2009 (9) TMI 665 - AT - Central Excise

Demand of excise duty under Section 11-A and penalty - challenge the order on the point of bar of imitation - non-applicability of the extended period of limitation - respondents submitted that, merely because there was failure to submit the information in the prescribed form, that would not amount to suppression of facts with intent to evade the duty Held that - It is not the case of the respondents that during the relevant period there was occasion for the Department to verify the facts in question. Had there been such occasion, perhaps the knowledge could have been, inferred. In the absence of such information, it cannot be presumed that the Department was fully aware of the fact that the respondents had been under-valuing their goods i.e. physician s samples by paying duty much below the value of the similar goods which were being removed by the respondents. Obviously, therefore, the provisions of extended period of limitation as well as provisions relating to penalty were clearly attracted, order cannot be sustained and is liable to be set aside and the order passed by the lower authority is to be restored, appeal is accordingly disposed of

Issues Involved:
1. Bar of limitation for the demand of excise duty.
2. Compliance with procedural requirements under Rule 173-C of the Central Excise Rules, 1944.
3. Applicability of the extended period of limitation due to suppression of facts.

Issue-wise Detailed Analysis:

1. Bar of Limitation for the Demand of Excise Duty:

The core issue in the appeal is the bar of limitation concerning the demand of excise duty amounting to Rs. 93,093/- and penalties imposed under Sections 11-A and 11-AC of the Central Excise Act, 1944. The respondents challenged the adjudicating authority's order on the grounds of limitation, arguing that the extended period of limitation should not have been invoked.

2. Compliance with Procedural Requirements under Rule 173-C:

The adjudicating authority found that the respondents failed to comply with Rule 173-C of the Central Excise Rules, 1944, which mandates the declaration of the value of goods assessable ad valorem. The respondents did not submit the required declaration, nor did they inform the Department about undervaluing their goods (physician's samples) by paying duty below the value of similar goods. This non-compliance was deemed a failure to fulfill statutory obligations, which are mandatory and not discretionary.

3. Applicability of the Extended Period of Limitation Due to Suppression of Facts:

The Department argued that the respondents' failure to disclose relevant facts and submit the necessary declaration amounted to suppression of facts with the intent to evade duty, justifying the invocation of the extended period of limitation. The Tribunal supported this view, emphasizing that the procedural requirements under Rule 173-C are designed to prevent evasion of excise duty and must be strictly complied with. The Tribunal referenced several legal precedents, including the decisions in Avis Electronics Pvt. Ltd., Eagle Flask Industries Ltd., and Medopharma, to underline the importance of adhering to procedural obligations and the consequences of non-compliance.

The Tribunal dismissed the respondents' reliance on the decisions in Gopal Zarda Udyog, Pushpam Pharmaceuticals Company, Chemphar Drugs & Liniments, and Swastik Auto Products, stating that these cases did not support the respondents' position. The Tribunal clarified that the facts of the present case did not involve any scope for doubt about the requirement of disclosure under Rule 173-C, and the non-disclosure constituted suppression with intent to evade duty.

Conclusion:

The Tribunal concluded that the respondents' failure to submit the required declaration and disclose relevant facts justified the invocation of the extended period of limitation and the imposition of penalties. The impugned order of the Commissioner (Appeals) was set aside, and the order of the adjudicating authority was restored with consequential relief. The appeal was disposed of accordingly.

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