TaxTMI 
TaxTMI 
2008 (12) TMI 224
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....tood before its amendment, on 16-3-95, all assessees were required to file, with the proper officer, a classification list giving the full description of the excisable goods produced or manufactured or to be produced or manufactured by them, the chapter heading and the sub-heading of the Tariff Act under which such goods would fall, the rate of duty leviable on them and all other particulars as may be required by the Collector. Under Rule 173B(2) the proper officer, after such enquiry as he deems fit, approve the list with such modifications as are considered necessary. The assessee is required to determine the duty payable on the goods intended to be removed in terms of such approved classification list. Rule 173B had been amended, on 16-3-95. After the amendment, the assessee was required to file a declaration giving all the details, as previously required under the said Rule. However, after the said amendment, the prior approval of the classification list had been done away with. 3. Under Section 11A of the Central Excise Act, 1944, it has been stated that where any duty of excise has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, a ....
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....50% of the weight of the solution, should be classified under Chapter 32. Since the goods in question did not satisfy the said condition the petitioner classified them under the Heading 3907.50 and such a classification had been duly approved by the Assistant Collector of Central Excise for the years 1988 and 1989. However, in the year 1993, the Department, after a detailed technical investigation, had taken the stand that the subject goods were classifiable under Heading 3208.40. In such circumstances, the petitioner, in order to establish its bona fides, based on the request of the department, had paid the differential duty, suo motu, to the tune of Rs. 17,41,328.65, on 4-9-93, under protest', towards clearances made between June, 1988 to February, 1993. While so, a show cause notice bearing O.R. No. 63/93-Adjn., dated 24-11-93, had been issued calling upon the petitioner to show cause as to why the duty of Rs. 17,41,328.65, being allegedly duty short-paid on insulating varnish, cleared between 1-6-88 to 28-2-93, should not be confirmed, under Rule 9(2) read with Section 11A of the Central Excise Act, 1944 and as to why a penalty should not be imposed on the petitioner, under Rul....
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....CC 633] and therefore, the demand was unsustainable. 6. However, it was pointed, at the time of the arguments before the Tribunal, that the judgment of the Supreme Court held the field as on that date. It was further contended that irrespective of the merits of the case, with regard to the dispute in classification, there was no question of short-levy and the consequential demand of the duty and the penalty was not sustainable. However, the amendments introduced by the Finance Bill, 2000, made substantial changes in Section 11A of the Central Excise Act, 1944, practically, undoing the judgment of Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633]. Even according to the Finance Bill, 2000, there can be no question of levying penalty since it had been categorically clarified, by way of an explanation in the amendments sought to be brought about by the Finance Bill. After arguments had been closed, on 31-3-2000, the first respondent-Tribunal had reserved orders. Thereafter, the petitioner had received a Final Order No. 485/2000, dated 18-4-2000 [2000 (123) E.L.T. 1094 (Tribunal)], on 12-5-2000. The first respondent-Tribunal had dismissed ....
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....ith the Central Excise Department. In the classification list, the petitioner-company had classified the impugned goods, namely, Alkyd Resins under Chapter Sub-heading No. 3907.50, which was approved by the Assistant Collector. However, on certain information received through the intelligence to the effect that the petitioner-company was clearing certain grades of insulating varnishes, classifiable under Sub-heading No. 3208.40 of the Central Excise Tariff Act, 1985, in the guise of Alkyd Resins, classifiable under 3907.50 of the Central Excise Tariff Act, 1985, a detailed investigation had been taken up, along with the study of the classification list filed by the petitioner-company, with reference to the actual manufacturing processing and the versatility of the products. All grades were manufactured by blending phenolic resins, or melamine resins or both with Alkyd Resins in varying proportions along with solvents and stabilizers. These grades are marketed for the purpose of using them as insulation varnishes as is clear from the technical data sheets and the admissions made by Basha, Assistant Manager (R&D), of the petitioner-company. Blending of Phenolic Resins or melamine res....
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....actured and cleared a quantity of 3,06,368.11 litres of aforesaid grades as alkyd resins, instead of clearing them as insulating varnishes. The misclassification had resulted in short payment of Rs. 16,20,604.85 BED and Rs. 1,20,723.80 SED, which is liable to be demanded under the proviso to Section 11A of the Central Excises and Salt Act, 1944, which envisages payment of duty short-paid for an extended period of five years. 9. It has also been stated that when the investigation was in progress, the assessee had reclassified the product under 3208.40 and the petitioner-company had started paying the duty at the rate applicable to the Heading 3208.40. The petitioner-company, vide letter, dated 4-9-93, had intimated the department that the differential duty of Rs. 17,41,428.65 payable on the clearance made by them during June, 1988 to February, 1993, pertaining to this had been paid. It has been stated that certain informations which were vital in deciding the classification of the product were not provided by the assessee. When the Department had come to know about the suppression of certain information a detailed investigation was undertaken by the Central Excise Department. Aft....
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.... were disputing the classification of the goods and their liability to pay the duty. Therefore, the duty demanded by the department, from the petitioner-company had been upheld by the Commissioner, Central Excise, Hyderabad and also by the first respondent-Tribunal. Thus, it is clear that the claims made by the petitioner-company are without substance and devoid of merits. 11. The learned counsel appearing for the petitioner had submitted that the impugned order of the first respondent, dated 18-4-2000, is without jurisdiction and without the authority of law, being contrary to the decision of the Supreme Court, including the Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633]. The impugned order had been passed by the first respondent-Tribunal without taking into account the submissions made at the time of the hearing of the appeal. The order of the first respondent-Tribunal is also contrary to the Central Excise Act, 1944, and the Rules made thereunder. The said order is contrary to the principles enshrined under Articles 14 and 19 of the Constitution of India. The first respondent-Tribunal had not taken into consideration the princip....
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....validated. When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a show cause notice could be issued, within six months, from the relevant date. However, the proviso to Section 11A of the Act would be applicable only where any duty of excise has not been levied or paid or were short-levied or short-paid or erroneously refunded by reason of order or collection or any wilful misstatement or the suppression of facts or contravention of any of the provisions of the Act, or rules made thereunder, with intent to avoid payment of duty. In such circumstances of the case, a demand can be made for such payment, within a period of five years from the relevant date. Since there is nothing to show on the part of the department that the petitioner-company had evaded payment of excise duty by fraud, collusion or wilful misstatement or suppression of facts, the extended period of five years from the relevant date would not be applicable to the present case. After the amendment of Rule 173B of the Central Excise Rules, 1944, the petitioner has been filing declaration as required thereunder. The petitioner had filed a classification list ....
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....the extended period of limitation under the proviso to Section 11A of the Central Excises and Salt Act, 1944, cannot be invoked when clearance have been made with the knowledge of the Department, under an approved classification, as decided by the Supreme Court in its various decisions relating to the matter. Further, no differential duty can be demanded until the correctness of the approval of the price list has been questioned by issuing a show cause notice. The first respondent-Tribunal had clearly mislead itself in coming to the conclusion that there was no necessity for a show cause notice to be issued to the petitioner-company, with regard to the reclassification of the goods in question, since the petitioner had opted to file a classification list, after investigation had commenced in the year, 1993, classifying Alkyd Resins under chapter sub-heading 3208.40 and as it had voluntarily paid the duty for the period June, 1988 to February, 1993, though 'under protest'. The first respondent-Tribunal has failed to appreciate that by mere payment of duty for clearance, under the approved classification list or the filing of a revised classification list, with effect from March, 199....
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.... the clauses gave retrospective effect to actions already taken under Section 11A, by way of an explanation it was clarified that no penalty could be imposed due to the retrospective amendment. In spite of all such issues having been raised, the first respondent-Tribunal had held that, except for the duty demand confirmed for the period exceeding five years from the date of issue of show cause notice, there was no other infirmity in the Order-in-Original, dated 6-11-97. Therefore, the final order of the first respondent-Tribunal, dated 18-4-2000, made in Appeal No. E/441/98, is arbitrary, contrary to law and liable to be set aside. 18. The learned counsel for the petitioner had further submitted that the issue of classification of the product by the respondents is not being pressed. However, it has been stated that the show cause notice issued by the respondents, with regard to the imposition of penalty on the petitioner, is contrary to law and the principles of natural justice. The first respondent-Tribunal had misled itself in rejecting the contentions raised on behalf of the petitioner that the levy of penalty on the petitioner, by the respondents, is illegal since the duty h....
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....rder had been passed by the first respondent-Tribunal at Chennai and therefore, this Court has the territorial jurisdiction in respect of the present writ petition filed by the petitioner. 19. Per contra, the learned counsel appearing on behalf of the second respondent had submitted that the petitioner had not disclosed certain vital facts to the Customs and the Central Excise Department. In the letter, dated 16-11-92, the petitioner had mentioned that Polyester based on alkyds are only modified by drying oil fatty acids. It did not disclose that the final product is a blend of alkyd resins with other resins. However, it was evident that the final product manufactured by the petitioner was essentially used as insulating varnish for imparting electrical insulating properties and mechanical strength, such as surface production and therefore, the final product ought to have been classified as insulating varnish, under the sub-heading 3208.40 of the Central Excise Tariff Act, 1985. Instead the petitioner had classified the final product as Alkyd Resin, classifiable under 3907.50 of the Act. In such circumstances, a detailed investigation had been taken up by the Central Excise Depar....
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....raph-27 has held as follows : "When an order, however, is passed by a Court or Tribunal or an executive authority whether under provisions of a statute or otherwise, a part of cause of action arises at that place. Even in a given case, when the original authority is constituted at one place and the appellate authority is constituted at another, a writ petition would be maintainable at both the places. In other words, as order of the appellate authority constitutes a part of cause of action, a writ petition would be maintainable in the High Court within whose jurisdiction it is situate having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of the original authority merges with that of the appellate authority." (2) A Division Bench of this Court in ORJ Electronics Oxides Limited v. CESTAT, Chennai, [2008 (225) E.L.T. 202 (Mad.)] at paragraphs 11 and 12 has held as follows : "11. A Full Bench of this Court in Sanjos Jewellers v. Syndicate Bank 2007 (5) CTC 305, has held that a writ petition challenging the order of the Debts Recovery Appellate Tribunal which is situated within the territorial limits of this Court,....
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.... of the Central Excises and Salt Act, 1944, and the period of six month is also not available. However, such a Show Cause Notice can be regarded proper for the period subsequent to its issue." (Para 6) 22.2 In ITW Signode India Ltd. v. Collector of Central Excise [2003 (158) E.L.T. 403 (S.C.)] it has been held as follows : "Section 11A deals with a case when inter alia excise duty has been levied or has been, short-levied or short-paid. The word "such" occurring after the words "whether or not" refers to non-levy, non-payment, short-levy or short-payment or erroneous refund. It is, therefore, not correct to contend that the word "such" indicates only such short-levy which has been held to be non-existent in Cotspun having regard to Rule 173B. Such short-levy or non-levy may be on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods. Thus, any approval made in terms of Rule 10, in the event, any mistake therein is detected, would also come within the purview of the expression "such short-levy or short-payment". Such notice is to be served on the person chargeable with duty which inter alia has been short-levy or sh....
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....rently has not considered these aspects correctly. Contrary to the factual position, the CEGAT has held that no plea was taken about there being no intention to evade payment of duty as the same was to be reimbursed by the buyer. In fact such a plea was clearly taken. The factual scenario clearly goes to show that there was scope for entertaining doubt, and taking a particular stand which rules out application of Section 11A of the Act. 12. As far as fraud and collusion are concerned, it is evident that the intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word 'wilful', preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words 'contravention of any of the provisions of this Act or Rules' are again qualified by the immediately following words 'with intent to evade payment of duty.' Therefore, there cannot be suppression or mis-statement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Mis-statement of fact must be wilful." 23. With regard to the peri....
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....arently for evasion of excise duty due on this waste/by-product but counsel for the assessee contended that in the absence of any such allegation in the show cause notice the assessee was not put to notice regarding specific allegation under the proviso to that sub-section. The mere non-declaration of the waste-by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or by-product did not attract excise duty and hence, it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, mis-conduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six mon....
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....nd a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no wilful misdeclaration or wilful suppression - Section 11A(1) of Central Excise Act, 1944" 25. In Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633], it has been held that the levy of excise duty on the basis of an approved classification list is the correct levy, at least until the correctness of the approval is questioned by the issuance of a show-cause notice to the assessee. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such. The levy of excise duty on the basis of an approved classification list is not a short-levy. Differential duty cannot be recovered on the ground that it is a short-levy. Rule 10 has then no application. So the Tribunal was right in holding that the revised assessment could be made effective only prospectively from the date of the show-cause notices and not with reference to earlier removals made under approved classification lists. 26. The learned counsel appearing for the second respondent had relied on the followin....
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....f the goods for the first time while claiming the exemption. It is true that subsequent to the amendment Notification, dated 14-2-1988, the respondent had replied for reclassification under Tariff Heading 84.30. But this will not detract from the initial claim of the respondent that its goods were properly classifiable under Heading 87.05 nor does it explain why the respondent did not describe the goods fully in its application for approval of its classification list for the relevant period." 27. With regard to the aspect of extended period of limitation and the penalty leviable on the assessee, the learned counsel had relied on the following decisions : 27.1 In Indian Petrochemicals Corporation Ltd. v. Collector of C. Ex. [1992 (57) E.L.T. 485 (Tribunal)], it has been held that that where the assessee disclosed manufacture of petroleum resin, obtained L-4 licence for it and got its classification determined but not disclosed that raw naphtha obtained under Chapter X procedure would be utilised for its manufacture via 'C8C9 cut' - Such use being against the terms of exemption Notification Nos. 75/84-C.E., dated 1-3-1984 and 27/89-C.E., dated 1-3-89, charge of suppression of f....
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....ve. The case law cited by the learned counsel is distinguishable as in that case, the Tribunal held that the respondents therein had not suppressed any material fact regarding the description of the goods, while in the present case, the appellants are guilty of concealment/deliberate non-disclosure of the description of goods as chemically modified phenol formaldehyde. We, therefore, hold that the extended period of limitation has been rightly invoked and that the demand is not hit by time bar. We also hold that penalty is warranted in the facts and circumstances of the case. In the light of the above, we uphold the impugned order and reject the appeal." 28. Even though the learned counsel for the petitioner had raised a number of issues said to be in favour of the petitioner, relying on various decided cases, he had submitted, at this stage of the hearing of the writ petition, that it would suffice if the final order of the first respondent-Tribunal, dated 18-4-2000, made in Appeal No. E/441/98, is set aside and the matter is remitted back to the first respondent-Tribunal with a direction to dispose of the Appeal No. E/441/98, on merits and in accordance with law, considering, ....