1999 (3) TMI 81 - SC - Central Excise

Whether the notice issued by the respondent was beyond the period of six months hence barred by time ? Whether the stock in question was pre-budget stock, the assessment on the same was illegal and not sustainable? Held that - In the present case a clear finding was recorded that the petitioner was aware and was obliged to file RG 1 Register, gate passes and also of clearances in the RT 12 returns by disclosing the particulars which was not done. The finding recorded especially in the background that this was a case of self removal procedure in which there is obligation cast on the assessee to make proper and correct declaration and entries in the production register RG 1. Further finding was that it was not by inadvertence. There could be no other inference if it was not by inadvertence, then deliberate, then it is not in the realm of inaction of the assessee but with the objective of a gain, which in other words would be conscious withholding of the information. Thus unhesitantly we conclude, on the facts of this case, proviso to Section 11 would be applicable, hence, show cause notice is held to be within time. the Tribunal recorded the finding that once allegation was that stock was not pre-budget stock, the burden was on the assessee to prove this fact. This was not done. The Tribunal further recorded that the Assistant Collector personally examined the matter and after discussing with the company official and after the scrutiny of the record gave allowances for a quantity which he held to be from pre-budget stock and that quantity was excluded from excise duty. Assistant Collector gives details about this and Tribunal recorded these figures were not controverted by the assessee before the Tribunal. No evidence was led to prove this. We find even this submission of learned Counsel for the appellant has been concurrently found against him by all the courts below. Against assessee.

Summary

Issues:
1. Time limitation for issuing a show cause notice.
2. Assessment of excise duty on pre-budget stock.

Analysis:

Issue 1: Time limitation for issuing a show cause notice
The appellant contended that the notice issued by the respondent was beyond the six-month period and hence barred by time. The appellant argued that the proviso to Section 11A of the Act would not be applicable in this case to extend the period to five years. The appellant also claimed that there was no wilful suppression of material facts to attract the extended period of limitation. However, the Tribunal found that the appellants failed to file necessary classification lists, enter production figures in the RG 1 Register, effect clearances under gate passes, and disclose clearance particulars in the RT 12 returns. The Tribunal concluded that the suppression of material particulars could not be said to be through inadvertence. The Supreme Court upheld this finding, stating that the demand was within time as per the proviso to Section 11A, and there was no error in the authorities' decisions below to interfere with the same.

Issue 2: Assessment of excise duty on pre-budget stock
Regarding the assessment of excise duty on pre-budget stock, the appellant argued that the stock in question was pre-budget stock and hence not liable for excise duty. The Tribunal found that the burden was on the assessee to prove that the stock was pre-budget, which the appellant failed to do. The Assistant Collector personally examined the matter, discussed with company officials, and gave allowances for a quantity he deemed to be from pre-budget stock, excluding it from excise duty. The figures provided by the Assistant Collector were not contested by the appellant before the Tribunal. The Supreme Court noted that all the courts below had ruled against the appellant on this issue, and therefore, found none of the appellant's submissions sustainable. Consequently, the Supreme Court dismissed the appeal with no order as to costs.

In conclusion, the Supreme Court upheld the Tribunal's decision on both issues, ruling in favor of the respondent and dismissing the appellant's appeal.