TaxTMI 
TaxTMI 
2018 (5) TMI 780
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....ces of both the units are to be clubbed, contrary to the decision of Supreme Court in Gajanan Fabrics Distributors [1997 (92) E.L.T. 451 (S.C.)] The said order also records that the substantial question of law framed in ground (f) of paragraph­21 of the memorandum of appeal is not pressed. 2. These two appeals take exception to the common judgment and order dated 21st February 2006 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (for short "Appellate Tribunal") in Appeal Nos.E/690, 691 and 692 of 2002. 3. The appellant in Appeal No.196/2006 is engaged in manufacture of articles of plastic. It is a proprietary business of one Shri R.S. Shanbag. The articles of plastic are made from granules purchased by the appellant on payment of duty. The articles manufactured by the appellant are used as filters in various diverse applications. It is the case of the appellant that the articles of plastic made from duty paid granules are exempted from duty since the inception. The appellant in Appeal No.198 of 2006 is also carrying on a similar business. Members of the family of Shri R.S.Shanbag are the partners of the said appellant. A sho....
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....d not be recovered from them. The appellants were called upon to show cause as to why penalty should not be imposed upon them under section 11A(1) of the said Act of 1944 and various Rules of the Central Excise Rules, 1944 (for short "the said Rules of 1944"). A demand was also made for payment of interest at the rate of 20% per annum in accordance with section 11AB of the said Act of 1944. 4. The demand notice was contested by the appellants in both the appeals by submitting separate replies. In the reply, it was pointed out that being SSI units they filed declarations from time to time claiming exemption from registration under Rule 174 of the said Rules of 1944. In the declarations, they have specified that the articles manufactured by them can be described as "Articles of Plastics:­ Plastic water filter elements, cylinders, discs." and "Articles of Plastic­ Plastic articles reinforced by moulded components" respectively. Reliance was placed on various declarations filed from the year 1987­88 to 1994­95. We must note here that the show causes notice relates to the period from 1994­95 to 1998­99. The appellant pointed out as to how they are entitled to ....
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....ing 39.26. The Department classified the same under headings 84.21, 84.79, 84.21 and 90.31. We must note here that an alternative submission was made on behalf of the appellants was that the battery parts should be classified under heading 84.21 which was not accepted. 6. On the issue of extended period of limitation, the Appellate Tribunal held that in the declarations filed from time to time by the appellants seeking exemption from registration, they have described the goods in question as "Articles of Plastics:­ Plastic water filter elements, cylinders, discs". However, at no point of time they disclosed that the goods manufactured by them are vent plugs of various types. The Appellate Tribunal observed that it was not a question of declaration of wrong classification of items, but it was a case where goods were not properly described in the declaration. 7. Though the demand of duty was confirmed, the penalty amounts were considerably reduced by the Appellate Tribunal. The Appellate Tribunal held that confiscation was not warranted and proceeded to set aside the same along with redemption fine. The Appellate Tribunal observed that in view of confirmation of duty demand....
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....has to a deliberate omission to disclose information to escape from payment of duty. Further reliance was placed by him on the decision of the Apex Court in the case of Densons Pultretaknik v. Commissioner of Central Excise 2003 (155) ELT 211 (SC). He also invited our attention to another decision of the Apex Court in the case of Gajanan Fabrics Distributors v. Collector of Central Excise, Pune 1997 (92) ELT 451 (SC). Lastly, he relied upon the decision of the Apex Court in the case of Collector of Central Excise v. H.M.M. Limited 1995 (76) ELT 497 (SC). 9. He submitted that as far as clubbing is concerned, the test has been laid down by the Apex Court in the case of Gajanan Fabrics Distributors (supra). He submitted that even assuming that clubbing is correct, a duty cannot be demanded from the appellant in Appeal No.198/2006. 10. The learned counsel appearing for the Revenue invited our attention to the findings of fact. He submitted that in show cause notice there are specific allegations made about the suppression of material facts with the intention of evading duties. He pointed out that there is a specific allegation that interdependency in relation to machines, manufac....
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....Shandar Products (Annexure C1 to C5), apart from filter elements/parts, are also engaged in the manufacture of other products not declared in their Central Excise declarations as under: Sr.No Description CH. Sub­Heading 1. Filter Elements/parts 8421.90 (8421.00 for 94­95) 2. Filters 8421.10 (8421.00 for 94­95) 3. Battery Parts e.g. Vent Plugs etc. 8507 4. Humidifier parts e.g. microbubblers 8479.90 5. Compressor parts e.g. Nozzles etc. 8414.99 6. Valve parts e.g. BSP silencers etc. 8481.99 7. Gauges 9031 5. It is however seen from the Central Excise declarations for the years 1994­95 to 1998­99 filed by M/s.Sansuk Industries that the full description of the goods manufactured by them has been mentioned s "articles of plastic, plastic water filter elements, cylinders, disks", falling under S.H. 3926.90. Whereas from the actual invoices (Annexure­ C1 to C5) and as confirmed by their customers (Annexure­ B) it is found that apart from the filter elements/parts i.e elements, cylinders and discs. M/s.Sansuk Industries are also engaged in manufacture and clearance of complete filters, b....
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....os.5 to 8 and a5 to 20 of Annexure B1 to Panchnama dated 31.7.99) and this further establishes that the initial processes of pulverizing and sieving of all the products cleared under the invoices of M/s.Sansuk Industries have been necessarily carried out at M/s. Shandar Products only. It is therefore established that both M/s. Sansuk Industries Ltd. and M/s. Shandar Products do not have the facility to independently manufacture a single piece of any of the products shown to independently manufacture a single piece of any of the products shown to have been cleared under their respective invoices. Thus both M/s. Sansuk Industries Ltd. and M/s. Shandar Products are not independent manufacturers having independent factories. So far as the said finished goods cleared under the invoices of M/s. Sansuk Industries Ltd. and M/s. Shandar Products are concerned, the premises of both M/s. Sansuk Industries and M/s. Shandar Products have to be collectively treated as one factory and not as two independent factories in terms of Section 2(e) of CEA, 1944. The clearances of the said finished products will therefore have to be treated as clearances as two manufacturers from one factory......." (....
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....ter 39. Quantum of demand was also disputed. Apart from disputing the demand, even the clubbing to clearances of the the appellants was disputed. 16. As far as findings of fact are concerned, the Commissioner acting an an adjudicating authority noted that the defence of the appellants mainly revolves around the classification of battery parts as the major demand is in respect of battery parts. The appellants classified the battery parts under CH 3926.90 claiming benefit of the notification dated 1st March 1988 and 28th February 1999. The Commissioner referred to the contention of the appellants that the battery parts are nothing but filters. The technical material produced by the appellants is considered by the Commissioner in paragraphs­ 32 to 36 and, ultimately, a finding of fact was recorded that the vent plugs manufactures by the appellants are not covered by the list and cannot be called as filters falling under Chapter 84.21. Therefore, it was held that vent plugs are classifiable under Chapter 85.07 as battery parts. Thereafter the Commissioner proceeded to deal with the classification of other products such as filter parts, humidifier, valve parts and gauges. A findi....
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....required to be aggregated in terms of the Notification No.1/93­CE. We have perused the decision in the case of Gajanan Fabrics relied upon by the appellants. The said decision deals with the peculiar facts of the case before it. In the present case, in view of the admitted facts, clause 3 of the amended Notification No.1/93­CE will apply. Hence, on the aspect of clubbing, it is not possible to find fault with the finding in the impugned Judgment. 20. Now we come to the invocation of the extended period of limitation. In the case of Cosmic Dye Chemical (supra), the Apex Court held thus: "6. Now so far as fraud and collusion are concerned, it is evident that the requisite intent, i.e., 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 the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can ....
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...., short­-levied or short­-paid by a suppression of fact or in contravention of any provision or rules but there should be wilful suppression. [Re: M/s.Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore, C.A.No.2693 of 2000 etc. decided on 13­1­2003]. By merely claiming it under heading 3926.90 it cannot be said that there was any wilful misstatement or suppression of fact. Hence, there was no justifiable ground for the Tribunal for invoking the first proviso to sub­section (1) of Section 11A of the Act." (emphasis added) In the case of Collector of Central Excise v. HMM Ltd (supra), the Apex Court held thus: "2. The assessee contended before the Additional Collector of central Excise that the show cause notice was time barred under the main part of Section 11A since it was issued after the expiry of the period of six months stipulated therein but the Additional Collector sustained the notice on the ground that it was within five years impliedly holding that the purported action was under the proviso to Section 11­A of the Act. There is no dispute that the show cause notice cannot be sustained under sub­section ....
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.... not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, misconduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub­section are more than one and if the excise department places reliance on the proviso it must be specifically stated in the show cause notice which is the allegation against the assessee falling within the four corners of the said proviso. In the instant case that having not been specifically stated the Additional Collector was not justified in inferring (merely because the assessee had failed to make a declaration in regard to waste or by­produ....