TaxTMI 
TaxTMI 
2010 (11) TMI 7
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....r Sub-heading 8708.00 and 8714.00 of the Central Excise Tariff Act, 1985. Bajaj, the Respondent no.1, was supplying inputs - aluminum ingots after purchasing the same from other manufacturers to Anurang for the relevant period under the cover of invoices issued under Rule 57F(2) and Rule 57(3) of the Central Excise Rules, 1994, after reversing the MODVAT credit availed on the said input. 3) A show cause notice dated 05.03.2001 was issued by the Commissioner of Customs and Central Excise, Aurangabad, in which it was alleged that Anurang was receiving inputs from Bajaj at an under-valued landed cost by not including expenses on account of sales tax, octroi, freight, insurance, loading- unloading charges and handling charges, and that Bajaj was charging only the basic price of such inputs equal to the basic price charged by the original manufacturers of the said inputs to Bajaj, and since the additional cost of loading-unloading, freight etc. was not included in the input supplied to Anurang, there was consequent reduction in the landed cost of such inputs. It was also alleged that the price charged by Bajaj was depressed price although the same was coloured as negotiated price and....
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....h the units are situated under the jurisdiction of the same division. It was also contended that there was no deliberate suppression of facts, or mis-statements or intention to evade Central Excise Duty on their part. Anurang, in their reply, had stated that the price charged by Bajaj to them was for sale of ingots and similarly, final product sold by Anurang to Bajaj was contracted/negotiated prices and, therefore, they have not contravened any provisions of the Act and the Rules framed thereunder. 5) After adjudication, the adjudicating authority held that the prices charged by Anurang were depressed prices coloured as negotiated prices. Further, Bajaj was supplying drawings/designs/specifications free of cost to Anurang to get the goods manufactured according to their specifications from them, which the Department claimed was for aiding each other for mutual business interest so that the production cost of each other is kept at a minimum and the Central Excise Duty is discharged at a lower rate. The adjudicating authority has further observed that by providing inputs at lower landed cost and drawings and designs free of cost, Bajaj was incurring part of the production ....
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....find that whatever duty was being paid by M/s. Anurang Engg. Co. Ltd. was being taken as credit by M/s. Bajaj Auto Ltd. thus leading to revenue neutral situation in which case the appellants cannot be attributed with any intention to evade payment of duty. The burden to prove under valuation is on the revenue and is required to be discharged by production of sufficient evidence. Ordinarily, the court, should proceed on the basis that the apparent tenor of the agreements reflected the real state of affairs and what is required to be examined is as to whether the revenue has succeeded in showing that the apparent is not real and the price shown in the invoice does not reflect the true price. Nothing has been shown in the present case. The entire case is based on assumptions and presumptions as such we are of the view that the confirmation of duty against M/s. Anurang Engg. Co. Ltd. is not sustainable." 7) Mr. V. Shekhar, learned senior counsel for the Revenue submitted that Bajaj has under-valued inputs which were being sold to Anurang by incurring all the landed costs such as freight charges, loading, unloading and handling charges etc: Anurang in turn has sold the manufac....
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.... by adopting coercive measures. It is also contended that Bajaj and Anurang are under the jurisdiction of the same division and as such, it cannot be reasonable to conclude that the revenue was not aware of the transactions of both the units and therefore, the revenue cannot invoke the extended period of limitation to demand of duty under the Act. 9) The Tribunal, while considering the issue of limitation in the impugned order has concluded as under:- "Apart from the merit of the case we also note that the demand is hopelessly barred by limitation. Notice for the period June 1998 to September, 1999was issued on 05.03.2001. The ingots were being cleared by M/s Bajaj Auto Ltd. on their invoices and the final casting products were being cleared by M/s Anurag Engg. Co. Ltd. on proper invoices. Both the units are situated under the jurisdiction of same division and as such it cannot be reasonable concluded that revenue was not aware of the said transactions and the value of the same. As such we are of the view that the demand is also barred by limitation." 10) In our view, the aforesaid issue was one of the important issues that fell for the consideration b....
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....on of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or the rules made thereunder with intent to evade payment of duty, by such person or his agent, to whom a notice is served under the proviso to sub- section (1) by the Central Excise Officer, may pay duty in full or in part as may be accepted by him, and the interest payable thereon under section 11AB and penalty equal to twenty-five per cent of the duty specified in the notice or the duty so accepted by such person within thirty days of the receipt of the notice. 12) Section 11A of the Act empowers the central excise officer to initiate proceedings where duty has not been levied or short levied within six months from the relevant date. But the proviso to Section 11A(1), provides an extended period of limitation provided the duty is not levied or paid or which has been short-levied or short-paid or erroneously refunded, if there is fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. The extended period so....
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....ords "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11-A. Mis- statement or suppression of fact must be willful." 15) In Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut, (2005) 7 SCC 749, this Court has observed: "...we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to wilful suppression. There must be some positive act from the side of the assessee to find wilful suppression." 16) In our view, on a reading of the relevant provision the extended period of limitation as provided by the proviso to Section 11A(1) of the Act, can only be invoked when there is a conscious act of either fraud, collusion, wilful mis-statement, suppression of fact, or contr....