TaxTMI 
TaxTMI 
2024 (8) TMI 1142
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...., the appellant also manufactures ethyl alcohol/rectified spirit, extra neutral alcohol, potable alcohol i.e. country liquor and Indian Made Foreign Liquor which are non excisable goods as also denatured spirit which is a dutiable product. 3. The appellant claims that it purchases sugarcane and obtains cane juice by crushing the sugarcane; the raw cane juice is boiled in different phases and impurities are removed to a certain extent; the boiled material is then allowed to evaporate to obtain concentrated form of juice, which is cooled; the product so obtained is known as RAB in the northern part of the country; this RAB is stored in storage tanks and transferred to distillery section of the appellant as per the requirements; in the distillery section, RAB undergoes the process of fermentation and distillation and the resultant product 'Rectified Spirit' is obtained; and though part of the Rectified Spirit is denatured and used in the manufacture of various chemicals which are cleared on payment of duty, but some quantity of rectified spirit is used in the manufacture of extra neutral alcohol and potable alcohol which are not chargeable to central excise duty. 4. The Officers....
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....he show cause notice further mentions that till 04.12.2009 the appellant misled the department by insisting that RAB is used in the manufacture of chemicals only and denied consumption of RAB in the manufacture of exempted goods. Thus, as the appellant had willfully suppressed the fact that RAB had been used in the manufacture of non excisable goods, the extended period of limitation under the proviso to section 11A(1) of the Central Excise Act would be invokable. It was, therefore, proposed that the appellant would have to discharge central excise duty on the entire quantity of RAB cleared and consumed captively within the factory. 9. The appellant submitted a reply dated 12.08.2011 to the show cause notice and denied the allegations made therein. The appellant also filed the written submissions. 10. The Commissioner, however, by the order dated 09.05.2019 confirmed the demand of Rs. 10,39,32,564/- for the following reasons: (i) The product RAB is akin to sugar syrups obtained after crushing of sugarcane in the factory and as such covered under ETI 1702 90 90 as 'sugar syrups not containing added flavouring or colouring matter'; (ii) The product RAB obtaine....
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....ave shelf life. Hence, it is not marketable nor covered by ETI 1702 90 90; (iv) The benefit of Notification dated 16.03.1995 is available on the intermediate product RAB used in the manufacture of both dutiable and non-dutiable goods; (v) The entire excise duty demand is time barred and hence the extended period of limitation could not have been invoked; and (vi) The valuation of RAB captively consumed has not been properly taken and cost sheets certified by independent cost accountant have been discarded. 12. Shri Reyaz Ahmad and Shri Unmesh Kumar, learned authorized representatives appearing for the department, however, made the following submissions: (i) The order passed by the Commissioner is justified in the facts and circumstances of the case and does not call for any interference; (ii) Simple syrups obtained by dissolving sugar in water is different from juice and syrups obtained from sugarcane; (iii) The Board has clarified that if the sugar syrup is marketable as such, without any reference to percentage of sugar concentration, then the same is excisable when taken for captive consumption or removed as such. Thus, th....
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....e Act, as it stood at the relevant time, is reproduced below: "Section 11A(1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such ....
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....d goods has been brought to the notice of the department by M/s IGL only on 04.12.09 (please refer RUD No.9). At very early stage of the enquiry, department had inquired about the usage of "RAB" in the factory premises of M/s IGL from the State Excise department vide C.No. 20-CE/Misc.Corr/IGL/KPR-II/07/723 dated 14.09.2007 (RUD-13). In this connection, an exclusive question was asked from State Excise Department whether the "RAB" manufactured by M/s India Glycol Ltd., Kashipur is exclusively used in the manufacture of potable alcohol. (Refer Question No. 6 of the said letter). In response to this letter, State Excise Officer(in-charge), M/s India Glycol Ltd., Kashipur vide letter C.No.21/AAB/Central Excise/2007-08 dated 19.09.2007 (RUD-14) informed that "RAB", manufactured in M/s. IGL Kashipur, is used in the manufacture of Chemicals & potable alcohol both. Thus, it appears that M/s IGL has will-fully suppressed the facts that "RAB" has been used in the manufacture of non excisable goods. Therefore, extended period of limitation as prescribed in proviso to Section 11 A(1) of the Central Excise Act, 1944 appears to be invokable." (emphasis supplied) 20. The reply filed by the ....
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....ed that the knowledge regarding consumption of 'Rab' on the manufacture of exempted goods has been brought to the Notice of the Department only in 2009. Noticees submit that such an allegation is incorrect. Whenever the Department has sought information from the Noticees, the Noticees have promptly provided all the information available. The Excise officers have periodically visited the plant of the Noticees at Kashipur for statutory checks. Therefore, by no means did the Noticees ever willfully suppress any fact from the Department. ***** ***** I.11 From the above correspondence, it is clear that Department has been in the full knowledge of the fact and especially Department itself right from the very beginning has been of the view that 'rab' is not excisable and not classified anywhere. In such circumstances, suppression can be alleged against the Noticees. I.12 Further, a special audit under Section 14AA of the Central Excise Act, 1944 was conducted by M/s S.K. Bhatt & Associates, Cost Accountants for the period 2004-05 to 2007-08 (up to Feb. 08), as per letter dated 7.3.2008, a copy of which is enclosed as Annexure-23. I.13 From time to time,....
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....of non excisable goods. 23. It must be remembered that mere suppression of facts is not enough. There has to be a deliberate attempt to evade payment of excise duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice. 24. The appellant had filed a detailed reply to the show cause notice pointing out why the extended period of limitation could not have been invoked in the facts and circumstances of the case, but the Commissioner upheld the invocation of the extended period of limitation merely for the reason that it was after a considerable enquiry that correct facts could be ascertained from the appellant which proves that the appellant resorted to suppression and wilful mis-statement of facts with intent to evade payment of duty. It needs to be noted that the show cause notice did allege that suppression of facts by the appellant was with an intent to evade payment of central excise duty but such a finding has been recorded by the Commissioner. This apart, there is no discussion in the order as to why the appellan....
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....e, Bombay [1995 (78) E.L.T. 401 (S.C.)]. The Supreme Court observed that section 11A(4) empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. The relevant observations are: "2. ***** The Department invoked extended period of limitation of five years as according to it the duty was shortlevied due to suppression of the fact that if the turnover was clubbed then it exceeded Rupees Five lakhs. ***** 4. A perusal of the proviso indicates that it has been used in company of such strong works as fraud, collusion or willful 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 m....
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....of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)] and the relevant portion of the judgment is reproduced below: "12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso." (emphasis supplied) 29....
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....Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention." ***** The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief." (emphasis supplied) 32. The Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others [W.P. (C) 7542 of 2018 decided on 06.04.2023], also observed as follows: "28. In terms of the proviso to Section 73(1) of the Act, the extended period of limitation is applicable only in cases where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of 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 service tax. However, the impugned show cause notice does not contain any al....
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....al is reproduced below: "24. It would be seen that the ER-III/ER-I returns filed by the applicant clearly show that the applicant had categorically declared that it had cleared the final products by availing the exemption under the notification dated 17.03.2012. The applicant had furnished the returns on the basis of self assessment. Even in a case of self assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is expected to self assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary ca....
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....t and, during the adjudication proceedings and is before us that it is entitled to the CENVAT credit. Thus, we find that it is a case of difference of opinion between the appellant and the Revenue. The appellant held a different view about the eligibility of CENVAT credit than the Revenue. Naturally, the appellant self-assessed duty and paid service tax as per its view. Such a self-assessment, cannot, by any stretch of imagination, be termed deliberate and wilful suppression of facts. 16. Another ground for invoking extended period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otio....
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....ms & Central Excise, Jodhpur [(2023) 8 Centax 209 (Tri.-Del.)] also observed as follows: "20. The Department cannot be permitted to invoke the period of limitation by merely stating that it is a case of self-assessment as even in a case of self-assessment, the Department can always call upon an assessee and seek information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to acc....
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....f self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner. 24. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. **********. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances." (emphasis supplied) 39. What, therefore, transpires from the aforesaid decisions is that there can be a difference of ....