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of <h1>Short Levy Dispute Resolved: Exempted Goods Turnover Ambiguity Prevents Duty Reassessment Under Section 11A</h1> <h3>PUSHPAM PHARMACEUTICALS COMPANY Versus COLLECTOR OF C. EX., BOMBAY</h3> SC examined short levy proceedings under Section 11A of Central Excises & Salt Act for years 1978-82. The Department claimed duty short levy by ... Demand - extended period of limitation - Words and Phrases - Suppression of facts - clubbed turnover - whether the Department was justified in initiating proceedings for short levy by invoking proviso to Section 11A of the Central Excises & Salt Act, 1944 for the years 1978-79, 1979-80, 1980-81 and 1981-82 - HELD THAT:- No rule could be pointed out requiring a manufacturer to disclose the turnover of exempted goods. Even assuming it was, the appellant could not be held guilty of suppression when the law itself was not certain. Section 11A empowers the Department to re-open proceedings if the 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. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful 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. Appeal succeeds and is allowed. The Supreme Court considered whether the Department was justified in invoking the proviso to Section 11A of the Central Excises & Salt Act, 1944 to initiate proceedings for short levy for 1978-79 to 1981-82. The appellant manufactured goods under Tariff Entry 14E (duty liable) and Item 68 (fully exempt). Notification No. 111/78 exempted turnover under Rs. 5 lakhs for Item 14E, leading the appellant to surrender its license. The Department contended that if turnover from both items was clubbed, the threshold was exceeded, justifying extended limitation under Section 11A proviso for 'suppression of facts.'The Court referenced Wallace Flour Mills Co. Ltd. v. Collector, which settled that turnover of exempted and assessable goods need not be clubbed. It held that in a state of legal uncertainty, the appellant was not guilty of 'suppression,' as no rule required disclosure of exempted goods turnover. The Court emphasized that 'suppression' under Section 11A proviso must be deliberate and intentional, akin to fraud or wilful default, not mere omission or failure to disclose known facts.Accordingly, the Court allowed the appeal, ruling that extended limitation could not apply absent deliberate suppression, and remitted the matter for reassessment limited to six months from the show cause notice date.
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