AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 23
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....stated briefly are that the appellant assessee is engaged in the manufacture of pharmaceutical products falling under Chapter XXX of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as "the CETA, 1985") and was availing of the benefit of Cenvat facility as prescribed under the erstwhile Central Excise Rules, 1944 (hereinafter referred to as "the rules"). It appears that the internal audit party of the Department while conducting audit of the assessee for the period 10th March, 2004 to 6th May, 2004, found that the assessee had irregularly availed Capital Goods Modvat Credit on the goods namely, Laminated False Ceiling and Panels falling under Chapter Heading 4409.00 of the CETA, 1985; Steel Door with Frame falling under Chapter Heading 7308.90; Parts of Furniture falling under Chapter Heading No.9403.00; Steelage Racking System falling under Chapter Heading 7308.90 and Light Fitting falling under Chapter Heading 9405.90 of the CETA, 1985 during the period of December, 1999 amounting to Rs. 10,54,934/-. Pursuant thereto, a show-cause notice came to be issued to the respondent assessee calling upon it to show-cause as to why Modvat credit of capital ....
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....ngly, the adjudicating authority ordered that cenvat credit on capital goods amounting to Rs. 10,54,934/- be recovered from the assessee under the provisions of rule 57U of the rules (now rule 12 of the CENVAT Credit Rules, 2002) read with the provisions of section 11A of the Act. The adjudicating authority further imposed penalty of Rs. 10,54,934/- on the assessee under the provisions of section 11AC of the Act read with section 173Q(bb) of the rules. It was further ordered that the party should pay interest at the appropriate rate under section 11AB of the Act. 5. Being aggrieved, the assessee went in appeal before the Commissioner (Appeals), who, by an order dated 14th November, 2005, allowed the appeal on the ground of time bar without going into the merits of the case. The Commissioner (Appeals) observed that the adjudicating authority had held in the impugned orders that the assessee had not disclosed the usage of the capital goods to the Department and thus, suppressed the material fact of availment of capital goods and, therefore, the extended time period was correctly invoked. He, however, found from the cenvatable invoices of capital goods submitted by the assessee along....
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....disclose the usage of capital goods before taking credit thereon and the allegation of suppression on this ground was not sustainable. Placing reliance upon the decision of this court in Apex Electricals Private Limited v. Union of India, 1992 (61) ELT 413 (Gujarat), for the proposition that information not required under law, if not supplied, does not amount to suppression, the Commissioner (Appeals) held that the demand of duty pertaining to the period December, 1999, April 2000 and April, 2001 for which the show cause notices were issued in the month of December, 2004 were clearly time-barred. In view of the fact that the demand was held to be unsustainable, it was held that there was no question of any penalty on the appellants and accordingly, the same was set aside. 6. The revenue carried the matter in appeal before the Tribunal, which, by the impugned order partially allowed the appeal and remanded the matter. While remanding the matter, the Tribunal held thus:- 2. There is force in the grounds taken by Revenue that during the said period Vide amendment dated 31.3.2000 to Central Excise Rules on Modvat, assessee was no longer required to submit Monthly Excise Returns, alo....
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....cisions of the Supreme Court in the case of Anand Nishikawa Company Limited v. Commissioner of Central Excise, Meerut, 2005 (188) ELT 149 (SC), for the proposition that "suppression of facts" can only have one meaning, that the correct information was not disclosed deliberately to evade payment of duty, when facts were not known to both the parties, the omission by one to do what he might have done not that he might 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. The court found that, therefore, there was no deliberate intent on the part of the appellant before it not to disclose the correct information or to evade payment of duty and held that it was not open to the Central Excise officer to proceed to recover duties in the manner indicated in proviso to section 11A of the Act. Reliance was also placed upon the decision of the Supreme Court in the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay, 1995 (75) ELT 721 (SC), wherein the court held that the main limb of section 11A provides limitati....
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....spect of capital goods in question. It was submitted that on a plain reading of rule 57Q of the rules, it is evident that none of the capital goods on which the assessee had availed of Modvat credit were so eligible. Attention was invited to the show-cause notice issued by the respondent to point out the chapter headings under which the capital goods in question fall. It was submitted that none of such capital goods fall under any of the categories enumerated under rule 57Q of the rules. It was submitted that on the face of it, it was evident that the assessee was not eligible to avail Modvat credit on such capital goods, despite which, the assessee has knowingly contravened the provisions of rule 57Q of the rules and availed of Modvat credit on the same. It was submitted that, therefore, it was incumbent upon the assessee to understand that the goods were not eligible as capital goods and, accordingly, it should have refrained from taking credit. However, the assessee chose to do so knowingly and willingly and contravened the provisions of rule 57Q of the rules. It was submitted that there being suppression on the part of the assessee as well as wilful contravention of the rules, ....
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....age of the capital goods in question. Accordingly, the assessee had submitted copies of invoices on which it had availed of Modvat credit during the course of the month together with the monthly excise returns. As can be seen from the order passed by the adjudicating authority, according to it, the assessee had suppressed the facts regarding availment of credit from the Department and that the exact usage of the capital goods namely, laminated false ceiling and panels, steel doors with frame, steel racking system, etc., was never declared by it to the Department. In this regard, it may be apposite to refer to the decision of this court in the case of Apex Electricals Pvt. Ltd. v. Union of India (supra) wherein the court has held that information not required to be supplied under law, if not supplied, does not amount to suppression. In the facts of the present case, there was no requirement for the assessee to declare the exact usage of capital goods to the Department under any provision of the Act or the rules. Under the circumstances, non-submission of such information which was not required to be supplied, cannot be said to amount to suppression. 12. The adjudicating authority h....
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.... when the description of goods which are required to be treated as capital goods in terms of rule 57Q of the rules is clearly set out thereunder, the officers concerned could have easily verified from the invoices which also refer to the chapter heading number of the goods in question as to whether or not such goods fall within the ambit of rule 57Q of the rules. However, at the relevant time, the concerned officers of the Department failed to do so. Besides, the Commissioner (Appeals) has also recorded that insofar as suppression of facts on account of non-disclosure of usage of capital goods is concerned, the same was irrelevant as the only condition for usage of capital goods during the relevant time was that it should be used in the factory of manufacturer of specified final products. Thus, there was no need for the assessee to disclose use of capital goods before taking cenvat credit thereon and suppression on this ground was not sustainable. 13. The Tribunal while interfering with the order passed by the Commissioner (Appeals) has not recorded any finding as to what is the legal infirmity from which the said order suffers. The Tribunal, in the impugned order, has observed th....