TMI Blog2023 (1) TMI 638X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant before the Commissioner (Appeals), but no finding has been recorded. The provisions of section 11A(4) of the Excise Act came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT] . 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. Thus, the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. The extended period of limitation could not have been invoked. The demand, which covers only the extended period of limitation, therefore, could not have been confirmed - Appeal allowed. - EXCISE APPEAL NO. 52930 OF 2018 - FINAL ORDER NO. 51117/2022 - Dated:- 15-11-2022 - MR. DILIP GUPTA, PRESIDEN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal, learned authorized representative appearing for the Department has, however, supported the impugned order and stated that not only the confirmation of the demand was justified but the extended period of limitation was correctly invoked as the appellant did not disclose the required information to the Department in the ER-1 form submitted by it. 5. The submissions advanced by the learned consultant appearing for the appellant and the learned authorized representative appearing for the Department have been considered. 6. As the entire demand that has been confirmed pertains to the extended period of limitation, it would be necessary to first examine this issue because if the appellant succeeds on this issue, then it would not be necessary to examine the issue on merits. 7. The submission of the learned consultant appearing for the appellant is that under section 11A (1) of the Excise Act, the Central Excise Officer could have served a notice upon the appellant within one year from January 02, 2014 on which date the return for the month of December 2013 was filed but in the instant case the show cause notice was issued on December 09, 2015 without there bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department and such facts came to the notice of department during the course of audit of the records of the assessee conducted by the AG, audit party, Jaipur. As such extended period is invokable in the present case. 10. In reply to the show cause notice the appellant specifically stated that facts had not been suppressed but even if it is assumed that facts had been suppressed, then too suppression of facts would not be sufficient to invoke the extended period because suppression has to be with intent to evade payment of duty. The appellant, therefore, submitted that the basic ingredient for invoking the extended period of limitation was not satisfied. 11. The adjudicating authority considered this issue relating to the extended period of limitation in paragraph 30 of the order and the same is reproduced below : 30. Now taking up argument of the assessee contesting that the instant case is time barred as they have not suppressed any material facts from the department. The demand of duty was issued in pursuant of an Audit objection raised by the Audit team on the basis of records maintained by them in regular course of business. Had the audit of records not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant submitted, which fact is not disputed by the Department, that the period of one year would commence from January 02, 2014 and so the notice that was issued on December 09, 2015 was beyond the period of one year. It has, therefore, to be seen whether the extended period of five years could have been invoked in the facts and circumstances of the case. 16. A perusal of section 11A (1) of the Excise Act shows that where any duty of excise has not been paid for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Excise Act with intent to evade payment of duty, the Central Excise Officer shall, within one year from the relevant date, serve notice on the person requiring him to show cause why he should not pay the amount specified in the notice. However, sub-section (4) of section 11A of the Excise Act provides that where any duty of excise has not been levied or short paid by reason of fraud or collusion or any wilful misstatement, the notice can be issued by the Central Excise Officer within five years from the relevant date. 17. The show cause notice, in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. 21. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the Central Board of Excise Customs [CBEC] on December 24, 2008 deal with duties, functions and responsibilities of Range Officers and Sector Officers . It has a table enumerating the duties, functions and responsibilities and the relevant portion of the table is reproduced below: LIST OF DUTIES, FUNCTIONS AND RESPO NSIBILITES OF RANGE OFFICER AND SECTOR OFFICER SCRUTINY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 Central Excise will scrutinize the returns of the units , which pay duty exceeding rupees one crore but less than Rs. 5 crores from PLA per annum every six months . They shall requisition all connected documents including invoices and the records and scruntinse the correctness of assessment . 2.4 The Additional/Joint Commissioner of Central Excise will scrutinize the returns of the units which pay duty of Rs. 5 crores or more from PLA per annum every six months. They shall requisition all connected documents including invoices and the records and scrutinize the correctness of assessment . (emphasis supplied) 25. It is thus evident that not only do the Rules mandate officers to scrutinise the Returns to verify the correctness of self assessment and empower the officers to call for documents and records for the purpose, Instructions issued by the department also specifically require officers at various levels to do so. 26. If the scrutiny by officers reveals short payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 perusal of the proviso indicates that it has been used in company of such strong works as fraud, collusion or willful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. (emphasis supplied) 29. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. 30. This decision of the Supreme Court in Pushpam Pharmaceuticals was followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal. 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 three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. (emphasis supplied) 33. The Supreme Court in Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh [ 2007 (216) E.L.T. 177 (SC) ] also observed in connection with section 11A of the Excise Act, that suppression means failure to disclose full information with intention to evade payment of duty and the observations are as follows:- 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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