TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 679
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Central Excise Tariff Act, 1985. Such confusion in the industry prevented appellant to seek registration under Central Excise Act, 1944 even though it was manufacturing food colour preparations both as a manufacturer as well as job worker. 2. To resolve the controversy, legislature intended that insertion of Chapter Note 7 to Chapter 21 to CETA, 1985 with effect from 16th March, 1995 was necessary. But that note related to labeling and relabelling and any other process amounting to manufacture. Learned counsel says that even carrying out any other process was legislated as manufacturing activity for the first time on 16th March, 1995 by Chapter Note 7 of Chapter 21. Therefore, the appellant was all along under bona fide belief that its activities shall not amount to manufacture and not liable to duty and no registration under Central Excise Act, 1944 is warranted. 3. The period involved in this appeal is December 1995 to June 1997. Appellant explains that show-cause notice was issued on 3.1.2001 and they sought registration in June 1997. It is also the submission of the appellant that the appellant has never committed any evasion of duty intentionally. 4. There was no ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tral Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to the CEGAT to come to a conclusion that the appellant was guilty of 'suppression of facts'. In Densons Pultretaknik v. Collector of Central Excise [2003 (11) SCC 390], this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be willful mis-statement or 'suppression of facts'. This view was also reiterated by this Court in Collector of Central Excise, Baroda v. LMP Precision Engg. Co. Ltd. [2004 (9) SCC 703].' [Emphasis supplied] 8. The ruling above was also followed in latest decision of the Hon'ble Supreme Court in the case of Uniworth Textiles Ltd. Vs. CCE, Raipur - 2013 (288) ELT 161 (SC). It would be beneficial to reproduce para 13 to 18 of the judgment as to law relating to suppression of the facts as under:- 13. This Court, in Pushpam Pharmaceuticals Company v. Collector of Central Excise, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f escapement of duty on account of non-levy, non-payment, short-levy, short-payment or erroneous refund, subject to it being done within one year from the relevant date. On the other hand, the demand for duty in relation to extended period is mentioned in the proviso to section 11A(1). Under that proviso, in cases where excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded on account of fraud, collusion or wilful mis-statement or suppression of facts, or in contravention of any provision of the Act or Rules with the intent to evade payment of duty, demand can be made within five years from the relevant date. In the present case, we are concerned with the proviso to section 11A(1). 24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995) 6 SCC 117, this Court held that intention to evade duty must be proved for invoking the proviso to section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression 'fraud and collusion' but mis-statement and suppression is qualified by the preceding....
X X X X Extracts X X X X
X X X X Extracts X X X X
....what he might have done and not that he must have done, would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in the proviso to Section 11A of the Act. 16. In Collector of Central Excise v. H.M.M. Ltd. - 1995 Supp (3) SCC 322 = 1995 (76) E.L.T. 497 (S.C.), this Court held that mere non-disclosure of certain items assessable to duty does not tantamount to the mala fides elucidated in the proviso to Section 11A(1) of the Central Excise Act, 1944. It enunciated the principle in the following way:- The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments - (1989) 2 SCC 127, Cosmic Dye Chemical v. CCE - (1995) 6 SCC 117, Padmini Products v. CCE - (1989) 4 SCC 275, T.N. Housing Board v. CCE - 1995 Supp (1) SCC 50 and CCE v. H.M.M. Ltd. (supra). In all these cases the Court was concerned with the applicability of the proviso to Section 11-A of the Central Excise Act which, like in the case of the Customs Act, contemplated the increase in the period of limitation for issuing a show-cause notice in the case of non-levy or short-levy to five years from a normal period of six months. 54. While interpreting the said provision in each of the aforesaid cases, it was observed by this Court that for proviso to Section 11-A to be invoked, the intention to evade payment of duty must be shown. This has been clearly brought out in Cosmic Dye Chemical case where the Tribunal had held that so far as fraud, suppression or misstatement of facts was concerned the question of intent was immaterial. While disagreeing with the aforesaid interpretation this Court at p. 119 observed as follows : (SCC para 6) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee. [Emphasis supplied] 9. Where there is specific and explicit averments challenging fids and conducts of assessee brought out in the show-cause notice, the notice is said to have brought such fides to the knowledge of the assessee for defence. In absence of malafide expressly stated in the show-cause notice, it cannot be presumed that appellant had acted malafide. It would be proper to reproduce para 25 of the judgment in Uniworth Textiles Ltd. (supra) as under to appreciate the principle governing such aspect. 25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific and explicit averments challenging the fides of the conduct of the assessee are made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In Aban Loyd Chiles Offshore Limited and Ors. (supra), this Court made t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-cause notice which is the allegation against the assessee falling within the four corners of the said proviso.... (Emphasis supplied) 10. It would also be proper to appreciate that this is the consistent view of the Hon'ble Supreme Court beginning from Anand Nishikawa Co. Ltd. (supra) that when facts are within the knowledge of both sides there cannot be presumption that there was suppression of fact by one to the other. Paras 10, 11 and 12 of the judgment in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh - 2007 (216) ELT 177 (SC) is reproduced for appreciation. 10. The expression 'suppression' has been used in the proviso to Section 11A of the Act accompanied by very strong words 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 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 suppress....