be similar. 16. Applying the aforesaid analysis for bringing out the ratio decidendi of the Apex Court decision in the Nizam Sugar Factory's case it was submitted that we will have to look into the facts of the case. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thetics (cited supra) relied upon by the appellants and submitted that this judgment nowhere holds that a show cause notice should be issued within six months from the date of knowledge. In fact, in para 9, it has clearly been held that the extended time limit could not be invoked since there was no allegation of suppression etc. in the show cause notice itself. Similarly, in the case of Gowtami Textiles (Cited supra) the show cause notice was held time barred because the show cause notice itself did not bring out the element of suppression, fraud etc. to justify invoking of the extended period. As regards the tribunal decision in the case of Prasad Polypack (cited supra) it was submitted that in that case the delay in issue of show cause notice was abnormal and no material was produced to show that the department was preoccupied with further investigations during the intervening period. However in the present case it is on record that the investigation started on 2-9-87 when the statement of representative of M/s. Spie Capag was recorded, which statement was also found to be not correct as number of pipes actually found to be manufactured were 512 as against 500 stated by the repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f knowledge and knowledge continues till full information is obtained through subsequent inquiries etc. 21. As regards appellant's contention that the show cause notice and the Order-in-Original do not invoke specific clause of Rule 173Q, it was submitted that so long as show cause notice brings out the contraventions clearly, invoking even a wrong clause would not vitiate the proceedings as has been held by the Supreme Court in the case of J.K. Steel - 1978 (2) E.L.T. J355 (S.C.), Jagdish Cancer - 2001 (132) E.L.T. 257 (S.C.) and Bombay High Court decision in the case of Sharda Synthetics - 2006 (205) E.L.T. 49 (Bom). 22. As regards plea of bona fide, it was submitted that the appellants being not a small company cannot be unaware of excisability of the manufactured products specially when clause T.15 of the instruction to the tender of international competitive bids stipulated that appellants would be responsible of paying all duties. Further, clause 10 of general conditions of contract for civil work stipulated that contractor shall make his own inquires and familiarize himself and comply with all the laws and regulations of the statutory authorities etc. This has put appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modity comes into existence having a new name, character and use, it would be excisable. In view of this the plea of bona fide belief cannot be entertained. 25. As regard breach of natural justice inasmuch as co-noticees were not heard in presence of each other, it was submitted that the appellants at no stage sought copies of the record of personal hearing of their co-noticees. 26. In view of above it was submitted that, penalty is clearly imposable and extended time limit has been rightly invoked. 27. We have considered the submissions both oral and written from both sides and perused the records. We are not going into the merits of the case, as the appellants are not disputing the same but are contesting the demand on limitation only. The appellants main plea is that once the Revenue has come to know about the activity of manufacture of RCC pipes through the statement of their legal and fiscal advisor recorded on 2nd September 1987, the extended period cannot be invoked thereafter and the show cause notice should have been issued within the normal period from the date of such knowledge and since the show cause notice was issued on 10-2-1989, it was clearly time barred. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notices on the same facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. In fact while coming to this conclusion the Apex Court has referred to its earlier decision in the case PNB Pharmaceuticals - 2003 (153) E.L.T. 14 (S.C.), ECE Industries - 2004 (164) E.L.T. 236 (S.C.) and Hyderabad Polymers - 2004 (166) E.L.T. 151 (S.C.) all of which involved issuance of first show cause notice for earlier period and a second show cause notice for subsequent period alleging suppression of facts. The Apex Court nowhere held that period of limitation would be six months from the date of knowledge as is being canvassed by the appellant. Nor does it say that date of knowledge and issuance of show cause notice are one and the same thing. In fact even in case of fraud and suppression, there will be some date when the department may come to know of fraud etc. but that does not mean that then the extended period will not be invokable as otherwise the provisions relating to extended period will become redundant. It is a matter of common knowledge that investigations in a case involving in fraud, suppression e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench as to how the costing of the pipes has been arrived at, the ld. Advocate for the appellants showed their complete inability to do so. In fact a copy of the contract also could not be furnished. Annexure A to the show cause notice gives the working of the cost by separately giving the cost of the cement, coarse concrete, river sand, reinforce steel, labour charges on steel and on concrete which costs were not available on the date of recording of the statement and were not capable of being readily furnished and must have been supplied by the appellants themselves but they could not indicate the date on which such information was supplied. We further note that enquiry was also made from Bombay Municipal Corporation and some information was furnished vide their letter dated 27-6-88. Show cause notice demands duties from both appellant and BMC and therefore confirmation of facts from. BMC was also essential. In spite of all these formalities involving gathering information relating to cost of pipes a show cause notice was issued within 16 to 17 months of the date of recording of 1st statement which appears to be more than reasonable. It has to be taken that all facts became ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Paresh Plastics and Prasad Polypack and other decisions cited by appellant and are satisfied with the distinction brought out by ld. DR in his submission. We also observe that the Tribunal in the case of Sudershan Casting cited supra has after noting the decision of Karnataka High Court in Bripanil Synthetics and in Mukund Ltd, 2007 (7) S.T.R. 159 after noting Apex Court decision in the case of Nizam Sugar Factory held that a show cause notice can be issued after five years. Supreme Court has also in the case Mathania fabrics - 2008 (221) E.L.T. 481 (S.C.) in para 9 clearly held that in case of suppression limitation of five years period has to be reckoned backward from the date of show cause notice. 33. We therefore hold that the extended period has been rightly invoked. 34. As regard appellants plea of non mention of specific clause of Rule 173Q, we find that the supreme Court has in the case of J.K. Steel - 1978 (2) E.L.T. 355 (S.C.) held that quoting wrong rule will not vitiate the proceedings so long as the charges are brought out in the show cause notice. Similarly the Apex Court has in para 12 inter alia held in the case of Jagdish Cancer that as long as the sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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