TaxTMI 
TaxTMI 
2026 (7) TMI 1127
X X X X Extracts X X X X
X X X X Extracts X X X X
....1) of the Central Excise Act (Hereinafter called as the Act) and the imposition of Mandatory Penalty under Section 11AC of the Act. 3.The brief facts of the case are as follows: The appellant company was engaged in the import of telephone instruments as well as their parts, in the brand names Santel and TATA. The company assembled the parts into telephone instruments and marketed the same by packing them in a retail pack affixing the MRP (except in the case of TATA, where it was supplied for personal use of TATA for providing the private telephone communication services to its customers). Whileso, the authorities visited the appellant company's unit on 30.01.2006 and after verification of records, issued a show cause notice dated 04.10.2006, demanding a duty of Rs. 60,13,236/- for the periods 2001-02, 2002-03, 2003-04, 2004-05. In addition, interest and penalty were also proposed on the assessee as well as the individuals. The company gave its reply to the show cause notice on 19.02.2007 and thereafter the following Original Order No.8/2007 dated 24.07.2007 was passed, which reads as follows: I. I hold that assembling of imported and indigenously procured telephone p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions of law, which fall for consideration are as follows: 1) Whether the order in Original Order No.8/2007 dated 24.07.2007 passed by the learned Commissioner invoking extended period of time under the proviso to Section 11A(1) of the Act is valid? 2) Whether the imposition of penalty on the Director and the Financial Advisor invoking Rule 26 of the Central Excise Rules, 2002, which stood confirmed in the impugned final order passed by the CESTAT, Chennai is proper/correct? 6.The facts narrated above are not traversed to avoid verbosity. The foremost question is whether the Tribunal was justified in adopting the extended period under Section 11A(1) of the Central Excise Act. Section 11A(1) of the Act reads as follows: "Section 11A of the Act empowers the Central Excise Officer to initiate proceedings where duty has not been levied or short-levied within six months from the relevant date. But this period to commence proceedings under proviso to the Section stands extended to five years if the duty could not be levied or it was short-levied due to fraud, collusion, wilful misstatement or suppression of facts etc. The provisio to Section 11A reads as und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ention to evade payment of appropriate duty, justifying the invocation of extended period under Section 11A[1] of the Act. So also the Tribunal, on the basis of its appreciation of the exemption Notification dated 26.06.2001, found that the failure of the assessee to file a declaration claiming exemption from registration and the omission to seek registration despite crossing the SSI value limit, amounted to wilful suppression with an intention to evade duty attracting the proviso to Section 11A[1] of the Act. The Tribunal, relying on the judgment of the Hon'ble Supreme Court in the case of Eagle Flask Industries Ltd. Vs. CCE Pune, found that the appellants failure to register themselves under the Act despite crossing the SSI value limit and engaging in manufacture of exercisable goods, omitting to file declarations for availing SSI exemption and not following the procedure prescribed under the Act, even after crossing the SSI value limit, sufficiently justified the invocation of the extended period under the proviso to Section 11A(1) of the Act. 9.We are called upon to test the aforesaid conclusions of the authorities below on the invocation of extended period under the proviso....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sions came to light only at the time of investigation by the Intelligence Wing of the department. Had the Intelligence Wing of the Department not investigated the company, the omissions and commissions would not have come to light. The show cause notice, in our view, candidly, clearly and unequivocally discloses the factual foundation of the clandestine operations of the assessee. Once the material facts constituting the ingredients of the provisions of Section 11A[1] of the Act are specifically pleaded, the mere omission to employ the precise statutory phraseology of the proviso, does not render the show cause notice invalid or legally unsustainable. Further, pursuant to the show cause notice, the assessee has also actively defended itself against those facts during the hearings before the authorities below. Therefore, by mere non-mention of the specific words used in the statute, the assessee cannot be said to have suffered any prejudice. The assessing officer on the basis of the admission of the Director, Financial Advisor and other top officials of the company, concluded that the non maintenance of records for production, stock and sale of finished goods was clearly a conscious....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o Section 11A(1) of the Act were committed by the assessee. We have gone through the judgment and find from the facts that the judgment is distinguishable. In H.M.M. Ltd, the Apex Court on appreciation of the facts, accepted the company's contention, that it was under the bona fide belief that the products did not attract excise duty. However, the facts of the present case are that despite crossing the SSI exemption limit the company did not apply for Registration with the Excise Department, deliberately suppressed the fact of manufacture and failed to maintain records for production, stock and sales of finished goods. But for the investigation by the intelligence wing of the department, the fact would not have come to the notice of the authorities. 15.In the case of Padmini Products Versus Collector of C.EX. reported in 1989 (43) E.L.T. 195 (S.C.), the Hon'ble Supreme Court found on facts that failure to take out the license to pay duty arose out of a belief or opinion that the goods were exempted goods and hence, held that the provisions of Section 11A(1) of the Act, were not attracted. The facts of the present case, for the reasons aforesaid, are distinguishable from that....