TaxTMI 
TaxTMI 
2022 (4) TMI 70
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....other appropriate writ, order or direction calling for records of impugned Show Cause Notice F. NO.XIV/233/2018 dated 31.12.2018 issued by the respondent No.2 and quashing and setting aside the same. (b) Writ of mandamus or writ in the nature of prohibition restraining the respondents from proceeding further. (c) pending the hearing and final disposal of the above petition, the respondents be directed by an interim order and injunction of this Hon Court not to proceed further in the show cause notice. (d) for ad-interim relief in terms of prayer (c) above. (e) for costs of the petition. (f) such other and further order or orders as may be deemed just and proper in the facts and circumstances of the present case." 4 The case put up by the writ applicant may be summarized as under: 5 The writ applicant No. 1 was formerly known as the L&T Technologies Limited. The name of the Company was changed from the L&T Technologies Limited to the L&T Hydrocarbon Engineering Ltd. on 21st May 2013. The writ applicant was, however, not carrying on any effective business activity either prior to or after 21.5.2013 including during the Financial Year 2013-2014. 6 The Larsen & Toubr....
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....mption was based on the nature of the goods and status of the customer. Sl. No. 336 of exemption Notification 12/2012-CE dated 17.3.2012 conferred complete exemption for certain supplies effected under the International Competitive Bidding. In terms of this exemption notification, some of the clearances of the goods manufactured by the factory were exempted from the central excise duty. The factory duly followed the procedure prescribed in the exemption notification. The factory entered into certain contracts for supply under the International Competitive Bidding. Due intimation of the same was given to the central excise department vide the writ applicants letter dated 10th May 2012. Along with this letter, the central excise department was given a copy of the certificate issued by the Director General of Hydrocarbons being the project authority. In respect of such clearances from the factory also, the excise invoice in the statutory form was issued declaring the rate of duty, as nil. These invoices duly showed that the clearances of these goods were exempt from duty. 11 The Larsen & Toubro Ltd. proposed to hive off/demerge its Hydrocarbon Division as a going concern to a separat....
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...., and the ER-1 returns, so filed by the legal entity Larsen & Toubro Ltd. qua the central excise registration held by it for this factory. 18 The writ applicant (i.e. the successor entity) vide the application dated 1st April 2014 formally applied to the jurisdictional central excise authority for the new central excise registration in its own name as a new legal entity. Along with the said application dated 1st April 2014, the writ applicant also submitted copy of the Order dated 20th December 2013 passed by the Bombay High Court sanctioning the scheme. 19 The Jurisdictional Central Excise officer accepted the said application of the writ applicant and granted fresh central excise registration no. AABCL5967DEM001 on 7th April 2014. 20 After obtaining the formal fresh registration on 7th April 2014, all the dispatches were effected by the writ applicant by issuing statutory invoices in its own name. The monthly returns in the Form ER-1 were also duly filed in its own name by the writ applicant for the period after April 2014 onwards. 21 The Rule 10 of the CENVAT Credit Rules, 2004, permits transfer of the CENVAT credit lying unutilised in the account of manufacturer of final pr....
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....-13 and 2013 - 2014 (upto February 2014) by the officers of the central excise department. During the course of audit, the departmental officers verified all the records maintained by the Hydrocarbon Division of the Larsen & Toubro Ltd. The Audit report dated 31st March 2014 raised diverse discrepancies perceived by the audit. None of those observations relate to the present demand or controversy. In other words, the audit did not raise any objection whatsoever (that payment of excise duty and following the procedure of central excise law by the Larsen & Toubro Ltd. during the FY 2013 - 2014 [upto February 2014]) was irregular or incorrect. The Audit at no point of time said that the compliance should have been by the L&T Hydrocarbon Ltd. i.e., the successor entity. 27 Two summons dated 15th November 2018 and 5th December 2018 resply were issued by the officers of the central excise department (at the behest of DGCEI, Madras) to the writ applicant requesting to provide documents and give statement. The statement of Vaidyanath Shastri, DGM (Finance & Accounts) (writ applicant No.2) was recorded on 12th December 2018. The following queries were raised: (a) whether the writ applica....
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....laws. The scheme of merger having been approved by the Bombay High Court, the payment of tax raising of invoice and filing of return by the Larsen and Toubro Limited and not by the writ applicant herein is in absolute compliance of the Central Excise laws. There is no procedural breach in this regard by the Larsen and Toubro Limited and/or the writ applicant. (iv) The excise duty has been discharged by the Larsen and Toubro Limited i.e. the transferor / demerged entity. Even if it is considered as discharge of excise duty by a wrong person, such duty so paid should be adjusted against the duty payable if any by the correct person. Asking the writ applicant herein to discharge the very same liability of payment of excise duty i.e. the very duty paid by the Larsen and Toubro Limited would amount to double taxation of the same transaction, and therefore, manifestly illegal. (v) The respondent No.2 has wrongly presumed that the writ applicant started carrying on its business from 1st April 2013 i.e. "the appointed date" as per the scheme. The relevance of "appointed date" has been thoroughly misunderstood by the respondent No.2. Issuance of the impugned show cause notice without pr....
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....on challenging the validity of a notice being barred by limitation, is maintainable. 16 State of Punjab vs. Bhatinda District Cooperative Milk P. Union Ltd. (2007) 11 SCC 363 32 In such circumstances referred to above, Shri Sridharan, the learned Senior Counsel prays that there being merit in his both the writ applications, those be allowed by quashing and setting aside the impugned show cause notices. * SUBMISSIONS CANVASSED ON BEHALF OF THE REVENUE: 33 Mr. Devang Vyas, the learned Additional Solicitor General of India assisted by Mr. Nikunt Raval, the learned Standing Counsel appearing for the respondents, on the other hand, has vehemently opposed the present writ application. 34 The principal submission canvassed by Mr. Vyas is that this writ application may not be entertained as it seeks to challenge the legality and validity of a show cause notice. Mr. Vyas would submit that the writ applicant has not made out any case for quashing the impugned show cause notice issued by the respondent No.2. Mr. Vyas would submit that the adjudicating authority is yet to decide the matter on merits. There are certain vital issues to be decided by the adjudicating authority on the b....
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....rt. He would submit that the Bombay High Court endorsed the scheme only keeping one thing in mind that the same was not opposed to the public policy. 39 Mr. Vyas further submitted that the impugned show cause notice has been issued on the ground that the writ applicants have contravened the provisions contained in Rule 11 of the Central Excise Rules, 2002 inasmuch as they failed to make proper invoices indicating the amounts to be paid towards the central excise duty and also Rule 12 of the Rules, 2002 inasmuch as they failed to file the monthly return within the prescribed time. 40 Mr. Vyas would submit that the writ applicant No.1 has not discharged its liability towards payment of the central excise of Rs. 115,81,08,490/- deliberately on clearance of their finished goods required to be recovered from it under the provisions of Section 11A(4) of the Central Excise Act, 1944. 41 In such circumstances referred to above, Mr. Vyas prays that there being no merit in the present writ application, the same may be rejected. * ANALYSIS: 42 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our....
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....g the conditions of the said notification and para 8.2 of chapter 8 of Foreign Trade policy 2009-2014. It appears that LTHE has not paid central excise duty amounting to Rs. 95,20,02,0911- as detailed in Annexure B to the show cause notice, which is required to be recovered from them under the provision of Section 11A.(4) of Central Excise Act, 1944 alongwith interest under section 11AA of Central Excise Act, 1944. 10. In view of the above, it appears that LTHE have contravened the provisions of Rule 9 of the Central Excise Rules, 2002 read with Section 6 of Central Excise Act, 1944 in as much as they have failed to apply for registration. 10.1. LTHE have also contravened the provisions of Rule 4 and 8 of Central Excise Rules, 2002, in as much as they failed to discharge their duty liability correctly and in appropriate manner on clearances of their excisable goods and removed the excisable goods in contravention. 10.2. Further, they have also contravened the provisions contained in Rule 11 of Central Excise rules, 2002 in as much as they failed to make proper invoices showing the amounts of central excise duty and Rule 12 of Central Excise rules, 2002 in as much as they f....
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....demand can be raised for a period of five years. Hence, the impugned show cause notice dated 31st December 2018 restricted the demand for the period from December 2013. 46 A bare perusal of the Paras 6 to 10 resply of the impugned show cause notice would indicate that the sole basis of the notice is that the central excise registration and issue of invoices should have been by the successor entity itself in its own name from 1st April 2013 onwards and the excise duty liability discharged accordingly. Effectively, according to the impugned notice, the compliance of the central excise law by the Larsen & Toubro Ltd. for the FY 2013-14 is irrelevant and nonconsequential. 47 The respondents have filed their affidavit-in-reply dated 5th March 2021 opposing the present petition. It has been contended by the learned A.S.G. that there was no need of pre-consultation before the issuance of the impugned show cause notice in the present case. According to him, the present case originated from the investigation by the ADG, DGGST and therefore hit by the exclusion clause as provided in the Circular dated 10th March 2017. It has been contended that the circular excludes the preventive and offe....
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....ch the amalgamation/transfer shall take place. The scheme concerned herein does so provide, viz., January 1, 1982. It is true that while sanctioning the scheme, it is open to the court to modify the said date and prescribe such date of amalgamation/transfer as it thinks appropriate in the facts and circumstances of the case. If the court so specifies a date, there is little doubt that such date would be the date of amalgamation/date of transfer. But where the court does not prescribe any specific date but merely sanctions the scheme presented to it---as has happened in this case---it should follow that the date of amalgamation/date of transfer is the date specified in the scheme as " the transfer date ". It cannot be otherwise. It must be remembered that before applying to the court under section 391(1), a scheme has to be framed and such scheme has to contain a date of amalgamation/transfer. The proceedings before the court may take some time; indeed, they are bound to take some time because several steps provided by sections 391 to 394A and the relevant rules have to be followed and complied with. During the period the proceedings are pending before the court, both the amalgamati....
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....e same both pre and post demerger on every aspect whether substantive or procedural, including the value of dutiable goods, rate of duty, time of payment of tax, cash flow, etc. 56 The relevant clause of the Scheme of demerger as approved by the High Court of Bombay vide the order dated 20.12.2013 is extracted for ease of reference. 4.2 CONTRACTS (a) All contracts, deeds, bonds, agreements schemes, arrangements and other instruments of whatsoever nature in relation to the Transferred Undertaking to which the Transferor Company is a party or to the benefit of which the Transferor Company may be eligible, and which are subsisting or have effect immediately before the Effective Date, shall continue in full force and effect against or in favour of, as the case may be, the Transferee Company in which the Transferred Undertaking vests by way of business transfer hereunder and may be enforced as fully and effectually as if instead of the Transferor Company, the Transferee Company had been a party or beneficiary or oblige thereto or thereunder; and (b) Without prejudice to the other provisions of this Scheme and notwithstanding the fact that veting of the Transferred Undertaking o....
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....used or incurred for and on behalf of the Transferee Company and to the extent they are outstanding on the Effective Date, shall also without any further act or deed be and stand transferred to and be deemed to be transferred to the Transferee company and shall become the debts, liabilities, duties and obligations of the Transferee Company which shall meet discharge and satisfy the same. 4.5. LICENSES AND PERMISSIONS (a) Any statutory licenses, permissions or approvals or consents held by the Transferor Company required to cany out operations of the Transferred Undertaking shall stand vested in or transferred to the Transferee Company without any further act or deed, and shall be appropriately mutated by the statutory authorities concerned therewith in favor of the Transferee Company and the benefit of all statutory and regulatory permissions, environmental approvals and consents, registration or other licenses, and consents shall vest in and become available to the Transferee Company as if they were originally obtained by the Transferee Company. In so far as the various Incentives, subsidies, rehabilitation schemes, special status and other benefits or privileges enjoyed, gr....
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.... to the extent that the Transferee Company accepts and adopts all acts, deeds and things done and executed by and/or on behalf of the Transferor Company as acts, deeds and things done and executed by and on behalf of the Transferee Company. 20. COMPLIANCE WITH TAX LAWS 20.1 Upon coming into effect of the Scheme, the Transferee Company may, if it considers necessary or expedient, revise (with retrospective effect if applicable) its income tax returns, TDS returns, service tax returns, sales tax returns, and other tax returns, and claim refunds and/ or credits, etc. pertaining to the Transferred Undertaking pursuant to the provisions of the Scheme. 20.2 Upon coming into effect of the Scheme, the Transferor Company is also expressly permitted to revise with retrospective effect if applicable) its income tax returns, TDS returns, Service Tax returns, sales tax returns and other tax returns, and to claim refunds and/or credits, etc. pertaining to the Remaining Business pursuant to the provisions of the Scheme." 57 The relevant portion of the order dated 20th December 2013 of the Bombay High Court, approving the scheme of demerger is extracted below. 10. Some objectors had c....
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....use notice has been issued on 31st December 2018, raising duty demand for the period December 2013 to March 2014. This is beyond the normal period of limitation of two years prescribed under Section 11A(1) of the Central Excise Act, 1944. The Extended/longer period of limitation of 5 years has been prescribed under Section 11A(4) of the Central Excise Act, 1944. The extended period of limitation of 5 years, applies when the duty of excise had not been levied or paid or short levied or short-paid by reason of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of duty. 60 If in a given case, ex-facie, the ingredients for invoking the extended period of limitation are not attracted based on the very averments in the show cause notice, the notice would be ex-facie barred by limitation. 61 It is now well settled that the question of limitation is a question of jurisdiction. 62 In Pandurang Dhoni Chougule Vs. Maruti Hari Jadhav AIR 1966 SC 153, the Supreme Court observed that: It is well settled that a plea of limitation or a plea of res judicata is a plea....
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....e act on the part of the appellant by way of fraud, collusion, wilful mis-statement or suppression of facts, the extended period of limitation could not have been invoked and in that view of the matter no show cause notice in terms of Rule 10 could have been issued. 65 In Deputy CCE Vs. Sushil & Company - 2016 (42) STR 625 (SC), the Supreme Court held that the High Court was correct in entertaining the writ petition as no disputed questions of fact were involved and the legal issue was to be decided on the basis of the facts, as admitted by the parties. The relevant portion of the decision is extracted hereunder: "3. The respondent challenged this show cause notice by filing a writ petition in the High Court, inter alia, contending that no services were provided by the respondent by entering into the aforesaid contract, as it was only supplying labour and the labour was not doing any work of packing, unpacking, loading and unloading of any cargo. The High Court, by the impugned Judgment, has accepted the plea of the respondent, resulting into allowing the writ petition and quashing the show cause notice. It is this Judgment of the High Court, the validity of which is questioned....
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....ur of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reasons of a new power. This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is not controlled by the commencement clause. 67 In Calcutta Discount Co. Vs. ITO - 1961 (2) SCR 241 = (1961) 41 ITR 191 (SC), the Supreme Court observed as under: "In the present case the company contends that the conditions precedent for the assumption of jurisdiction under section 34 were not satisfied and came to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts w....
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....e left to wonder on what basis does the Department contend that the evasion of duty if at all is on account of fraud, collusion or wilful misstatement on the part of the petitioners so as to invoke extended period of limitation. 42. Looking from any angle, we are of the opinion that the petition must succeed. The same is, accordingly, allowed. The impugned show cause notice dated 1-8-2001 issued by the Commissioner of Central Excise, Surat, is hereby quashed and set aside. Rule is made absolute with no order as to costs. 69 In Godrej Foods Ltd. Vs. UOI - 1993 (68) ELT 28 (MP), it was held under: 8. This court in Universal Cables Ltd. v. Union of India & Others [ 1978 (2) E.L.T. (J632 )] has relying on decisions of the Supreme Court in Calcutta Discount Co. v. I.T. Officer (AIR 1961 SC 372). East India Commercial Co. v. Collector of Customs [AIR 1962 SC 1893 = 1983 (13) E.L.T. 1342 (S.C.)] and N.B. Sanjana v. E.S.W. Mills [AIR 1971 SC 2039 = 1978 (2) E.L.T. (J 339) (S.C.)] held that it is settled law that if a notice issued by Tribunal or Authority threatening to initiate proceedings prejudicial to a person is on admitted facts, in excess of jurisdiction, the Tribunal or Auth....
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....d period of limitation of 5 years, it had to he established that the duty of excise had not been levied or paid or short levied or short-paid by reason of either fraud or collusion or wilful misstatement or suppression of facts or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of duty. It was further observed that mere failure or negligence on the part of the producer or manufacturer either not to take out a licence in case where there was scope for doubt as to whether licence was required to be taken or where there was scope for doubt whether the goods were dutiable or not would not attract Section 11A of the Act. In the facts and circumstances of that case the Supreme Court found that there were materials on record to suggest that there was scope for confusion and the assessee believing that the goods came within the purview of concept of handicrafts were exempt. The court observed that if there was scope for such a belief or opinion, then failure either to take out a licence or to pay duty on that belief, when there was no contrary evidence that the producer or the manufacturer knew that the goods were excisable or require....
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....which have been noticed in Baburam Prakash Chandra Mahesweri v. Antarim Zila Parishad (Now Zila Parishad, Muzaffar Nagar) AIR 1969 SC 556, State of U.P. v. Bridge & Roof Co. (India) Ltd. [1997] 104 STC 78 (SC); (1996) 6 SCC 22 and Kerala State Electricity Board v. Kurien E. Kalaithil AIR 2000 SC 2573. One of the exceptions carved out by the Courts is that if the order under challenge is per se without jurisdiction, the aggrieved party may not be relegated to the alternative remedy of appeal, etc. In the present case, the petitioner has challenged the impugned order mainly on the ground that respondent No. 2 did not have the jurisdiction to initiate the proceedings under the 1973 Act. Therefore, we do not find any justification to non-suit it on the ground of availability of alternative remedy. The above decision has been referred to by the Supreme Court in State of Haryana Vs. Hindustan Construction Company Ltd. - (2017) 9 SCC 463. 71 In Famina Knit Fabs Vs. UOI - 2020 (371) ELT 97 (P&H), the Punjab and Haryana High Court held as under: 9. Q. No. (i) Whether writ petition under Article 226 is maintainable against impugned show cause notice? The primary issue involved is de....
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....ra 8 has dealt with similar objection. Para 8 reads as under : "8. We have given our anxious consideration to the preliminary objection raised by the respondents with regard to the maintainability of the present petition and also the contentions raised by the Learned Counsel for the petitioner-Company. The rule that the High Court will not entertain writ petition under Article 226 of the Constitution of India if an effective alternative remedy is available to the petitioner is not a statutory rule, but is a rule of self-imposed restraint evolved by the Courts and there are well recognised exceptions to this course, some of which have been noticed in Babu Parkash Chandra Maheswari v. Antrim Zila Parishad (Now Zila Parishad Muzaffarnagar), AIR 1969 Supreme Court 556: State of U.P. and others v. Bridge & Roof Company (India) Ltd., 1996 (83) A.I.R. (SC) 3515 : (1996) 6 SCC 22. and Kerala S.E.B. v. Kurien E. Kalaithil, 2000 (4) S.C.T. 242 : AIR 2000 Supreme Court 2573. One of the exceptions carved out by the Courts is that if the order under challenge is per se without jurisdiction, the aggrieved party may not be relegated to the alternative remedy of appeal, etc. In the present case....
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....Controller of Capital issues granted the approval for the issue of share capital to the shareholders of the ICL vide the letter dated 18th November 1985. The RBI approved the issue of shares to non-resident shareholders vide the letter dated 1st February 1986. Thus, the last of the approvals required for completion of the scheme of amalgamation was given on 1st February 1986, which was beyond the date on which the relevant previous year ended, i.e. 30th June 1985. For the assessment year 1986- 87, the assessee filed its return of income including the income of the ICL as its income, claiming that the ICL had amalgamated with it from 1st July 1982. However, the Assessing Officer assessed the income of the ICL in the assessee's hands only on protective basis, holding that, since necessary formalities for the amalgamation had not been completed during the year under consideration, therefore, the Assessing Officer also disallowed the benefit of adjustment of advance tax and TDS paid in the name of ICL. On appeal, the Commissioner (Appeals) confirmed the orders of the Assessing Officer. 75 The assessee went in appeal before the Appellate Tribunal. The pivotal issue before the Tribunal ....
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....5,10,495 has been paid as advance-tax and TDS by erstwhile IFCL. Assessing Officer has not adjusted the amount in the assessment of the assessee. Since the income of the IFCL had been assessed on protective basis and the income was said to be assessable in the hands of IFCL, adjustment of taxes paid in the name of IFCL was not allowed. Since we have held the income of the IFCL to the assessable in the hands of the assessee on substantive basis, the taxes paid in the name of IFCL are adjustable against the demand in the name of the assessee. Where the income of another person is included in the income of the assessee the taxes paid in the name of the person whose income is assessed with the income of the assessee are adjustable in the hands of the assessee. We derive support for this view from the decision of the Supreme Court in the case of ITO v. Bachu Lal Kapoor [1966] 60 ITR 74 as also from the decision of the Delhi High Court in the case of CIT v. Ramanand Sachdeva [1982] 136 ITR 440. Respectfully following the afore-mentioned decisions, we direct the Assessing Officer to adjust the sum of Rs. 65,10,494 being the tax deducted at source and the advance-tax paid in the name of IF....
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....esting the scheme does not seem to arise. Further, Hon'ble Court was made to believe that the scheme was not in contravention of any of the provisions of the Laws. However, as stated supra in the entire notice, it can be seen that how the said scheme of arrangement had contravened various provisions of the Central Excise Act, 1944 and the Rules made thereunder. 80 One of the issues is the question of jurisdiction of the Central Excise authorities to question the legality and validity of the scheme approved by the High Court. 81 In the present case, the Central Government was a party to the scheme through the Office of the Regional Director, Ministry of Corporate Affairs, Western Region Mumbai. Thus, the respondent No. 1 was aware of the Scheme at all times. Once, the Scheme has been approved by the High Court and has attained finality, the Respondent is now barred to raise any objection to the said scheme in the present proceeding. 82 In Sadanand Varde and Others Vs. State of Maharashtra - (2001) 247 ITR 609 (Bom), the Bombay High Court held as under: "....... The amalgamation order made by the company court in any event clarifies that the ninth respondent would issue ....
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....y for the Principal Commissioner/Commissioner prior to the issuance of show cause notice in cases involving the demands of duty above Rs. 50 lakh. Such consultation is required to be done by the adjudicating authority with the assessee as an important step towards reducing the necessity of issuing show cause notice. 84 The contention of the learned A.S.G. that since the present case originated from the intelligence gathered from the DGGI such preconsulting is not required. The said contention runs contrary to the recent clarification issued by the Board. For the very objection now being raised, a clarification was sought by the DGGI office from the Board as to whether the DGGI formations will fall under the exclusion category of the master circular dated 10th March 2017 read with the circular dated 19th November 2020. The Board vide the Circular No. F.No.116/13/2020-CX-3 Dated 11.11.2021 clarified that the exclusion from the pre-show cause notice consultation is case specific and not formation specific. Therefore, merely because in the present case, the case originated on account of investigation of the DGGI will not be a sufficient ground for not following the mandatory procedure....
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....ted' SCN. If that were to be the logic, then in every case para 5.0 can be dispensed with on the ground that the adjudication of the SCN is likely to be lead to the noticee facing proceedings for having committed an offence. The exception would then become the rule and not vice versa, and the need for any pre-notice consultation being rendered redundant. Further, without the conclusion of the adjudication on the SCN, the Respondent would not be in a position to decide whether an offence is made out. (ii) Tube Investment of India Ltd. Vs. Union of India - 2018-TIOL-330- HC-MAD-CX 7. Admittedly, the above referred procedure, which has been held to be a mandatory by C.B.E. & C., has not been adhered to in the instant case. That apart, when the petitioner had been given an opportunity to submit the reply to the Audit Slip, which they had submitted by reply dated 16-12-2016, the same ought to have been considered by the fourth respondent prior to issuance of the show cause notice. If, for some reasons, the fourth respondent was of the opinion that the reply given by the petitioner to the Audit Slip is not satisfactory, then at least the same should have been dealt with in the impug....
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....evade payment of duty. by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice." 88 The case on hand by any stretch of imagination cannot be described as an offence/preventive case whatsoever. This is not a case where the goods have been removed illicitly without a statutory invoice. In the cases of offence, there is no dispute about the dutiability or taxability of the transaction. The only dispute is whether the transaction is put through. In other words, the only question is whether, the goods have been actually manufactured or removed. The dispute is whether on facts, the assessee has manufactured or cleared those goods. Those are offence/preventive cases mentioned in the circular dated 10th March 2017. 89 The impugned show cause notice has proposed to invoke the extended period of limitation on the ground stated in para 10 of the show cause notice. The relevant portion of Show Cause Noti....
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....pects. The record reveals that the writ applicant on its own had applied to the department on 1st April 2014 for obtaining the central excise registration in the name of the new entity. It appears that along with the said application, the order passed by the Bombay High Court dated 20th December 2013 was also enclosed. The Central Excise Department granted registration on 7th April 2014. 92 The Central Excise Department could be said to be aware of the fact that the new entity applied for registration in April 2014. The department could also be said to be aware of the fact that for the earlier period (F. Y. 2013-14), the old registration continued and the old entity i.e. the predecessor had issued invoices and filed monthly ER-1 return for the factory with the department for F. Y. 2013-14. It was within the knowledge of the department that the dispatches and payment of duty for the F. Y. 2013-14 had been done by the Larsen & Toubro. The writ applicant herein also applied for the transfer of the CENVAT Credit balance on 30th June 2014 and the same was allowed vide the order-inoriginal dated 30th April 2015. 93 With all the aforesaid, we fail to understand why the department did no....
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....te to the extent that the Transferee Company accepts and adopts all acts, deeds and things done and executed by and/or on behalf of the Transferor Company as acts, deeds and things done and executed by and on behalf of the Transferee Company." 96 In view of the above, the writ applicants could be said to have had a bonafide belief and that since the predecessor has discharged the excise duty liability wherever applicable and complied with the central excise provisions like issuing the invoice and filing of returns during the period in dispute, the writ applicant itself is not required to do so in its own name. Also, in terms of the Clause 4.5(a), the excise registration in the name of the predecessor stood vested in name of the writ applicant automatically and without anything more. Hence, none of the ingredients of Section 11A(4) are applicable to the present case. 97 The Supreme Court has construed the proviso to Section 11A(1) as it stood prior to the amendment dated 8th April 2011 and held that in order to invoke the extended period of limitation, the intention to evade payment of duty and suppression on the part of assessee has to exist. 98 The Supreme Court in the case of....
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....ch is payable in accordance with law." 100 We may also refer to a decision of the CESTAT in the Geep Industrial Syndicate Ltd. vs. CCE - 1999 (114) ELT 850. In the said case, the benefit of exemption notification was available to the assesse, subject to following the procedure specified in the notification. The assessee failed to follow that procedure. The Revenue invoked the extended period of limitation. In that context, the CESTAT held as under: "failure to follow procedure may be an error or omission on the part of the assessees, but it cannot amount to suppression and the question of suppression will arise only when an assessee wants to obtain a benefit not available to him under the law and will not arise when any exemption conferred by law is sought to be denied due to nonfulfilment of procedural requirement." 101 The ratio of the Collector of Central Excise vs. Chemphar Drugs & Liniments (supra) is similar to the situation hereunder. The only difference is the availability of the exemption under different notifications etc. The Supreme Court held that the exemption under the Notification Nos.71/78-C.E., and 80/80-C.E. resply is available if the total value of clearanc....
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....s. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different then what has been 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 should 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 the 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 as suppression. So far as the Classification List which has already been given in (Tata Iron & Steel Co, Ltd. v. Union of India and Ors.) it is held in paragraph 7 therein as follows : "In fact, it is common ground that right from 1962 the appellant was filing classification lists containing the description of the items and showing them as liable....
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....iew of our findings made hereinabove 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 11-A 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 CEGAT to come to a conclusion that the appellant was guilty of "suppression of facts." (emphasis supplied) 105 In Easland Combines, Coimbatore Collector of Central Excise, Coimbatore [(2003) 3 SCC 410], the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. 106 The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Tex....
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....t correct." (emphasis supplied) 108 The Annexure A to the impugned show cause notice indicates that duty has been paid for these very clearances against various invoice as detailed in the Annexure-A, though by the predecessor in interest. Therefore, there cannot be any intention to evade the excise duty in respect of the clearances covered under Annexure-A. The Annexure-B is concerned with the clearances which are otherwise exempted from duty, whether the removal is effected by predecessor or successor. This very exemption has been duly given by the department for all the supplies effected against the very contracts with the customer prior to the F. Y. 2013 - 2014 qua the predecessor and post 1st April 2014 to the writ applicant itself. 109 There is one another submission canvassed by Shri Sridharan which merits consideration. It was submitted that the taxable event for the levy of excise duty is manufacture. In that sense, it is not even a tax on goods. Demanding excise duty once again on the same taxable event, even on the ground that the liability towards the excise duty ought to have been discharged only by the transferee would amount to double tax. 110 As per the charging ....
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....se of Article 289(1). Though the expression "taxation", as defined in Article 366(28), "includes the imposition of any tax or impost, whether general or local or special", the amplitude of that definition has to be cut down if the context otherwise so requires. The position is that whereas the Union Parliament has been vested with exclusive power to regulate trade and commerce, both foreign, and inter-State (Entries 41 and 42) and with the sole responsibility of imposing export and import duties and duties of excise, with a view to regulating trade and commerce and raising revenue, an exception has been engrafted in Article 289(1) in favour of the States, granting them immunity from certain kinds of Union taxation. It therefore becomes necessary so to construe the provisions of the Constitution as to give full effect to both, as far as may be. If it is held that the States are exempt from all the taxation in respect of their export or imports, it is not difficult to imagine a situation where a State might import or export all varieties of things and thus nullify to a large extent the exclusive power of Parliament to legislate in respect of those matters. The provisions of Article 2....
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....ther indirect taxes, etc. to be done or done by the Transferor Company in relation to the Transferred Undertaking shall for all purposes be treated as compliances to be done or done by the Transferee Company.' 4.5. It may not be out of place to point out that for the financial year 2013-14, income tax returns pertaining to business and financial transactions and profit and loss made by LTHE were initially filed on 29.11.2014 and later revised income tax returns were filed on 30.03.2016. LTHE had requested all customers to revise their Income Tax TDS returns for 2013-2014, for transferring TDS. However, no such attempts appeared to have been made to discharge Central excise duty and file ER-1 returns, even belatedly, though they had admittedly clearing the finished goods and received consideration in respect of such sale of goods supplied to various customers. LTHE have been consistently stating that LT-HCIC had made central excise duty payments and filed ER-1 returns on their (LTHE's) behalf. During the course of investigations and the depositions made by Shri Shastri, it appears that LTI-1E, Hazira had been relying heavily on the order of the Hon'ble High Court, Bom....
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....ssary certificate received from the Directorate General of the Hydrocarbon recommending grant of exemption was filed with the central excise department as is evident from the letter dated 10th May 2012 (Annexure-1 to the rejoinder affidavit) filed by the Larsen & Toubro Ltd. to the central excise department. The Central Excise Invoice No. 1000001893 dated 27th September 2012 (Annexure-2 of Rejoinder affidavit) issued by the predecessor against the Contract Note No. 300005 dated 7th June 2010 also establishes this position. This invoice is part of Sr. No.7 of the statutory ER-1 return filed by predecessor i.e., Larsen & Toubro for the month of September 2012. In such circumstances, the department duly allowed the predecessor to dispatch the goods under the ICB contracts without payment of excise duty. 118 Also, for the period post 1st April 2014, while recording the statement of Mr. Vaidyanath Shastri on 5th December 2018, the department specifically asked for the invoices raised by the writ applicant post demerger. Accordingly, the writ applicant submitted the copies of Invoice Nos. 1100000001 and No.1100000002 resply both dated 10th April 2014 (Annexure-3 to Rejoinder affidavit) ....
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....ncerned, the same shall vest with and be available to the Transferee Company on the same terms and conditions as applicable Io the Transferor Company, as if Iho seme had been allotted and/or granted and/or sanctioned and/or allowed to the Transferee Company. "10.3. Any income or profit accruing or arising to the Transferor Company in relation to the Transferred Undertaking and all costs, charges, expenses, losses or taxes (including but not limited to advance tax, tax deducted at source, service tax, VAT, other indirect taxes, etc.), arising or incurred by the Transferor Company in relation to the Transferred Undertaking for any period commencing on or after the Appointed Date shall for all purposes be treated as income, profits, charges, expenses, losses or taxes, as the case may be, of the Transferee Company. 10.4 All compliances with respect to advance tax, withholding taxes or tax deduction at source, service tax, VAT, other indirect taxes, etc. to be done or done by the Transferor Company in relation to the Transferred Undertaking shall for all purposes be treated as compliances to be done or done by the Transferee Company. ..." 12. The transfer and vesting of the ass....
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....wed to the Transferee Company." 125 In view of the above, without anything more, the registration granted by the central excise department to the predecessor Larsen & Toubro Limited could be said to have automatically stood vested as a registration in favour of the writ applicant. The formal application made on 1st April 2014 by the writ applicant for fresh registration could be said to be a compliance of the procedural requirement out of the abundant caution and was an unnecessary step. It is more in the nature of intimation of the department to formally correct the name of the writ applicant in its record. Hence, the objection that the writ applicant has not taken a registration in its name prior to 1st April 2014 is also invalid. 126 The following observation of the Supreme Court in Mangalore Chemicals & Fertilizers Ltd. vs. Dy. Commissioner - 1991 (55) ELT 437 (SC) are relevant and reproduced below: "11.............A distinction between the provisions of statute which are of substantive character and were built-in with certain specific objectives of policy on the one hand and those which are merely procedural and technical in their nature on the other must be kept clearly ....