2020 (3) TMI 309 - AT - Central Excise

Clandestine removal - branded mineral water - allegation that appellant had not declared the same to the Department and did not raise Central Excise invoices - extended period of limitation - HELD THAT - It is very clear from the ruling of the Hon ble Supreme Court in COLLECTOR OF CENTRAL EXCISE VERSUS CHEMPHAR DRUGS LINIMENTS 1989 (2) TMI 116 - SUPREME COURT that something positive other than mere inaction or failure on the part of the manufacturer, conscious or deliberate withholding of information when the manufacturer knew otherwise is required before he is saddled with any liability. In the present case, Revenue has alleged that there was suppression on the part of the appellant due to non-registering themselves with the Department. The said reason is not sufficient to invoke extended period of limitation. When Revenue came to know about the manufacture of packaged drinking water by the appellant in the month of May 2009, then they should have issued Show Cause Notice raising the demand to the appellant within a period of one year from May 2009. Since the demand was raised after May 2010, i.e. on 03.11.2010, therefore the same is hit by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
- Appeal against Order-in-Original regarding Central Excise Duty demand for manufacturing branded mineral water
- Allegation of suppression of facts by the appellant
- Extended period of limitation invoked by the Revenue

Analysis:

Issue 1: Appeal against Order-in-Original regarding Central Excise Duty demand for manufacturing branded mineral water
The case involved an appeal against Order-in-Original No. 115/2011 passed by the Commissioner of Central Excise, Chennai-III Commissionerate. The appellants, who were manufacturers of Ready Mix Concrete, started packing packaged drinking water in April 2004. The Central Excise Commissionerate audited the unit in May 2009 and issued a Show Cause Notice in November 2010, alleging that the appellants had manufactured branded mineral water without declaring it to the Department, evading Central Excise Duty amounting to around ?98 lakhs. The Original Authority confirmed the demand and imposed penalties, leading to the appeal before the Tribunal.

Issue 2: Allegation of suppression of facts by the appellant
The appellants contested the Show Cause Notice, arguing that they were packing drinking water and not manufacturing mineral water. They claimed that all transaction details were recorded and reported to government departments through required returns, indicating no suppression of facts. The appellant also relied on a Supreme Court ruling stating that mere non-submission of information is not sufficient to prove suppression, requiring a positive act with deliberate intent. They highlighted the confusion in the field regarding packaged drinking water and mineral water, emphasizing that there was no intention to evade payment of duty.

Issue 3: Extended period of limitation invoked by the Revenue
The Revenue alleged suppression on the part of the appellant for not registering with the Department, invoking the extended period of limitation. However, the Tribunal noted that something positive, beyond mere inaction or failure, is required to establish liability. As the demand was raised after the Revenue became aware of the manufacturing activity in May 2009, the demand issued in November 2010 was held to be beyond the permissible time limit, rendering it invalid. Consequently, the Tribunal set aside the impugned order, allowing the appeal and entitling the appellant to consequential relief as per law.