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TMI Blog2024 (12) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... called Mahul Refinery and goods manufactured by Mahul Refinery stated above are transported to their various depots situated at places like Manmad, Manglia, Mathura, Kota and Bijwasan through pipeline called Mumbai Manmad Bijwasan Pipeline (MMBPL). During the transportation of HSD, MS and SKO through pipeline to their depots, SKO comes into contact with HSD and MS. When the goods were continuously transported through pipeline, one product in the pipeline pushes the other product without any gap in between. Due to technical reasons SKO is positioned in between MS and HSD. Since one product pushes the other product in the pipeline, small quantity of SKO either gets mixed up with MS or gets mixed up with HSD. Such mixed goods are called as intermixed goods. The said goods such as MS, HSD and SKO are pumped through pipeline after they are cleared from the refinery on payment of duty. In respect of SKO if the same is for ultimate sale through public distribution system, the same is exempted from central excise duty under serial No.20 of Notification No. 04/2006-CE dated 01.03.2006 and subsequently under serial No.72 of Notification No.12/2012-CE dated 17.03.2012. The wording in the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice for the period from December 2015 to January 2017 was issued on the same grounds on 22.12.2017 demanding central excise duty of Rs.47,87,05,326/-. For issue of the said show cause notice dated 22.12.2017 in para 18 of the said show cause notice, sub-section (4) of Section 11A of Central Excise Act, 1944 was invoked by stating that the appellant had willfully suppressed and misstated and misdeclared actual facts and circumstances with ulterior motive to defraud government exchequer by evading payment of duty on the quantity of SKO which was cleared from refinery for intended purpose of distributing under PDS but could not be received at the receiving end and not distributed under PDS. The show cause notice dated 30.01.2015 on contest was decided through order-in- original dated 31.07.2015 by relying on CBEC circular bearing No.636/27/2002-CX dated 22.04.2002 wherein demand of central excise duty of Rs.43,70,13,942/- was confirmed and equal penalty was imposed and the appellant was ordered to pay interest on the same. Aggrieved by the said order, appellant is before this Tribunal in appeal No. E/87430/2015. The above stated show cause notice dated 27.01.2016 was decided on con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Undertaking of the Government of India and it does not gain anything by evading central excise duty and as such an organization under the control of the Government of India does not involve in any mala fide intention and, therefore, the extended period of limitation cannot be invoked in respect of the appellant being a Government of India Undertaking and in the absence of mala fide intention, demand raised under extended period does not survive. b) The Board circular dated 22.04.2002 relied upon by the original authority was issued much before the exemption notifications were issued and was not related to exemption from payment of central excise duty for SKO cleared for public distribution system and the said circular was for deciding the value of imported goods and, therefore, the order-in-original passed on the basis of the said circular dated 22.04.2002 is not sustainable in law. c) The intermixing takes place post clearance of the goods which is very clear from the sentence "The said intermixed products are completely different from the one they had cleared from their refinery" in para 10 of show cause notice dated 30.01.2015 and similarly worded sentences in the remaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribution system and, therefore, the said quantity of SKO was not eligible for full exemption of central excise duty. He has further submitted that the word "ultimate" used in the expression for exemption is that it should be ultimately consumed by public distribution system to be eligible to avail exemption from payment of central excise duty. 5. We have carefully gone through the record of the case and submissions made. We note that in all the three show cause notices it has been alleged that there was willful suppression, misdeclaration of facts and circumstances with an ulterior motive to defraud the government exchequer by evading payment of duty on the quantity of SKO which was cleared from refinery for intended purpose of distribution under public distribution system and for recovery of central excise duty, provisions under sub- section (4) of Section 11A of Central Excise Act, 1944 were invoked. In show cause notice dated 30.01.2015 it is also stated that Section 11A(4) of Central Excise Act, 1944 is the same as proviso to sub-section (1) of Section 11A before amendment. On this issue we have ruling by Hon'ble Supreme Court in the case of Nizam Sugar Factory vs. Collector ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed the procedure prescribed under the rules; and had not discharged duty liability. The said SCN covered the period of assessment years 1982-83 to 1986-87. Appellant responded to the second SCN and took the plea that the SCN under consideration was practically a repetition of the allegations contained in the SCN dated 28-2-1984 and for the period April, 1982 to September, 1982 the department had raised demands under two different SCNs. It was pointed out that carbon dioxide in the impure form was not marketable as it also contained carbon monoxide in lethal proportions. It was contended that they were under bona fide belief that since such impure carbon dioxide was not exigible to payment of duty, they were not required to file either Classification List or the Price List or take out licence. It was submitted that resorting to extended period of limitation under Section 11A(1) was not justified in the circumstances of the case. Appellant was served with the third SCN on 12-9-1988 for the period 16-3-1988 to 27-6-1988 on the same allegations. Assessee filed its reply in terms of the earlier replies i.e. reply to SCN dated 16-7-1987. The adjudicating authority did not accept the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts which make it clear that the question whether M/s. Pharmachem Distributors was a related person has been the subject-matter of consideration of the Excise authorities at different stages, when the classification was filed, when the first show cause notice was issued in 1985 and also at the stage when the second and the third show cause notices were issued in 1988. At all these stages, the necessary material was before the authorities. They had then taken the view that M/s. Pharmachem Distributors was not a related person. If the authorities came to the conclusion subsequently that it was a related person, the same fact could not be treated as a suppression of fact on the part of the assessee so as to saddle with the liability of duty for the larger period by invoking proviso to Section 11A of the Act. So far as the assessee is concerned, it has all along been contending that they were not related persons, so, it cannot be said to be guilty of not filling up the declaration in the prescribed proforma indicating related persons. The necessary facts had been brought to the notice of the authorities at different intervals from 1985 to 1988 and further, they had dropped the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant. 10. For the reasons stated above, Civil Appeal Nos. 2747 of 2001 and Civil Appeal No. 6261 of 2003 filed by the assessees are accepted and the impugned orders are set aside on the question of limitation only. The demands raised against them as well as the penalty, if any, are dropped. Civil Appeals @ Special Leave Petition (C) Nos. 9271-9278 of 2003 filed by the department are dismissed. Questions of classification and marketability are left open. Parties shall bear their own costs." In para 9 of the said ruling, Hon'ble Supreme Court has held that when the first show cause notice was issued, all the relevant facts were in the knowledge of authorities and that while issuing the second and third show cause notices, the same and similar facts would not be taken as suppression of fact on the part of the assessee as these facts were already in the knowledge of the authorities. Therefore, Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ates issued by the Board to the effect that the cement was required for use in the generation or distribution of electrical energy. In the initial assessment proceedings on the basis of these certificates the sales of cement by the assessee to the Board were exempted. The exemption was granted under Section 5(2)(a)(iv) of the Act. 3. Section 5(2)(a)(iv) of the Act reads as under : "5(2). In this Act the expression 'taxable turnover' means that part of the dealer's gross turnover during any period which remains after deducting therefrom - (a) x x x x (1) x x x x (2) x x x x (3) x x x x (iv) Sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910 (IX of 1910) of goods for use by it in the generation or distribution of such energy: x x x x x x x x x x x x x 4. There is no dispute that the Board was an undertaking supplying the electrical energy to the public and that it held a licence or a sanction under the Indian Electricity Act 1910. The assessing authority on the basis of the certificates took the view that the cement was sold by the assessee to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s such, that is, certificates given with the knowledge that the cement purchased was to be used partly in activities not directly connected with the generation or distribution of electrical energy nor were the certificates obtained by the assessee in collusion with the Board. The assessee was entitled to rely on the certificates and get the exemption. 10. We are unable to accept the submission of Mr. Bana that, in order to get the exemption it must be shown that the goods in question, namely, the cement supplied by the assessee in this case was actually used in the generation or distribution of electrical energy. It must be noted that the important words used in the relevant provisions are goods for use by it in the generation or distribution of such energy (emphasis supplied by us). On a plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use". If the intention of the legislature was to limit the exemption only to such goods sold as were actually used by the undertaking in the generation and distribution of electrical energy, the phraseology used in the exemption clause would have been different as, for example, "goods actuall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration or distribution of electrical energy cannot make any difference regarding the availability of the exemption. 14. In view of the conclusion set out in the previous paragraph, we do not feel called upon to go into the question whether certificates granted by the Board must be regarded as conclusive in a matter of granting exemption. We may, however, point out that the certificate contemplated under Section 5(2)(a)(iv) of the Act cannot compare with the certificate in Form C which is a statutory certificate nor can it be regarded as completely conclusive. We are not called upon in this case to consider in what circumstance the assessing authority can go behind the certificate. It is clear that in the present case no such circumstances existed. 15. In the result, the appeals must fail and are dismissed with costs." We note that Hon'ble Supreme Court in para 10 of the above stated ruling has observed that it must be noted that the important words used in the relevant provisions are goods "for use" by it in the generation or distribution of such energy and that on a plain reading of the relevant clause it is clear that the expression "for use" must mean "intended for use". I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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