2015 (9) TMI 355 - SC - Central Excise

Assessee's duty demand barred by limitation; walk-in cooler classified under item No.29A(3) as refrigerating machinery

Blue Star Ltd. & Anr. Versus Union of India & Anr.

SC held for the assessee, setting aside a duty demand as barred by the period of limitation. The Court found that a walk-in cooler-an insulated room with ... Levy of duty on walk-in cooler - Extended period of limitation - A Walk-in cooler consists of an insulated room with a door. A cooling unit is fixed on the top panel of this enclosure and cool air is blown in to maintain low temperature therein. - Whether in the nature of REFRIGERATING AND AIR-CONDITIONING APPLIANCES AND MACHINERY, ALL SORTS AND PARTS THEREOF falling under item no. 29A - Held that:- many High Courts had taken the view that the tax on Walk-in coolers would not be covered by item No.29A (3). If the assessee acted on the basis of the said position in law which was prevailing at that time (though over-ruled subsequently) it would show that the action of the assessee was bonafide. - Demand set aside on the ground of period of limitation - Decided in favor of assessee. Issues involved:1. Interpretation of the Central Excise Tariff Act 1985 regarding the classification of walk-in coolers under item No.29A.2. Application of the proviso to Section 11A of the Act for invoking extended period of limitation.3. Consideration of suppression or mis-declaration of facts by the Department in the case.Interpretation of Central Excise Tariff Act 1985:The case involved determining whether walk-in coolers fell under item No.29A of the Central Excise Tariff Act 1985. Previous High Court opinions suggested that parts of walk-in coolers were not covered by the entry related to refrigerating and air-conditioning appliances. However, a Supreme Court judgment in Frick India Ltd. vs. Union of India overruled this view, holding that parts of walk-in coolers were indeed subject to excise duty under Item No.29A.Application of Proviso to Section 11A:The Revenue sought to levy duty on walk-in coolers beyond the standard limitation period provided under Section 11A. The show cause notice was issued in 1986, covering a period from 1981 to 1986, which exceeded the standard limitation. The Revenue invoked the proviso to Section 11A to extend the limitation period. However, the appellant argued that there was no misrepresentation or suppression of facts justifying the use of the proviso. Referring to a Bombay High Court judgment, it was contended that all relevant facts were known to the Revenue, indicating no suppression. The Court agreed, concluding that the Revenue could not invoke the proviso under Section 11A.Consideration of Suppression or Mis-declaration:The appellant's argument centered on the lack of suppression or misdeclaration of facts by the Department. It was highlighted that the Revenue was aware of all relevant facts, as evidenced by its own arguments regarding the assembly process of walk-in coolers. Moreover, the prevailing legal position at the time, as supported by various High Court decisions, indicated that the appellant's actions were bona fide. Consequently, the Court found that there was no suppression or misdeclaration of facts, further supporting the decision to disallow the invocation of the proviso under Section 11A.In conclusion, the Supreme Court allowed the appeal to the extent that the Revenue could only recover duties for a specific period within the limitation. The duty was to be recalculated for a restricted timeframe, and any excess amount paid by the assessee was to be refunded promptly. The judgment emphasized the importance of considering legal interpretations, limitations periods, and the absence of suppression or misdeclaration in excise duty cases involving complex classifications like walk-in coolers.