TMI Blog2018 (7) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Rules, 2001. The appellant has also not informed the department about the clearance of the goods. Complete non-observance of procedure cannot be said to be a mere procedural lapse. The appellant has not fulfilled any of the conditions. Merely stating that they have not paid the Central Excise Duty as they felt that they would be used by M/s.Metro & Metro for export purposes would not be sufficient. It is well settled that the stringency and the mandatory nature of any notification is decided on the basis of the purpose it seeks to achieve. The purpose of Notification No.43 of 2001 dated 26.06.2001 is to ensure that excise duty should not be evaded under the garb of export sales. The appellant has removed the goods without informing the Department. The appellant has also not registered under Rule 9 of the Central Excise Rules. The contention, even if the appellant is not registered under Rule 9, still the appellant can avail exemption from paying excise duty cannot be accepted. The removal of goods came to light only after the visit of the officers to the factory and perusal of the documents - the authorities were justified in invoking Section 11-A for recovery of excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2006 was issued stating that the appellant had manufactured and cleared 70,840 pairs of leather show uppers and they sold the same to M/s. Metro Metro, Agra, during the period of December, 2004, to February, 2005 in contravention of Rules, 4, 6, 8, 9, 10, 11 and 12 of the Central Excise Rules, 2002 i.e., sale without Central Excise registration, without assessment, without payment of excise duty, without maintaining the statutory records, and without filing the statutory returns. 6. The show cause notice also stated that since the appellant has not disclosed the fact of removal and sale of the said goods to the Department and that they did not approach the Department for guidance or clarification, it appears that they have wilfully suppressed the fact of removal of said goods without payment of duty and contravened various provisions of Central Excise Rules, 2002 with an intention to evade payment of duty. The show cause notice, further, stated that the extended period under the proviso of Section 11-A of the Central Excise Act, 1944, is invokable. The show cause notice also stated as to why interest and penalty should not be levied on the appellants. 7. The appellant sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a rebate claim where the duty was paid and relevant documentary proof for export was submitted. There was no dispute in export of goods. 21. The ratio of the above decisions is not applicable to the instant case, since it had not been proved before me that the shoe-uppers cleared from M/s. SC had been used in the manufacture of shoes that were finally exported. M/s.ISC have not produced any documentary evidence to prove that the shoe-uppers cleared from their factory were used in the shoes which was finally exported. It is not just procedural lapse in following Notification No.43 of 2001, but the use of shoe uppers in manufacture of shoes that were finally exported is in doubt. The question of procedural lapse would come in to picture, had the shoe-uppers been cleared under Form H for export purpose. 22. I observe that M/s.ISC have cleared the shoe-uppers without payment of duty, suppressed the fact of such clearances and contravened the various provisions Central Excise Rules, 2002, with the intent to evade payment of duty. Hence, the proviso to Section 11A(1) is applicable to the instant case. 23. The show cause notice prime facie made a case for the clearance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority and produced before the appellate authority for consideration. Hence, the additional evidence submitted at the appellate stage cannot save the case of the appellant. 7.7 The lower adjudicating authority has accepted the payment of the duty on the basis of cum-duty-price and accordingly he had confirmed the demand. 7.8 The appellant neither informed the department about the clearance of the goods nor paid appropriate duty on the goods. This fact came to light only after the visit of the officers to the factory and perusal of the documents and the extended period under the proviso to Section 11 A of the Central Excise Act, 1944 was rightly invoked. When the proviso to Section 11 A of the Act ibid, it is also correct to impose penalty equivalent to duty so determined under Section 11 AC of the Act ibid. In view of the above, the citations viz., TNHB [1994 (74) ELT 9 SC], Rashtriya Ispat Nigam Ltd., Vs. CCE [2003 (161) ELT 285], CCE Vs. Sree Krishna Pipe Industries [2004 (61) RLT 17 Kar HC], CCE Vs. Ikon Engineering P Ltd., [2003 (151) ELT 453] are not relevant to this case. 12. The matter was taken up further by the appellant before the Customs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or any other premises, as may be approved by the Commissioner. (2) Any material may be removed without payment of duty from a factory of the producer or the manufacturer or the warehouse or any other premises, for use in the manufacture or processing of goods which are exported, as may be approved by the Commissioner. (3) The export under sub-rule (1) or sub-rule (2) shall be subject to such conditions, safeguards and procedure as may be specified by notification by the Board. 18. The Central Government has brought out Notification Nos.42 of 2001 and 43 of 2001, notifying conditions and procedures under Rule 19. The present case is governed by Rule 19(2), since the appellant have sold the leather uppers to M/s.Metro Metro for the use and manufacture of leather shoes, which were exported. Notification No.43 of 2001, dated 26th June, 2001,reads as under:- G.S.R. In exercise of the powers conferred by of sub-rule (3) read with sub-rule (2) of rule 19 of the Central Excise (No.2) Rules, 2001, the Central Board of Excise and Customs hereby notifies the conditions, safeguards and procedures for procurement of the excisable without payment of duty for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacture or processing of finished goods without payment of duty or remove the same, without payment of duty in bond for export, provided that the waste, if any, arising in the course of such operation is also returned to the factory of manufacturer or processor; and (c) any waster arising from the processing of the excisable goods any be removed on payment of appropriate duty as if such waste is manufactured in the factory of the manufacturer or processor; (vi) the goods shall be exported on the application in Form A.R.E 2 specified in the Annexure and the procedures specified in Ministry of Finance (Department of Revenue) notification No.40/2001-Central Excise (N.T) dated 26th June, 2001 or in notification No.42/2001-Central Excise dated 26th June, 2001 shall be followed. Notification No. 42 of 2001 deals with the conditions imposed on the exporters, which have not been reproduced as it is not relevant for the purpose of this case. 19. Perusal of Notification No.43 of 2001, dated 26th June, 2001, would show that in order to get exemption from paying excise duty, the manufacturer or processor has to follow the following conditions:- a) the manufacturer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dealers, it will wellnigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the section. Therefore, presumably to achieve the twofold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall furnish a decla- ration form in the manner prescribed under the section. The liberal construction suggested will facilitate the commission of fraud and introduce administrative inconveniences, both of which the provisions of the said clause seek to avoid ............. 3...........The declaration contemplated in Form 14 is to the effect that the goods imported shall not be used for any other purpose for sale or otherwise etc. It can thus be seen that an incentive is sought to be given to such entrepreneurs by such concession if the raw material which is imported is also utilised in the industrial undertaking without selling or disposing of otherwise. That being the object a verification at the relevant time by the octroi authorities becomes very much necessary before a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y disclosure via a classification list. 13.1. In our view, this cannot be construed as suppression of fact, within the meaning of Section 11A(1) of the 1944 Act. Mere non-disclosure of facts, in such like circumstances, cannot constitute suppression of facts. Given the way the Section is framed, the expression suppression of fact , appears in the company of words and expressions, such as, fraud, collusion, willful misstatement. Therefore, the expression suppression of facts , has to take colour from the words whose company, it appears in. A mere non-disclosure of information, when there is no obligation in law to furnish the same, will not amount to, in our opinion, fraud or collusion or even, willful misstatement and, hence, trigger the extended period of limitation [See Collector of Central Excise, Hyderabad V. M/s.Chemphar Drugs and Liniments, Hyderabad, 1989 (40) ELT 276 (SC).;Padmini Products V. Collector of C.Ex., 1989 (43) ELT 195 (SC) and Pushpam Pharmaceuticals Company V. Collector of Central Excise, Bombay, 1995 (78) ELT 401 (SC)]. 24. The ratio of the said judgment, cannot be applied to the facts of the case for availing benefit of Rule 19 of the Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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