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HAVUKAL TEA & PRODUCE CO. (P) LTD. Versus COMMISSIONER OF C. EX., SALEM

2008 (7) TMI 685 - CESTAT, CHENNAI

Demand - time Limitation - Suppression of facts - Held that: - the assessee cannot be held to have suppressed before the department anything which were within their knowledge. It appears that they had enough documentary material with them at the commencement of every fiscal, which made them believe that their prospective raw material suppliers were “small tea growers” - demand of duty set aside - appeal allowed - decided in favor of appellant. - E/94 and 95/2007 - 639 and 640/2008 - Dated:- 1-7- .....

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8-2-2005 from the appellants in adjudication of a show-cause notice dated 28-3-2006, wherein the extended period of limitation had been invoked on the ground of suppression of facts. The ld. Commissioner also imposed a penalty equal to duty under Section 11AC of the Central Excise Act, 1944. The impugned demand of duty is consequential to denial of the benefit of Notification No. 41/99-C.E. dated 26-11-99, 13/03-C.E. dated 1-3-03 and 42/03-C.E., dated 14-5-03. These Notifications, which were iss .....

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the processed tea manufacturer (covered by the term bought-leaf factory defined in the Notification) should have worked in the previous year at least for a period of 6 months (b) an undertaking should be given by him to the effect that he would procure raw material from small tea growers to the extent of at least 2/3rd of his total procurement (c) a Statement of Accounts should be filed at the end of the financial year so as to confirm that the conditions have been fulfilled. It appears, the ass .....

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the proviso to Section 11A(1) of the Central Excise Act, alleged, inter alia, that some of the so-called small tea growers did not, in fact, qualify to be small tea growers in terms of the Notifications and that this fact was suppressed by the noticee. Vis-a-vis this allegation, the assessee, in their reply, stated that, at the commencement of every fiscal year, they were possessed of documents which indicated that the raw material-suppliers were small tea growers . Documents referred to by the .....

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period of limitation is questioned in this manner. The SCN had also relied on Agricultural Income Tax Returns (AIT Returns, for short) filed by tea growers with the authority concerned. These returns filed by the tea growers indicated extent of land over 10 hectares as held under tea cultivation. On this basis, it was further alleged that the excess land holding of the tea growers was suppressed by the assessee for the purpose of obtaining the benefit of the Notification. The ld. counsel for the .....

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n the statements recorded from these witnesses earlier by the investigating officers, they had given information regarding AIT Returns but had not stated that such information had been divulged to the assessee also. The ld. counsel has referred to these witnesses also in the context of his endeavour to meet the charge of suppression levelled against the assessee. It is submitted by the JCDR that some of the so-called small tea growers had, in fact, leased out of a part of their agricultural land .....

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hat the clubbing of the leased portion of the land with the land held by a tea grower for the purpose of determining whether the tea grower is a small tea grower for purposes of the Exemption Notification is not consistent with the provisions of the Tea Act. In any case, according to the ld. counsel, the entire demand of duty is for a period beyond the normal period of limitation prescribed under Section 11A(1) and a portion of the demand is even beyond the extended period of 5 years. 4. Af .....

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ctares of land under tea cultivation and hence were not small tea growers in terms of the Notifications. It was alleged that this fact was suppressed with intent to avail the benefit of the Notifications. We find that, at the commencement of every fiscal year, the assessee was possessed of documentary material evidencing the small tea grower status of the prospective raw material suppliers. The V.A.O s certificates and the Tea Board s Registration Certificate clearly indicated the extent of tea .....

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ivated land as shown in these returns was above 10 Ha, but this fact was not known to the assessee. Therefore, the AIT Returns cannot be accepted as having the effect of disproving the assessee s plea of bona fide belief based on Tea Board s Registration Certificate and the VAO s certificates. The third document, which made the assessee believe that the tea growers were small tea growers is the self-declaration of the tea growers. Those tea growers who were examined before the adjudicating autho .....

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