2013 (6) TMI 141 - HC - Central Excise

High Court affirms Tribunal's decision on Duty Demand, stresses accuracy in returns

The High Court upheld the Tribunal's decision to remand the case for a detailed examination of the similarity of goods cleared in the Domestic Tariff Area ... Extended period of limitation - discrepancy in filing of return - entire issue revolves around the true and correct interpretation of the words “similar goods” in the context of the controversy which has been raised in the present case. - held that:- It will not be appropriate for us to touch or observe anything in this regard as the CESTAT has directed the Commissioner to consider this issue and decide afresh. However, we do not find any merit in the contentions of the Revenue that ER-2 Returns which were filled in by the assessees did not enable the Central Excise officers to find out whether the DTA sales were in excess of the 50% of the quantities of the exported goods or not. Record reveals that the details in the prescribed format of ER-2 Returns along with the Central Excise invoices were submitted by the assessees on monthly basis for a period from 2004-05 onwards and, therefore, it is not believable that the Central Excise officers who received the Returns and invoices right from the year 2004-05 were not able to verify the exact quantity of each of the goods exported by the assessees vis-à-vis the DTA clearances made on payment of concessional rate of duty for a long period of five years. Therefore, the findings recorded by the CESTAT that the Central Excise officers receiving the Returns had all the information to enable him to verify the facts is, therefore, correct and cannot be termed as perverse so as to warrant any interference at our ends. The conclusion arrived at by the CESTAT that the demand was time-barred and the Revenue cannot invoke the extended period of limitation in this case is not based on mere assumptions or presumptions but is based on the conclusion arrived at after considering the documentary evidence on record including ER-2 Returns and Central Excise invoices of the assessees. Whether there was any fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of any Act, would be a question of fact depending upon the facts and circumstances of a particular case. In exercise of powers under Section 35G of the Act, a pure question of fact cannot be disturbed except on the ground of perversity. - Decided against the revenue. Issues Involved:1. Whether the extended period for demanding duties could be invoked.2. Whether the returns submitted by the assessee were complete and accurate.3. Whether the demand for short-payment of Education Cess was addressed.4. Whether the goods cleared in the Domestic Tariff Area (DTA) were similar to the goods exported.Issue-wise Detailed Analysis:1. Extended Period for Demanding Duties:The Revenue contended that the extended period for demanding duties should be invoked due to the assessee's alleged suppression of facts. The Tribunal, however, found that the assessees had submitted all necessary details in their ER-2 returns, including the quantities of goods manufactured, exported, and cleared in DTA, along with the applicable notification numbers. The Tribunal held that the Central Excise officers had sufficient information to verify the compliance with the 50% limit of DTA clearances. The High Court upheld this view, stating that the Tribunal's findings were based on documentary evidence and were not perverse. The Court emphasized that the extended period under Section 11A of the Central Excise Act could not be invoked without clear evidence of fraud, collusion, or willful misstatement.2. Completeness and Accuracy of Returns:The Revenue argued that the returns submitted by the assessees were insufficient for verifying the DTA clearances. The Tribunal, however, found that the ER-2 returns contained all necessary details, such as the description of goods, classification numbers, quantities manufactured, exported, and cleared in DTA, and the notification numbers under which concessional rates were claimed. The High Court agreed with the Tribunal, noting that the format of the ER-2 returns prescribed by the government was followed, and there was no evidence of any incorrect or incomplete information. The Court concluded that the Central Excise officers had all the information needed to verify the compliance with the DTA clearance limits.3. Demand for Short-Payment of Education Cess:The Revenue raised the issue of short-payment of Education Cess, but the Tribunal did not discuss or pass any orders on this matter. The High Court did not address this issue in detail, as it was not a primary contention in the appeals.4. Similarity of Goods Cleared in DTA and Exported Goods:The core issue revolved around whether the goods cleared in DTA were similar to the goods exported, as required by Notification No. 23/2003-C.E. The Tribunal remanded the matter to the Commissioner for a detailed examination of whether the goods cleared in DTA were indeed similar to the exported goods. The Tribunal emphasized the need for a product-wise examination to determine the eligibility for concessional rates. The High Court upheld this approach, noting that the interpretation of 'similar goods' was crucial and should be decided by the Commissioner as directed by the Tribunal.Conclusion:The High Court dismissed the appeals, upholding the Tribunal's decision to remand the matter for a detailed examination of the similarity of goods and confirming that the extended period for demanding duties could not be invoked without clear evidence of suppression or misstatement. The Court emphasized the importance of accurate and complete returns and the need for a thorough examination of the facts before making any determinations.