2016 (12) TMI 594 - AT - Central Excise

Manufacture - fabrication of roof structure - suppression of facts - Held that - Submission of the appellants is that they were basically manufacturers of the described goods as depicted at the outset. That is apparent from SCN dated 24.4.90. It is noticeable that till 1996, that industry was under the impression that the structural fabricated by them for their own use shall not amount to manufacture and not liable to duty. Only after 19 years of the Tribunal s LB decision in the case of Mahendra & Mahendra, 1995 (3) TMI 88 - SUPREME COURT OF INDIA the position of law was made clear to them as to the exciseability of the structural fabricated for their own use. Accordingly the allegation of suppression shall not subsist following the ratio laid down by the apex court in the judgement in the case of Continental Foundation Jt. Venture Vs. CCE, Chandigarh 2007 (8) TMI 11 - SUPREME COURT OF INDIA . Suppression with intention to cause evasion only invites extended period. Finding that the confusion in law has only caused difficulties to both sides, it is not possible to hold that it is the case of suppression of fact with intention to cause evasion, to invoke extended period. Accordingly, the adjudications suffer from limitation for which that is unsustainable. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Whether the appellants were required to disclose the fabrication of structural items in their return filed before the excise authorities.
2. Whether the duty and penalty imposed on the appellants are sustainable.
3. Whether the confusion in law regarding dutiability of the goods amounts to suppression of facts with intention to cause evasion.

Analysis:

Issue 1: The appellants argued that they were not obligated to disclose the fabrication of structural items as they were not the manufacturers of the structures but of other specified goods. They contended that the obligation to disclose arose only after a Supreme Court decision clarified that such fabrication amounts to manufacture. The Tribunal had previously held that the fabrication of roof structures did not constitute manufacture under the Central Excise Act. The appellants maintained that they acted in good faith based on their understanding of the law until the legal position was clarified.

Issue 2: The Revenue supported the duty and penalty imposed, citing a Supreme Court decision that deemed the goods in question dutiable. However, the Tribunal noted that the confusion in the law had caused difficulties for both parties. It emphasized that mere omission to provide correct information does not amount to suppression unless there is an intent to evade duty payment. The Tribunal found that the duty and penalty imposition suffered from limitation due to the lack of intentional suppression of facts for evasion. Consequently, the adjudications were deemed unsustainable.

Issue 3: The Tribunal clarified that when the law was clarified by a Larger Bench decision, the duty liability for the normal period should be calculated by the adjudicating authority without any penalty for the appellant in one appeal. In another appeal, the penalty imposed was set aside, and in a third appeal, subject to the recovery of duty liability for the normal period, relief was granted. The Tribunal concluded that the confusion in law did not amount to suppression of facts with the intention to cause evasion, thus ruling in favor of the appellants on the issue of sustainability of duty and penalty.