TaxTMI 
TaxTMI 
2013 (6) TMI 142
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...., manufacturing PVC pipes, filters and what is popularly known as Tara handpumps. The period in dispute is 1-3-1997 to 18-10-1997. In this regard, it may be noticed that initially two identical notices were issued for the period 1-3-1997 to 18-10-1997 and the other for 5-5-1997 to 18-10-1997 but ultimately the authorities, having realized that there was undisputed overlapping of period, the larger of the two periods is taken to be the period in dispute. 3. It is not in dispute that PVC pipes are independent commercial goods which attract, at the relevant time, central excise duty of 25% ad valorem. Handpumps are also distinct items but, considering its usage, the rate of duty is nil. PVC pipes are covered under Chapter 39 of the Central Excise Tariff and, in particular, sub-heading tariff item No. 3917 whereas handpumps under Chapter 84 and, in particular sub-heading tariff item No. 8413 and, in particular, 8413.20. Thus the petitioner, upon manufacture and clearance of PVC pipes, was liable to account for duty at the rate of 25% but in respect of handpumps, the duty was nil. To this, there is no dispute. The problem has arisen because for manufacturing Tara handpumps which, as ....
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....yment of duty and, as such, the demand-cum-show cause was clearly barred by limitation. It then contented that if the provisions of Chapter 84 were correctly taken into account then the PVC pipes and filters, being integral part and component of the handpump, the duty liability on it would be that of the final product nil but as they were not maintaining separate accounts, they had rightfully admitted liability and paid to the extent of 8%. It may be noted that while the matter was being considered, to avoid heavy interest liability and penal consequences, they deposited the required duty of Rs. 4,02,801/- on 29-10-1999. 6. The Additional Commissioner, Central Excise (Headquarters), Patna heard the party and disposed of the matter by order dated 24-11-1999 (Annexure-5) clearly finding that the assessee-petitioner had made no suppression of fact as it was never alleged by the Department that they had cleared the manufactured goods without payment of duty. He held that there was, thus, no ground for proceeding against the assessee-petitioner who had, in the meantime, deposited the differential duty demand as well. 7. It appears that the Commissioner, Central Excise, Patna then ....
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....ed. A penalty of the same amount was imposed under the provisions of Section 11AC of the Act and interest was ordered to be levied in accordance with Section 11AB of the Act. 10. The petitioner-assessee then filed an appeal before the Commissioner (Appeals) against this adjudicatory order which was finally disposed of by order dated 8-10-2004 (Annexure-9) affirming the order and the appeal was, thus, dismissed. Against this, the petitioner appealed to the Customs, Excise and Service Tax Appellate Tribunal, Eastern Zone Bench, Kolkata being Appeal No. EDM-41 of 2005. The Tribunal disposed of the matter by order dated 17-6-2008 (Annexure-10). The Tribunal held that the longer period of limitation, as invoked, was valid and, thus, the demand of differential duty and the interest was not interfered with but when it came to penalty, they held that the dispute was of technical nature and they took a lenient view of the matter and set aside the penalty as imposed on the petitioner-assessee. 11. It appears that against that part of the order of the Tribunal, by which the demand in relation to differential duty had been sustained, petitioner filed this writ petition before this Court ....
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....e words "five years" were substituted. SECTION 11AB. Interest on delayed payment of duty. - (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful 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, the person liable to pay duty as determined under sub-section (2) of section 11A shall, in addition to the duty, be liable to pay interest at such rate not below ten per cent and, not exceeding thirty per cent per annum, as is for the time being fixed by the Board, from the first day of the month succeeding the month in which the duty ought to have been paid under this Act or the rules made thereunder or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2) of section 11A, till the date of payment of such duty. ... ... SECTION 11AC. Penalty for short-levy or non-levy of duty in certain cases. - Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded b....
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....n short levied, proceeding can be initiated for collecting the same within six months of the due date which has now become one year by subsequent amendment. But if it is found that it was deliberate act of the assessee to evade duty then the proceedings can be initiated in a longer period, as provided by the proviso to Section 11A(1). 17. The Department has sought to invoke the proviso to Section 11A(1) and have relied on the observations as made by the Apex Court in the case of Union of India & Others v. Dharamendra Textile Processors & Others since reported in (2008) 13 Supreme Court Cases 369 = 2008 (231) E.L.T. 3 (S.C.) and, in particular, what is said in paragraphs 19 and 20 of the reports. What is submitted by the Department, if we have understood it clearly, is that once escapement of duty is established then it has to be recovered along with penalty and penal interest. At the very outset, we may point out that apparently, relying on the language used in the case of Dharamendra Textile Processors (supra), they submit that the provisions are mandatory and recoveries with penalty and penal interest leaves them no discretion in the matter. This is apparently not correct. The....
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....amendra Textile decides. It must, however, be made clear that what is stated above in regard to the decision in Dharamendra Textile is only insofar as Section 11-AC is concerned. We make no observations (as a matter of fact there is no occasion for it!) with regard to the several other statutory provisions that came up for consideration in that decision." 20. We then have the decision of the Apex Court in the case of Commissioner of Central Excise, Pune v. SKF India Limited since reported in (2009) 13 Supreme Court Cases 461 = 2009 (239) E.L.T. 385 (S.C.) wherein the view taken in the case of Rajasthan Spinning and Weaving Mills (supra) was reiterated. While doing so, this is what their Lordships held in paragraph-11 of the reports in the case of SKF India Limited (supra). "11. Section 11-A puts the cases of non-levy or short-levy, non-payment or short-payment or erroneous refund of duty in two categories. One in which the non-payment or short-payment, etc of duty is for a reason other that deceit; the default is due to oversight or some mistake and it is not intentional. The second in which the non-payment or short-payment, etc of duty is "by reason of fraud, collusion or an....
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....ords as "fraud" or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop (sic evade) the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11-A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a willful misstatement. The latter implies making of an incorrect statement with the knowledge that the statement was not correct. 14. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word "willful", preceding the words "misstatement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by th....
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....ided that the benefit of Rule 57CC(1) would not apply in case of articles of plastic falling under Chapter 39 and, as such, this resulted in short-payment of duty for the period in question that is 1-3-1997 to 18-10-1997 amounting to Rs. 4,02,801/-. The only material in the show cause notice to show deliberate concealment is RT-12 return for the month of June, 1997 which did not mention clearance figures in respect of Tara handpump. As noted above, petitioner immediately protested, in its reply, stating that the notices were clearly barred as there was no intentional suppression or such other delinquent act with intention to evade duty. It showed that before the period under consideration, the petitioner-assessee had clearly disclosed that they would be charging the PVC pipes and filters manufactured by them but used in the production of the Tara handpump at 8% duty. The invoices under Rule 52A in regard to payment of duty for the period under consideration, whenever they were so used, showed this fact clearly and duty was paid accordingly. Nothing was suppressed, much less deliberately, with the intent to avoid duty. Upon this show cause being filed and hearing, the Additional Com....
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....ner-assessee much less with an intention to evade tax. 31. As the Commissioner (Appeals) had set aside the order of the adjudicatory authority, petitioner preferred appeal before the appellate Tribunal which was disposed of by order dated 11-2-2002 (Annexure-7). The Tribunal clearly noticed that the Revenue had not filed any appeal against the order of the Commissioner (Appeals) wherein it was observed that the amount could not be appropriated even if deposited voluntarily by the party which was the reason for allowing the appeal by the Commissioner of Appeals. The Tribunal, accordingly, held that the assessee was entitled to claim refund of the amount deposited but as the order of the adjudicatory authority had been set aside, the adjudicatory authority should pass a fresh order. Again, it would be seen that even the Tribunal was not invited by the Department to give any finding with regard to deliberate suppression with intent to evade duty nor was any such finding recorded rather Tribunal gave liberty to the petitioner-assess to claim refund. 32. Now when the matter, pursuant to order of Tribunal, came back to the adjudicating authority, the petitioner-assessee was again h....
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....uthority has virtually proceeded on the ground that duty has been short-levied because of wrong claim or misstatement by the petitioner but there is no finding that it was so deliberately done by the petitioner to evade duty which a condition precedent for invocation of powers to realize the same with penalty and penal interest. Unfortunately, in view of the judgment as noticed above, a technical breach or a wrong claim or a mistake by itself cannot give longer period jurisdiction for recovering penalty and penal interest unless it is shown that there was a deliberate attempt to evade tax. This was lost sight by the adjudicatory authority. 34. The matter was then taken in appeal before the Commissioner (Appeals) by the petitioner-assessee which confirmed the order of the adjudicatory authority and dismissed the appeal. 35. The matter was then taken by the petitioner-assessee to the appellate Tribunal in Appeal No. EDM-41 of 2005 which was disposed of on 17-6-2008 (Annexure-10). The Tribunal first, in its order, dealt with the duty demand in the following words : "The ground taken by the Appellants that the demand is time barred has also been adequately dealt by Authorities....
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....hus, in our view, the Department is unable to establish any deliberate act on part of the petitioner-assessee to evade tax. All it could establish was that a claim after full disclosure was made, which was later, after the period of limitation found unsustainable and, as such, all penal actions taken. That is not correct and could not have been done. The duty demand sustained by the Tribunal is, thus, not correct and that part of the order cannot be sustained. 41. Now, we come to the claim, as put forward by the assessee though not necessary to be decided. The petitioner-assessee has annexed the monthly invoices of payment of duty in respect of PVC pipes, filters and fittings manufactured by it and used in the manufacture of Tara handpump. That has also been annexed to the writ petition as Annexure 3 series. These invoices, on basis of which duty was deposited, clearly disclosed that they were plastic parts being used in the manufacturing of Tara handpump and was self-clearance on which duty was paid at the rate of 8%. It is apparent that if the petitioner-assessee had any intention to evade duty, such disclosures would not have been made. Department has never disputed these spe....