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TMI Blog2023 (1) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... re, believed that the value of S.S. Utensils sold to RSSL should have been valued under rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 [the Valuation Rules]. A show cause notice dated December 09, 2015 was, accordingly, issued to the appellant raising a demand of Rs. 87,31,992/-. A reply was filed by the appellant to the aforesaid show cause notice contesting the demand both on merits and also on the ground that the extended period of limitation contemplated under section 11A(4) of the Excise Act could not have been invoked. The adjudicating authority, however, by the order dated March 08, 2017 confirmed the short paid duty demand of Rs. 85,396/- with interest and also imposed penalty. It is against the said order dated March 08, 2017 that the appellant filed an appeal before the Commissioner (Appeals) again contesting the demand both on merits and also on the ground that the extended period of limitation could not have been invoked. The Commissioner (Appeals) upheld the order of the adjudicating authority and dismissed the appeal. It is against this order dated June 08, 2018 of the Commissioner (Appeals) that the present appeal has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o levied or paid or which has been so short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice; (4) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice." 9. In order to examine whether the conditions specified in sub-section (4) of section 11A were satisfied, it would be appropriate to first refer to the allegations made in the show cause notice dated December 09, 2015 on this aspect and they are reproduced below : "14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that we had never shown the details in ER-I returns or not shown the same in any other records or information provided to the department and that the same came to the notice of the department during the course of audit of the records of our firm. But it has no where been alleged that we have suppressed these facts with an intent to evade payment of duty. It is being repeatedly held by the Hon‟ble Supreme Court that mere suppression is not sufficient to invoke extended period. Suppression must be by reasons of fraud, collusion or willful misstatement with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required for covering extended period." 13. The Commissioner (Appeals), however, has not given any finding on this issue raised by the appellant relating to invocation of the extended period of limitation, as is clear from the order. 14. What, therefore, needs to be decided is whether for invoking the extended period of limitation under section 11A(4) of the Excise Act, facts had been suppressed by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied. 19. With the assistance of the learned authorized representative appearing for the Department Form ER-I that has to be submitted online has been perused. There is no space designated for the assessee to disclose that it is a related party and indeed the learned authorized representative appearing for the Department has not been able to point out any space where this information was required to be disclosed by the appellant. What has been alleged in the show cause notice is that the appellant had suppressed this information in the ER-I Form. As the said form does not require an assessee to disclose this information, it is not open to the Department to contend that the assessee had suppressed any information. 20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 [the Rules] that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the Rules provides that the proper officer may, on the basis of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sector Officer, and initiate recovery proceedings. He will also furnish the report of defaulters to AC/DC. Further, in case of default for more than 30 days, the RO has to enforce the provisions contained in sub-rule 3(A) to Rule 8 of CER,2002. 2.3 Completion of scrutiny of returns. Each Return, selected for detailed scrutiny, to be endorsed that the same has been subjected to scrutiny and found in order. Shortcomings, if any, be specified alongwith action initiated. To record the fact of completion of scrutiny on all copies of the return and also details of action initiated for shortcomings noticed. 24. The Central Excise Manual published by CBEC on May 17, 2005, which is available on the website of CBEC, devotes Part VI to SCRUTINY OF ASSESSMENT. Paragraphs 2.2,2.3 and 2.4 of this Part are reproduced below: "2.2 The Superintendent of Central Excise in-charge of the Range Office, with assistance of the Inspectors in-charge of the factory of an assessee, will scrutinize all the returns. They shall in selected cases, call all connecting documents including invoices and the records and scrutinize the correctness of assessment. 2.3. The Deputy/Assistant Commissioner of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant had suppressed facts with intent to evade payment of duty, the Department could not have invoked the extended period of limitation under section 11A(4) of the Act. This issue was raised by the appellant before the Commissioner (Appeals), but no finding has been recorded. 28. The provisions of section 11A(4) of the Excise Act came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, Bombay [1995 (78) E.L.T. 401 (SC)]. The Supreme Court observed that section 11A empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed:- "2. ****** The Department invoked extended period of limitation of five years as according to it the duty was short levied due to suppression of the fact that if the turnover was clubbed then it exceeded Rupees Five lakhs. ******** 4. A per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. 32. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (SC)] and the relevant portion of the judgment is reproduced below: "12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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