TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 904
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....tted on 06.09.2005, when, following question of law was framed for consideration by this Court: " Whether the imposition of the penalty under Section11AC of the Central Excise Act is mandatory or directory?" 2.1. In so far as the Assessee's appeal is concerned, the following questions of law were framed for consideration, in the first instance, vide order dated 05.10.2005: "(1) Whether the expression "arising from the processing of inputs" mentioned in Rule 57F(5) is the same as "arising in the course of manufacture of final product" mentioned in Rule 57D and if it is not, was the Appellate Tribunal right in holding that waste arising in the course of manufacture of final product would be treated as waste arising in the processing of inputs under Rule 57F(5)? (2) Whether the Appellate Tribunal can treat clearances of Spent Pacol Catalyst made to a job worker in Mumbai as per Rule 57F(2) and equate it with clearances made under Rule 9 of the Central Excise Rules and demand duty as if it was sold, particularly when it was subsequently exported by the Appellants in the form of extracted Platinum?" 2.2. The record shows that thereafter, an additional question of law was fra....
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....n issuance of a Show Cause Notice, dated 18.02.1999 (in short SCN). In the SCN, a proposal was raised to impose duty in the sum of Rs. 12,68,377/- qua the aforementioned waste and scrap, which were cleared during the period, spanning between 01.01.1994 and 31.08.1998. 5.6. Furthermore, in this behalf, the extended period of limitation, as provided in the proviso to Section 11A(1) of the Central Excise Act, 1944 (in short 'the CE Act') (as it then obtained), was sought to be invoked. 5.7. Furthermore, a proposal was made to levy penalty under Section 11AC of the CE Act and Rule 9(2) and 173Q of the Central Excise Rules, 1944. 5.8. In addition thereto, the SCN also referred to the sub-headings, under which, the Revenue proposed to tax the aforementioned waste and scrap. 6. A perusal of the SCN would show that it was pivoted on the application of Rule 57F(5), which at the relevant time, had been renumbered at Rule 57F(18) of the Central Excise Rules, 1944 (in short 'the 1944 Rules'). 7. In response to the SCN, the Assessee filed a detailed reply dated 25.03.1999. 7.1. In the reply, the defence, inter alia, taken by the Assessee was that waste and scrap were not e....
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....al Excise (in short, "Commissioner"), sustaining, almost in entirety, the demand raised in the SCN. The only difference, which as indicated above was not substantial, was that, that the quantum of duty had been reduced from Rs. 12,68,377/- to Rs. 12,03,578/-. This reduction came about on account of the fact that the Commissioner, while passing the Order-in-Original had excluded the period, which was beyond five years. 8.1. Accordingly, penalty was calculated under Section 11AC of the CE Act for the period after 28.09.1996. The penalty quantified by the Commissioner, keeping this yardstick in mind, worked out to Rs. 7,41,499/-. Resultantly, penalty in the said amount was also imposed on the Assessee. 9. The Assessee, being aggrieved by the said order of the Commissioner, carried the matter in appeal to the Tribunal. 10. The Tribunal, vide the impugned judgment and order, partly allowed the appeal of the Assessee. 10.1. The Tribunal, came to the conclusion based on its reading of Rule 57F(5), which, as indicated above, is pari materia to Rule 57F(18), that the waste and scrap were exigible to duty, if: the waste had arisen from processing of inputs and, credit of duty in respect ....
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....381 (Tri.). 16.1. This judgment was delivered on 13.09.1995. 16.2. Via this judgment, the Tribunal held that i) Spent Sulphuric Acid was amenable to excise duty; ii) This position, evidently, took a different turn, when the Northern Principal Bench of the Tribunal, in the matter of CCE V. Aureola Chemicals Private Limited, 1998 (103) ELT 105 came to the conclusion that Spent Sulphuric Act was not exigible to excise duty. iii) The aforementioned view taken in Aureola's case was reiterated by the Principal Bench of the Tribunal in Superchem Industries V. Collector of Central Excise, Meerut, 1999 (113) ELT 689. The Tribunal in this case also held that Spent Sulphuric Acid was not amenable to excise duty. iii) a) A perusal of the judgment shows that in this case, the Tribunal preferred to follow its own decision in Aureola's case as against its judgment delivered in DCW Limited. iv) It appears that because of the conflict in the decisions, the matter was referred to a Larger Bench of the Tribunal vide Misc. Order No.37/99-C. The reference to the Larger Bench was made with regard to the following question of law: "Whether Spent Sulphuric Acid (Dilute Sulphuric A....
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....d 30.04.1999, the Commissioner of Central Excise (Appeals) vide order dated 20.04.2000 had set aside the demand for duty under Rule 57F(18). 18.1. The Tribunal, in turn, dismissed the Revenue's appeal preferred against the said order, vide judgment dated 19.07.2007. 18.2. Thus, in effect, confirmed the Commissioner Appeal's order dated 20.04.2000. 18.3. This apart, in so far as the waste lube oil was concerned, reliance was placed on the judgment of the Southern Regional Bench of the Tribunal dated 12.09.2006, passed in the matter of Spic Pharmaceuticals Division Vs. Commissioner of C.Ex., Chennai, 2007 (213) ELT 679, whereby, it was held that waste lube oil was not goods, amenable to excise duty. 19. As regards the Spent Pacol Catalyst is concerned, it was pointed out that for the period spanning between 11.02.2000 and 15.11.2000, the Tribunal, vide its judgment dated 13.12.2002, noticed that the said waste product was cleared for job work by the Assessee and, accordingly, sent to an entity by name of Hindustan Platinum. 19.1. Based on this fact, the Tribunal noted that the plea of the Assessee for seeking exemption from payment of excise duty under Section 57A(4) had....
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....ed, 2008 (229) ELT 159. 22. Mr.Prasad, in sum, submitted that given this state of law, the Assessee was well within its right to hold bonafide belief that waste and scrap, adverted to in the SCN, were not excisable goods, and, therefore, were not amenable to duty. 22.1. Learned counsel says that, therefore, the mere non-disclosure of clearances made qua such waste/scrap would not necessarily lead to a conclusion that there was suppression by the Assessee with an intention to evade payment of excise duty. 22.2. In support of this submission, learned counsel sought to place reliance on the two judgments of the Supreme Court; these being: Padmini Products V. Collector of C.Ex., 1989 (43) ELT 195 (SC) and Commissioner of Central Excise Jalandhar, V. Royal Enterprises, 2016 (337) ELT 482 (SC). 23. On the other hand, Mr.A.P.Srinivas, largely, relied upon the impunged judgment and order of the Tribunal to contend that the extended period of limitation could be invoked in the present case, as the Assessee had failed to make requisite declarations and disclosures in the returns. 23.1. Learned counsel says that the finding of suppression returned by the Commissioner, which was affirmed ....
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....f India or on excisable materials used in the manufacture of goods which are exported out of India; (ii) relevant date means, (a) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid (A) where under the rules made under this Act a periodical return, showing particulars of the duty paid on the excisable goods removed during the period to which the said return relates, is to be filed by a manufacturer or a producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed; (B)where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules; (C) in any other case, the date on which the duty is to be paid under this Act or the rules made thereunder;] (b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (c)in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund." 26. A perusal of the said Section would show that the duty of excise, which was,....
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....rdinary period of six months, as it then obtained. 27.1. On the first aspect, the Supreme Court concurred with the view of the Tribunal that agarbaties were not handicrafts, as was contended by the Assessee. 27.2. In respect of the other aspect, with which we are concerned, the Supreme Court held that before the extended period could be invoked against the noticee "something positive other than a mere inaction or failure on the part of the manufacturer or the producer had to be shown". The Court further observed that, it had to be a case of conscious or deliberate withholding of information by the manufacturer, when he knew otherwise, before he could be saddled with liability beyond the ordinary and normal period of six months. 27.3. These observations are found in paragraph 8 at page 200 of the said judgment, wherein the Court, as a matter of fact affirms the view taken in an earlier judgment, passed by it, in the matter of: Collector of Central Excise, Hyderabad V. M/s.Chemphar Drugs and Liniments, Hyderabad, 1989 (40) ELT 276 (SC). 27.4. For the sake of convenience, the observations made in paragraph 8 of the said judgment, being apposite, are extracted hereafter. "8..........
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....ng 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. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. (Emphasis is ours) 28. Having regard to the aforesaid, in our view, therefore, the mere failure to make declarations/or disclosure of the clearance of waste and scrap in the returns would not amount to suppression in the given facts and circumstances. 29. Our view is fortified by the fact that the Tribunal has simply affirmed the view of the Commiss....
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....ty under Section 11AC cannot be levied. 32.1. To that extent, the Supreme Court explained its decision rendered in Union of India V. Dharmendra Textiles Processors, 2008 (231) ELT 3 (SC). 33. In the given circumstances, as indicated above, the Commissioner proceeded to impose penalty, only for the reason that, the clearance of waste and scrap had not been declared by the Assessee. The rationale provided, which is, reflected in paragraph 21 of the order of the Commissioner, for the sake of convenience is extracted hereafter: "....21. The Show Cause Notice has sought to impose penalty on the noticee under Section 11 AC of the Central Excise Act. Since this provision in the Act was brought into force only from 28/9/96, it cannot be applied to an offence during a period prior to this date. M/s.TPL never declared the clearance of these goods to the Dept. Therefore it is clear that they suppressed this informations for the dept. with the intention to evade the duty of the goods. I confirm the penalty under Section 11AC to the period after 28/9/96. I find that the duty amount for the period after this date works out to Rs. 7,41,499/-. I therefore impose a penalty of Rs. 7,41,499/- (Ru....