TaxTMI 
TaxTMI 
2025 (10) TMI 799
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....oms Act, 1962 [the Customs Act] with interest and penalty. 2. Customs Appeal No. 50949 of 2020 has been filed by Sunil Kumar Sharma, Senior Manager- Finance and Accounts of Toyota India against that portion of the order dated 29.05.2020 passed by the Principal Commissioner that imposes penalty of Rs. 16,73,042/- upon him under section 112 of the Customs Act and a penalty of Rs. 10 lakhs under section 114AA of the Customs Act. 3. Customs Appeal No. 51136 of 2020 has been filed by the department to assail that portion of the order dated 29.05.2020 passed by the Principal Commissioner that drops the demand of Rs. 3,25,17,290/- for the period from 14.05.2015 to 20.03.2017. 4. Toyota India is a subsidiary of Toyota Industrial Corporation, Japan and is primarily engaged in the business of importing and distributing forklifts and trucks in India. In addition to the above, it also engages in supply of after sales and/or maintenance services in relation to the forklift supplied to its customers. Toyota India imported parts, components and accessories of forklifts during the period 01.02.2014 to 20.3.2017 through various Bills of Entry to supply the same to Maruti Udyog Limited, MCC....
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....the declared invoice values are to be accepted. They were paying applicable Basic Customs Duty under the on the declared invoice values under Section 14 of the Customs Act, 1962. In terms of notification no. 49/2018CE (NT) dated 24-12-2018 as amended by notification no. 19/2010 CE (NT) dated 29-42010, as detailed in above para, all parts, components and assemblies of goods falling under CTH 8427 are liable to payment of CVD on their MRP/RSPs with applicable abatement rate of 30%. Since the forklifts imported by them are classifiable under CTH 8427, as correctly done by them, it appears evident that the parts imported by them for these forklifts are liable for CVD on the basis of their MRP/RSPS. 7.2. However, on verification of the import documents of M/s. TMHIPL, it appears that they have not paid applicable CVD on the basis of the MRP/RSPs of their imported parts of forklifts, as per the above mentioned legal provisions, and instead, they have paid CVD on the transactions values declared by them. They are liable to declare the MRP/RSPs of these parts correctly at the time of import and pay appropriate duty on these goods." (emphasis supplied) 7. The show cause....
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....sumer' was as follows: "2 (bb) "industrial consumer" means the consumer who buys packaged commodities directly from the manufacturer for use by that industry;" 11. After the amendment, definition of 'industrial consumer' is as follows: "2 (bb) "industrial consumer" means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration 'not for retail sale';" 12. The main finding given by the Principal Commissioner for confirming the demand for the period prior to 14.05.2015 is that a transaction of sale can fall under the exclusion category provided under rule 3 of the 2011 Metrology Rules only when the goods are procured by an institutional/industrial consumer directly from a manufacturer, while in the present case the appellant was an importer and not a manufacturer. The order holds that though in general parlance "manufacturer" and an "importer" may be treated at par but they cannot be treated at par for the purpose of rule 3 of the 2011 Metrology Rules. It, therefore, concluded that MRP basis assessment was mandatory during the disputed p....
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....The Principal Commissioner has recorded the following findings with regard to the invocation of the extended period of limitation: "29.1 1 find that the SCN has sought to invoke extended period, however, M/s Toyota Material Handling India Limited has 8illful8ed that they have not indulged in any activity such as collusion, 8illful-misstatement or suppression of facts and argued that extended period of limitation is not invokable and the demand is time barred in this case. I do not find any merits in this contention of the importer because of the fact that the investigation carried out has clearly established that prior to 14.05.2015, despite being merely an importer and not a manufacturer, kept on clearing their goods without following the provisions of the Legal Metrology Act and intentionally contravened the provisions of Section 4A of the Central Excise Act, 1944 to avoid assessing their duty on the MRP/RSP based valuation. They also did not pay any heed to the official correspondence vide which they were advised to clear their goods under MRP/RSP assessment. This act on their part show their mala-fide intention in deliberate contravention of relevant legal provisions a....
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....hort-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." 21. It would be seen from a perusal of sub-section (1) of section 28 of the Customs Act that where any duty has not been levied or paid, for any reason, other than the reason of fraud or collusion or any wilful mis-statement or suppression of facts, the proper officer, shall within two years from the relevant date, serve notice on the person chargeable to the duty which has not been paid. However, sub-section (4) of section 28 of the Customs Act provides that where any duty has not been levied or not paid by reason of collusion or suppression of facts, the proper Officer, shall within five years from the relevant date, serve notice on the person to show cause why he should not pay the amount specified in the notice. 22. It has to be remembered that mere suppression of facts is not enough. There has to be a deliberate attempt to evade payment of customs 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 sta....
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....satisfactory. Thus, in 2014/2015 the department was well aware that the appellant was paying CVD on the transaction value and not on MRP basis 26. The show cause notice was, however, issued on 30.01.2019 invoking the extended period of limitation by alleging suppression of facts. The Principal Commissioner had observed that the Toyota India did not pay heed to the correspondence sent by the department advising them to clear the goods under MRP assessment. There is nothing on record to indicate that such a letter was ever sent by the department. On the other hand, letters were sent by Toyota India to inform the department that it would be paying CVD on the transaction value in view of the legal advice tendered to it. The Customs Authorities at Delhi had also cleared the goods after raising the query that CVD should paid on MRP basis and not on transaction value. 27. It cannot, therefore, be said the department was not aware that Toyota India was discharging payment of CVD on the basis of transaction value. There is, therefore, no question of suppression of facts, much less with an intent to evade payment of duty. 28. In Easland Combines, Coimbatore vs. Collector of Central ....
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....o disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with knowledge that the statement was not correct." (emphasis supplied) 31. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication)[ 2018 (12) GSTL 368 (Del.)] also examined the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act, 19941 [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 ....
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....is sustainable. ***** 41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had wilfully suppressed any material fact. MTNL's contention that the receipt is not taxable under the Act is ....
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....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) 35. Therefore, for the reasons stated above, the demand confirmed for the period from 01.02.2014 to 13.05.2015, has to be set aside as the extended period of limitation could not have been invoked. . 36. It will, therefore, not be necessa....
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..... 28.8 The fact remains that declarations made on the packages and goods in physical form were available at the time of the visit of the officers I also find that in the present case the investigation has alleged that for the previous clearances, the declaration was not made merely on the basis of the fact that the goods were not being sold in their original import packaging and it appeared that re-packaging did not contain the said marking. It is difficult to fathom that if on a given date the said goods are carrying a particular marking on their packages, how can it be presumed that the despatches made a day before were not having the said marking specially when the importer has categorically denied the said allegation and has stated that the packages contained the said marking. The investigation has also not been able in bringing any evidence on record to prove that once the goods are repacked and are affixed with their own brand there was no mention of the words "Not For Retail Sale" on them, whereas, they were at liberty to visit the premises of the industrial consumers and got the specific queries replied by them in order to substantiate that the packages received by....