2013 (2) TMI 677 - HC - Central Excise

Demand of differential duty - Penalty u/s 11AC - SSI Exemption - Invocation of extended period of limitation - Held that - The goods have been supplied by IOC (from their Lube Blending Plant, Chennai and plants at Trombay and Vashi) in bulk and the repacked unit containers cleared to the IOC depots as per the instructions of IOC. The unit containers have been supplied by IOC itself along with the packing materials, viz., Cartons. Both the unit containers and the packing materials have the Logo/Emblem. The assessee has been engaged in the repacking of Coolants and brake fluids under Chapter 38 of Central Excise Tariff Act amounting to manufacture as per note 5 to Chapter 38 with effect from 1-3-1997 read with Section 2(f) of the Central Excise Act. As per Note 5 to Chapter 38, repacking of Servo Kool/Hydraulic Brake fluids in unit containers amounts to manufacturing with effect from 1-3-1997 and therefore the 1st respondent was liable to pay Central Excise duty on the repacked coolants and the brake fluids in unit containers are not eligible for SSI exemption. Within seven months from the date of Officers visit to the 1st respondent s factory the assessee paid the duty. But it was only on 26-2-2002 the show cause notice was issued to the 1st respondent. It is the case of 1st respondent that such a demand of duty raised after 3 years after the Officers visit to the factory cannot be sustained in law and in the facts and circumstances of the case, no suppression can be alleged against them so as to invoke the extended period of limitation. - Tribunal pointed out that within seven months after the receipt of Central Excise Officers, the assessee paid the duty of ₹ 5,00,696/-. The Tribunal also pointed out that Central Excise Officers visited the assessee s factory in July, 1998 and gathered all the material facts and even then show cause notice was issued 3 years later and the Tribunal recorded the factual finding that there was no suppression of fact. When the Tribunal has recorded factual finding that there was no suppression of fact to invoke the extended period of limitation under Section 11A of the Central Excise Act and when Tribunal has recorded such factual finding, there is no substantial question of law per se involved. - Tribunal has recorded the factual finding that there was no suppression of facts and as such no substantial question of law is involved in the appeal - Decided against Revenue.

Summary

Issues:
- Imposition of penalty under Section 11AC of Central Excise Act, 1944
- Suppression of facts regarding manufacture of dutiable goods

Imposition of Penalty under Section 11AC:
The appeal involved the imposition of penalty under Section 11AC of the Central Excise Act, 1944. The Commissioner of Central Excise challenged the Order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) setting aside the demand of duty as time-barred. The main issue was whether the penalty should be imposed irrespective of the fact that duty payment had been made before the issuance of the show cause notice. The Tribunal held that the penalty was not warranted as there was no suppression of facts regarding the manufacture of dutiable goods. The appellant contended that the penalty should be imposed regardless of the duty payment timing, but the respondent argued that the duty amount was re-worked and paid before the show cause notice was issued.

Suppression of Facts Regarding Manufacture of Dutiable Goods:
The case involved the re-packing of goods by the respondent company, which was considered manufacturing activity by the Department. The respondent had not registered themselves or paid excise duty on the re-packed products until later. The show cause notice was issued invoking the extended period of limitation under the Central Excise Act, calling for duty payment, penalty imposition, and interest. The Tribunal found that there was no suppression of facts regarding the manufacture of dutiable goods, leading to the setting aside of the demand of differential duty and penalty under Section 11AC. The respondent argued that they re-worked the duty amount and paid it before the show cause notice was issued, based on their understanding of the law post-amendment.

Conclusion:
The High Court dismissed the appeal, upholding the Tribunal's decision. It was emphasized that when there is a factual finding of no suppression of facts, no substantial question of law arises. Citing the Supreme Court's decision in Kushal Fertilisers (P) Ltd. v. Commissioner of Customs & C. Ex., Meerut, the Court reiterated that the question of suppression of facts is a question of fact and does not per se give rise to a substantial question of law. Therefore, the appeal was dismissed, and no costs were awarded.