TaxTMI 
TaxTMI 
TaxTMI 
2024 (9) TMI 1244
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....nded in respect of the clearances of excisable goods during the period December, 2003 to March, 2006. (ii) I confirm the demand of Central Excise duty amounting to Rs. 11,02,12,141/- (Rupees eleven crores two lakhs twelve thousand one hundred and forty one only) not paid by the assessee for the clearance of excisable goods in the guise of exempted goods during the period December, 2003 to March, 2006 in terms of the provision to Sub-section (1) of section 11A of the Central Excise Act, 1944. (iii) I impose penalty of Rs. 11,02,12,141/- (Rupees eleven crores two lakhs twelve thousand one hundred and forty one only) on the assessee under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. (iv) I order for recovery of interest under the provisions of Section 11AB of the Central Excise Act, 1944 on the amount of duty demanded. (v) I impose penalty of Rs. 10,00,000/- (Rs. Ten Lacs Only) on Shri Sanjay Kanoria Managing Director/vice Chairman of M/s. A. Infrastructure Ltd. Hamirghrh, Bhilwara Rajasthan under Rule 26 of the Central Excise Rules, 2002. (vi) I impose penalty of Rs. 10,00,000/- (Rs. Ten Lacs Only) on Shri V. K. Gupta, Ch....
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...., the appellant claims that fly ash is available free of cost, but the other two materials namely asbestos fibre and cement are purchased for a price from the market. Asbestos fibre is usually imported and costs around Rs. 45,000/- per metric ton, while the cost of cement is around Rs. 4,000/- per metric ton. 9. During the period from 2003-04 to 2005-06, fly ash was procured by the appellant free of cost from Kota Super Thermal Power Station [KSTPS] at Kota and Suratgarh Thermal Power Station [STPS] at Suratgarh, both in the State of Rajasthan, through contractors. The details of the fly-ash procured, as given by the appellant, are as follows: Details of Fly Ash Procured from KSTPS and STPS Year Qty procured from KSTPS (MT) Qty procured from STPS (MT) Total Qty procured (MT) 2003-04 9,758 - 9,758 2004-05 14,980 (wrongly shown in SCN as 9,758) - 14,980 2005-06 10,803 7,616 18,419 10. The appellant contends that: (i) Contracts for supply of fly ash were given to the transporters, but no contract was entered into with the thermal power stations, as the fly ash was available free of cost; (ii) Fly ash was lifted from the thermal power stations by the transport....
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....le; and (b) from so much of the Special duty of excise leviable thereon under the Second Schedule (hereinafter referred to as the Second Schedule) to the Central Excise Tariff Act, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (5) of the said Table, subject to the relevant conditions specified in the Annexure to this notification, and referred to in the corresponding entry in column (6) of the said Table: Provided xxxxxxxxxx Provided xxxxxxxxxx Explanation:-For the purposes of this notification, the rates specified in columns (4) and (5) of the said Table are ad valorem rates, unless otherwise specified:- S.No. Chapter or heading No. or sub-heading Description of goods Rate under the First Schedule Rate under the Second Schedule Condition (1) (2) (3) (4) (5) (6) 158 68 Goods, in which not less than 25% by weight of fly-ash or phosphogypsum or both have been used Nil - 36 Condition No. 36: If the manufacturer maintains proper account in such form and in such manner as the Commissioner of Central Excise having jurisdiction may specify in this behalf, for receipt and use of fly-ash or phosphogypsu....
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....e appellant asserts that the Office of the Central Excise Commissionerate also did not raise any objection about the non-utilization of fly-ash. 18. The Office of the Accountant General, Rajasthan also conducted an audit of the central excise records of the appellant at the factory premises in Bhilwara during the period from 21.11.2005 to 25.11.2005, but the Office of the Accountant General, Rajasthan did not raise any objection regarding non-utilization of fly-ash. 19. Based on an intelligence, the Officers of DGCEI in association with the officers of the Central Excise Commissionerate, Jaipur-II, searched the factory premises of the appellant on 09.03.2006. The office premises of the appellant at D-83, Gulmohar Park, New Delhi were also searched on 10.03.2006. 20. A show cause notice dated 31.12.2008 was issued based primarily on the statements of the dharamkanta owner, truck drivers and officials of KSTPS, who denied that fly ash was supplied or transported to the factory. The show cause notice called upon the noticees to show cause why:- (i) benefit of exemption notification dated 01.03.2002, as amended, should not be denied for the period December 2003 to March 2006; (i....
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....enalty of Rs. 11,02,12,141/-. 24. It is against this order that the appellant had earlier filed an appeal before the Tribunal. The Tribunal, by order dated 03.10.2019, set aside the order of the Commissioner and remanded the matter to the Commissioner with the following directions: "13. As it can been seen from the discussion above that the entire case of the Department is made on the basis of statements of the various persons, who have not been examined by the adjudicating authority while adjudicating the case and also the Appellants were not permitted to cross examine these witnesses and thus the impugned order suffers from the inherent infirmity. In this regard we place reliance on the decision of G. Tech Industries (supra) and Swadeshi Polytex Ltd. (supra) wherein it is held that it is mandatory on the part of the adjudicating authority to examine the witnesses whose statements have been relied upon and thereafter these witnesses are required to be subjected to cross examination by the Appellant. Accordingly, the impugned order is not legal and proper. However, we find that the Department's case is also not without basis as enough evidence has been collected against the ....
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....r 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 person or his agent, the provisions of this sub-section shall have effect, for the words one year, the words "five years" were substituted"." (emphasis supplied) 30. It ....
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....uppressed the facts by giving wrong information in the statutory returns about the production and clearance and utilization of fly ash with an intent to evade Central Excise Duty. AIL have intentionally fabricated their statutory documents suppressing the actual receipt of fly ash from the Department and thus the extended period as laid down in proviso to Section 11A (1) of Central Excise Act, 1944 appears to be invocable against them. Accordingly they also appear to be liable for imposition of penalty and interest under Section 11AC read with rule 25 of Central Excise Rules 2002 and Section 11AB of the Central Excise Act, 1944 respectively." (emphasis supplied) 34. In regard to the invocation of the extended period of limitation, the Commissioner made the following observations in the impugned order dated 31.03.2021: "66. Moreover, in the era of self-assessment, the assessee himself required to maintain correct obligatory record and fulfill all the conditions prescribed under law. In the case of Union of India Vs Rajasthan Spinning & Weaving Mills {2009 (238) ELT 3 (S.C.)}, the Hon'ble Supreme Court has observed that in case the non-payment of duty is intentional and by ad....
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....D.G.S. & D or other nominated agencies. The AC Pipes were found to be in accordance with the tender conditions; (iii) The appellant had been maintaining all the required records, and had filed the required returns and intimations, as provided for in Trade Notice dated 16.05.1997 issued by Commissioner of Central Excise, Jaipur, including Form A, Form B, Form C (monthly return), and Form D (D3 Intimations); (iv) The factory of the appellant was audited on regular basis by the Officers of the Commissioner, Central Excise, Jaipur and Accountant General Rajasthan but allegations relating to non-utilization of fly-ash were never raised in any of the audits conducted for the period from December 2003 to March 2006; (v) The Central Excise Commissionerate also conducted an audit between 27.01.2005 to 31.01.2005 pertaining to the period from April 2003 to April 2004 but no objection was raised regarding non-utilization of fly-ash; and (vi) The Accountant General, Rajasthan also conducted an audit of the central excise records during the period from 21.11.2005 to 25.11.2005, but no objection was raised regarding non-utilization of fly-ash. 36. It is in the light of the aforesaid fac....
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....it had been maintaining all the requisite records as contemplated in the Trade Notice dated 16.05.1997. These include Form A, Form B, Form C. They also include Form D-3 intimations which contain receipts of fly-ash and these were submitted to the jurisdictional division and range offices. The appellant also claims to have maintained a register for fly-ash stock on monthly basis for use of fly-ash above 25% in the manufacture of AC Pressure Pipes. 40. When the records were duly maintained by the appellant and intimation was also given in form D-3 to the jurisdictional division and range offices, it was for the Officers to put the appellant to notice if there was any discrepancy in the information contained in these forms. There is, however, nothing on the record to indicate that the appellant was ever put to notice about any discrepancy. This apart, audits were regularly conducted for the period from December 2003 to March 2006 and April 2003 to April 2004, but no discrepancy was noticed by the officers conducting the audit. The appellant had also maintained a register for fly-ash stock on monthly basis for use of fly-ash above 25% by weight and the appellant had claimed exemption ....
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....e duty. In fact, the order passed by the Commissioner states that suppression means failure to disclose full information with intent to evade payment of duty. It is not so. The department has to establish that not only the assessee suppressed facts but also that such suppression was with an intent to evade payment of duty. 44. It needs to 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. 45. The provisions of section 11A (4) of the Central Excise Act, which are as similar to the provisions of section 11A (1) of the Central Excise Act, came up for interpretation before the Supreme Court in Pushpam Pharmaceuticals Company vs. Collector of Central Excise, 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....
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....nion 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) 47. In Easland Combines, Coimbatore vs. 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. 48. The aforesaid decisions of the Supreme Court were relied upon by the Supreme Court in Uniworth Textiles Ltd. vs. Commissioner 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 con....
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....on) 2018 (12) GSTL 368 (Del.) also examined at length the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act, 1994 [the Finance Act] and held as follows: "27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression" in the proviso to Section 11A (1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty. ***** 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....
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....ct is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return." (emphasis supplied) 53. In M/s. Raydean Industries vs. Commissioner CGST, Jaipur Excise Appeal No. 52480 of 2019 decided on 19.12.2022, the Tribunal in connection with the extended period of limitation, observed that even in the case of self assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The Division Bench also noted that departmental instructions issued to officers also emphasise that it is the duty of the officers to scrutinize the returns. The relevant portion of the decision of the Tribunal 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 in....
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....Evidently, fraud, collusion, wilful misstatement and violation of Act or Rules with an intent all have the mens rea built into them and without the mens rea, they cannot be invoked. Suppression of facts has also been held through a series of judicial pronouncements to mean not mere omission but an act of suppression with an intent. In other words, without an intent being established, extended period of limitation cannot be invoked. ***** 14. In this appeal, the case of the Revenue is that the appellant had wilfully and deliberately suppressed the fact that it had availed ineligible CENVAT credit on input services. The position of the appellant was at the time of self-assessment 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 ....
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....assessment but the audit found so much later. Had the Superintendent scrutinized the returns calling for whatever accounts or records were required, a demand could have been raised within the normal period of limitation. The fact that the alleged short payment came to light only during audit does not prove the intent to evade payment of service tax by the appellant, but it only proves that the Range Superintendent had not done his job properly. For these reasons, we find that the demand for the extended period of limitation cannot be sustained." (emphasis supplied) 56. The Tribunal in Sunshine Steel Industries vs. Commissioner of CGST, Customs & 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 inf....
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....that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co-exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee's view to be lacking bona fides. In any scheme of 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 ....