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2015 (7) TMI 710 - ALLAHABAD HIGH COURT

2015 (7) TMI 710 - ALLAHABAD HIGH COURT - 2015 (323) E.L.T. 361 (All.) - Classification of goods - Classification as shampoo or ayurvedic liquid soap - Deliberate suppression of production and clearance of excisable goods - evasion of central excise duty - held that:- Bare perusal of Section 11A(1) of the Act clearly shows that the extended period of limitation of five years may be invoked, if the central excise duty has not been levied or has not been paid or short levied or short paid or erron .....

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the order of the Tribunal suffers from manifest error of law and the finding recorded with respect to the extended period of limitation is bad. It is also relevant to note that on the question of classification the Tribunal itself has found that the stand in regard of department is correct. There remained no dispute that the goods in question were excisable goods and therefore removal of such goods without paying duty was in contravention of the provisions of the Act and Rules applicable and, th .....

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t : R. R. Kapoor ORDER 1. Heard Sri B.K. Raghubansi, learned counsel for the applicant/department and Sri S.D. Singh, learned senior advocate assisted by Sri Rishi Raj Kapoor, learned counsel for the respondent-assessee. 2. In this central excise reference, following questions of law has been referred by the Tribunal at the instance of the Central Excise Department, for opinion of the High Court: "1. Whether demand of duty under Section 11-A for extended period on excisable goods manufactur .....

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are that the respondent is engaged in manufacturing of shampoos. His business premises was visited by a team of Central Excise Preventive Officer, Moradabad on 16.9.1996. During the course of checking it was found that the respondents were engaged in the manufacturing of excisable goods (shampoo) since the year 1989. They manufactured shampoos in various brand names, namely (i) Dena Ji Brand Satritha shampoo, (ii) Dena Ji Brand Harbal shampoo (iii) Dena Ji Brand Neem shampoo. These goods were b .....

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lia stated that the unit was registered with the Uttar Pradesh Khadi and Gram Udyog Board and they had no central excise liability on these products. The respondents have neither filed any declaration nor applied for central excise registration. The respondent also took the stand that their product is not shampoo but an ayurvedic liquid soap. Certain quantity of final products (shampoos), found during the course of checking, were seized. 4. A show cause notice dated 14th March, 1997 was issued t .....

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of Central Excise, Meerut clearly alleged that during the period March, 1992 to September, 1996 the respondent clandestinely removed excisable goods with sole intention to evade payment of Central Excise duty by deliberately suppressing the production and clearance of shampoos. The extended period of limitation as provided under Section 11A(i) of the Act was invoked. 5. The respondent filed their objection to the notice. 6. The aforesaid show cause notice was adjudicated by the Commissioner of C .....

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entral Excise duty, M/s DJS had not informed the department about the manufacture of these excisable goods. They had not obtained Central Excise Licence/Registration. They had thus deliberately suppressed material information from the department and cleared the goods clandestinely without payment of duty. Extended period of limitation has, therefore, been rightly invoked. Therefore, Central Excise Duty amounting to ₹ 1,70,05170.92/- on goods already cleared clandestinely without payment of .....

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the manufacture of excisable goods, did not obtain Central Excise licence/registration as required under rules and clandestinely removed excisable goods without due discharge of Central Excise duty liability leviable thereon and thus, failed to discharge their statutory obligation and is therefore liable for penal action under rule 173 of the Central Excise Rules for contravention of the provisions of the Rules ibid. I also find that the seized goods manufactured in violation of rules as quoted .....

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2000 under Section 35 (C) (1) of the Act. The tribunal allowed the appeal of the respondent solely on the ground that the extended period of limitation under the proviso to Section 11A (1) of the Act could not be invoked in the facts of the case. The conclusion was recorded by the Tribunal on the basis of a final order No. 812-813/99-C dated 18.8.1999 passed in the case of another accessee. The relevant part of the order is as under: "Advocate A.R. Madhav Rao and Dr. Ravinder Babu, JDR for .....

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ng authority is as follows: "........... I find that the party failed to inform the department about its manufacture and did not obtain registration during the impugned period under dispute as required under Rule 174 of the Central Excise Rules, 1944 and hence, failed to discharge their statutory duties and are liable for penal action under Rule 1730 of Central Excise Rules, 1944........". We observe that the findings of the adjudicating authority does not say that the appellants herei .....

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ated from the date of show cause notice. Consequently the demand of duty may be revised, if any". (b) In the present case also in the Order-in-Original the Commissioner has observed as follows:- "M/s DJS had not informed the Deptt. about the manufacture of these excisable goods. They had not obtained Central Excise Licence/registration. They had thus deliberately suppressed material information from the Deptt. and cleared the goods clandestinely without payment of duty. Extended period .....

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mand, the classification as determined in this order under heading 3305.99 of the Central Excise Tariff Act, 1985 is confirmed. The appeals are allowed in above terms." 8. Against the aforesaid order of the Tribunal, the applicant filed a Central Excise Reference Application (Defective) No. 23 of 2000 before this Court which was allowed by an order dated 29th October, 2003. The Tribunal was asked to refer the four questions of law as framed. In consequence to the said order of this Court, t .....

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intention to evade payment of duty. The facts of the case in which findings recorded in the final order as relied by the tribunal were distinguishable inasmuch in that case the adjudicating authority had not recorded any finding with regard to wilful misstatement/suppression of fact or contravention of rules with intention to evade payment of duty, it was only recorded that, the assessee failed to inform the department about the manufacture of the product under consideration. On the contrary in .....

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ded therein and penalty and interest were rightly levied. 10. He, therefore, submits that the referred question of law deserves to be answered in favour of the applicant and against the respondent/assessee. 11. Learned Senior Counsel for the respondent-assessee supports the findings recorded in the order of the tribunal. He submits that the findings recorded by the tribunal are the findings of fact. 12. We have carefully considered the submissions of learned counsel for the parties. 13. It is un .....

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f the respondent-assessee was that in case of another assessee a final order No. 812-813/99-C dated 18.9.1999 was passed in which the adjudicating authority of that assessee recorded a similar finding that the assessee failed to inform the department about the manufacture of product under consideration, which was not at part with suppression of material facts for evasion of duty. The Tribunal, although quoted a passage from the order in original in question of the respondent-assessee but did not .....

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der: (i) The respondent-assessee failed to inform the department about the manufacture of excisable goods; (ii) Respondent assessee did not obtain central excise lisence/registration as required under Rule (iii) They clandestinely removed excisable goods without due discharge of central excise duty leviable thereon. (iv) They failed to discharge their statutory obligation. (v) They deliberately suppressed material information from the department and cleared the goods clandestinely without paymen .....

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he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect for the words "six mon .....

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