TaxTMI 
TaxTMI 
2026 (5) TMI 362
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....ile reducing the penalty imposed to 50% of that imposed under Section 11AC. 2. The relevant facts are that the Appellant is engaged in the manufacture of Laminated Corrugated Mono Carton, Printed Paper Label etc. falling under chapters 48191090, 48219010 of the CETA. During the course of audit on 05-06-2014 and 06-06-2014, it was noticed that the Appellant had cleared (stock transferred) "Farmers Integrated Handbook" manufactured by them to their other unit situated at Trichy, without payment of duty by wrongly classifying them under chapter subheading 49109900. While the appellant cleared the goods at Rs.7.5 per item from their factory, it was noticed that the said goods are ultimately sold by the Tamil Nadu Agricultural Department to their customers at Rs.8.5 per item on payment of sales tax. On physical verification of the said product, it was observed that the said product is a four folded paper board with only heading printed and columns left out to be filled during periodical intervals. It is to be issued to the farmers of Tamil Nadu by the Agricultural Department which is to be maintained for a three year period from 2013-14 to 2015-16. Photograph of the individual farmer....
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....partment on 01-07-2014 and thus the Department officers had knowledge about the non payment in June 2014 itself. The Appellant paid duty under protest on 03-07-2014 and communicated to the Department on 07-07-2014. The Department has given acknowledgement for the said letter on 0807-2014. Ld. Counsel contended that the show cause notice should have been issued within the limitation period of one year from the date of knowledge i.e. 01-07-2014 or even from the date of payment of duty under protest with intimation which was acknowledged on 08-07-2014. Thus, the normal period of one year limitation expired on 07-07-2015. The show cause notice was issued on 29.02.2016, after a lapse of twenty months from the date of having knowledge by the Department. Ld. Counsel contends that the Demand being wholly barred by limitation ought to be allowed on this ground alone. 5. Ld. Counsel submits without prejudice to the above submissions that the impugned product even on merits ought to be classified under Chapter 49019900 or alternatively under 49119990. The Adjudicating Authority and also the First Appellate Authority had failed to consider the reference to chapter note number 10 of Chapter ....
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....15 (321) ELT A 134, Commissioner v Oracle India P Ltd., 2016 (342) ELT A 40 SC, and Saint Gobain Glass Ltd v Commissioner, 2015 (317) ELT A 164 Mad HC. Ld. Counsel also placed reliance on the Board Circular No. 11/91 CX.4 dated 15.10.1991, Board Circular No. 1052/1/2017- Cx dated 23.2.2017 and Board Circular No.1057/06/2017 CX dated 07.07.2017 in support of the Appellant's contention that the classification of their goods under Chapter heading 4820 of the CETA by the Department is incorrect. 6. Per contra, Shri. Sanjay Kakar, Ld. Authorised Representative appearing and arguing for the Respondent, contended that the impugned order is a reasoned one and warrants no interference. It is also contended that the Appellant had not indicated the clearance of these goods in its ER-1 returns and that would amount to suppression justifying the invoking of the extended period of limitation. Ld. A.R therefore submits that the Appeal ought to be dismissed. 7. We have heard the rival submissions, carefully perused the appeal records as well as the citations submitted as relied upon. 8. The issues that arise for determination are: A. Whether the Demand is wholly barred by limitat....
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....as not been levied or paid or has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder; (ii) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid and the return has been filed, the date on which such return has been filed; (iii) in any other case, the date on which duty of excise is required to be paid under this Act or the rules made thereunder; (iv) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof; (v) in the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund; (vi) in the case where only interest is to be recovered, the date of payment of duty to which such interest relates." (emphasis supplied) 12. The ingredients mentioned in Section 11A(4) for invoking the extended period of limitation of five years has come up for analysis rep....
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....ations as have been visualised by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power. Since the proviso extends the period of limitation from six months to five years, it has to be construed strictly. The initial burden is on the Department to prove that the situations visualised by the proviso existed. But once the Department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the Section, the burden shifts and then applicability of the proviso has to be construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay duty. It must be something more. That is, the assessee must be aware that the duty was leviable and it must deliberately avoid paying it. The word `evade' in the context means defeating the provision of law of paying duty. It is made more stringent by use of the word `intent'. In other words the assessee must deliberately avoid payment of ....
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....The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from 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 suppression." (emphasis supplied) 16. In 2013, in Uniworth Textiles v CCE, Raipur, 2013 (288) ELT 161 (SC), the Apex Court noticed a slew of its earlier judgements and after reproducing therefrom, held as under: "17. In fact, the Act contemplates a positive action which betrays a negative intention of willful default. The same was held by Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore - (2003) 3 SCC 410 = 2003 (152) E.L.T. 39 (S.C.) wherein this Court held :- "31. It is settled law that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion, wilful misstatement, suppression of facts or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to p....
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....e 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". It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not wilful and yet constitute a permissible ground for the purpose of the proviso to Section 11A. Misstatement or suppression of fact must be wilful." 63. This decision was followed in Uniworth Textiles v. Commissioner of Central Excise [(2013) 9 SCC 753 = 2013 (288) E.L.T. 161 (S.C.)] where it was observed that "(t)he conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts" is "untenable". This view was also followed in Escorts v. Commissioner of Central Excise [(2015) 9 SCC 109 = 2015 (319) E.L.T. 406 (S.C.)], Commissioner of Customs v. Magus Metals [(2017) 16 SCC 491 = 2017 (355) E.L.T. 323 (S.C.)] and other judgments." 19. We find that in the impugned order the Appellate Authority has held that the invocation of extended period cannot be faulted since the Appellant had not declared the clearances of the above goods in th....
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.... the extended period of limitation in the instant case. In as much as the period involved is April 2013 and May 2013 and the ER-1 return ought to have been filed in June 2013, in the absence of any allegation that the Appellant had not filed its return for the said period within the stipulated time, the SCN issued on 29.02.2016 is indisputably beyond the normal period of one year from the relevant date and is thus barred by limitation. The impugned order is liable to be set aside on this count alone. 21. That apart, we find that the SCN itself concedes that it stems from the audit of the appellant's accounts conducted on 05-06-2014 and 06-062014. The spot memo dated 27.11.2006 issued by the Superintendent of Audit indicates that the appellant's documents/records were verified during the course of audit conducted on 22 to 24.11.2006. The SCN reveals that the ER-1 returns filed by the appellant were verified. The Appeal records also reflect the correspondence made subsequent to the Audit as has been noticed supra. It is apposite at this juncture to notice that the Hon'ble High Court of Bombay in the decision in Rajkumar Forge Ltd v. UOI, 2010 (262) ELT 155 (Bom) after noticing tha....
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....ring : "Whether the Tribunal having held that proceedings were barred by limitation and proceedings were liable to be quashed on the ground of limitation, the Tribunal committed an illegality in deciding the question on merits. Hence is the finding of Tribunal on merits liable to be set aside?" 21. The appeal is admitted on the following question of law and is by consent taken up for final hearing. 22. The Tribunal came to the conclusion that the demand by the Revenue was beyond the period of limitation of one year prescribed under Section 73(1) of the Finance Act, 1994 and that the period of five years could not have been invoked. That part of the judgment of the Tribunal has been confirmed in the companion appeal. Once that be the position and the Tribunal having come to the conclusion that the extended period of limitation could not have been validly applied, the Tribunal, in our view, acted outside its jurisdiction in entering upon the merits of the dispute on whether the demand for duty should be confirmed. Once it is held that the demand is time barred, there would be no occasion for the Tribunal to enquire into the merits of the issues raised by th....
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....ed into the merits of the appeal filed by the assessee and passed an adverse order. Before the Allahabad High Court, one of the substantial questions of law raised by the assessee, was when the Tribunal having held that proceedings were barred by limitation, has committed any illegality in deciding the question on merits. Whether the finding of the Tribunal on merits, is liable to be set aside?" 12. While addressing the above said substantial question of law, decision of the Hon'ble Supreme Court in State Bank of India v. B.S. Agricultural Industries reported in (2009) 5 SCC 121, has been pressed into service, wherein, the Hon'ble Supreme Court had an occasion to deal with a situation, where the consumer forum held that the complaint was barred by limitation, but nonetheless had proceeded to decide the issue on merits. Dealing with the issue, which is similar to the case on hand, at Paragraph 12, the Hon'ble Supreme Court in State Bank of India's case (cited supra), held as follows :- "12. As a matter of law, the consumer forum must deal with the complaint on merits only if the complaint has been filed within two years from the date of accrual of cause of action a....