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2024 (9) TMI 1244 - AT - Central ExciseDenial of benefit of exemption notification dated 01.03.2002, as amended - recovery of central excise duty in terms of the proviso to sub-section (1) of section 11A of the Central Excise Act, 1944 - demand of interest and penalty - invocation of extended period of limitation. Extended period of Limitation - whether the appellant had suppressed facts from the department with an intent to evade payment of central excise duty? - HELD THAT - When the records were duly maintained by the appellant and intimation was also given in form D-3 to the jurisdictional division and range offices, it was for the Officers to put the appellant to notice if there was any discrepancy in the information contained in these forms. There is, however, nothing on the record to indicate that the appellant was ever put to notice about any discrepancy. This apart, audits were regularly conducted for the period from December 2003 to March 2006 and April 2003 to April 2004, but no discrepancy was noticed by the officers conducting the audit. The appellant had also maintained a register for fly-ash stock on monthly basis for use of fly-ash above 25% by weight and the appellant had claimed exemption from payment of central excise duty under the notification dated 01.03.2002 since fly-ash of over 25% by weight was used in the manufacture of AC Pressure Pipes. The appellant had not suppressed facts relating to use of fly-ash by more than 25% by weight in the manufacture of AC Pressure Pipes. This is for the reason that information as contemplated under the Trade Notice was provided by the appellant to the department, and most importantly information contained in Form D-3 relating to receipt of fly-ash. The show cause notice nor the impugned order have denied the providing of such information by the appellant to the department. The show cause notice merely alleges that subsequent investigation revealed that the appellant had manipulated the records regarding the actual receipts of fly-ash - There is no reason given in the show cause notice to conclude that the appellant had suppressed facts with an intent to evade payment of central excise duty nor the impugned order passed by the Commissioner gives any reason as to why the appellant had suppressed facts with an intent to evade payment of central excise duty. In fact, the order passed by the Commissioner states that suppression means failure to disclose full information with intent to evade payment of duty. It is not so. The department has to establish that not only the assessee suppressed facts but also that such suppression was with an intent to evade payment of duty. The provisions of section 11A (4) of the Central Excise Act, which are as similar to the provisions of section 11A (1) of the Central Excise Act, came up for interpretation before the Supreme Court in PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT . The Supreme Court observed that section 11A (4) empowers the Department to reopen the proceedings if levy has been short levied or not levied within six months from the relevant date but the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. In EASLAND COMBINES VERSUS COLLECTOR OF C. EX., COIMBATORE 2003 (1) TMI 107 - SUPREME COURT the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation. It is, therefore, clear that the suppression of facts should be deliberate and in taxation laws it can have only one meaning, namely that the correct information was not disclosed deliberately to escape payment of duty. In THE COMMISSIONER, CENTRAL EXCISE AND CUSTOMS AND ANOTHER VERSUS M/S RELIANCE INDUSTRIES LTD. AND COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S RELIANCE INDUSTRIES LTD. 2023 (7) TMI 196 - SUPREME COURT the Supreme Court held that if an assessee bona-fide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be mala fide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona-fide manner. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self-assessment. In the present case, the appellant had not suppressed any facts from the department, much less with an intent to evade payment of central excise duty. The extended period of limitation could not, in view of the aforesaid decisions, have been invoked in the present case even if the returns were self-assessed. Thus, as the extended period of limitation contemplated under the proviso to section 11A (1) of the Central Excise Act could not have been invoked, the impugned order dated 31.03.2021 passed by the Commissioner deserves to be set aside as the entire demand is covered under the extended period of limitation. The impugned order dated 31.03.2021 passed by the Commissioner is, accordingly, set aside - Appeal allowed.
Issues Involved:
1. Denial of benefit of exemption notification No. 06/2002-CE dated 01.03.2002. 2. Confirmation of demand for Central Excise duty amounting to Rs. 11,02,12,141/-. 3. Imposition of penalties under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002. 4. Invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944. Issue-Wise Detailed Analysis: 1. Denial of Benefit of Exemption Notification No. 06/2002-CE dated 01.03.2002: The Commissioner denied the benefit of exemption notification No. 06/2002-CE dated 01.03.2002, which exempted goods containing not less than 25% by weight of fly-ash from excise duty. The appellant claimed that they used fly-ash in the manufacture of Asbestos Cement Pressure Pipes & Couplings (AC Pressure Pipes) and maintained all required records and returns as stipulated in the exemption notification. Despite this, the Commissioner concluded that the appellant had manipulated records to show receipt of fly-ash over and above the actual receipts, thereby violating the conditions of the exemption notification. 2. Confirmation of Demand for Central Excise Duty Amounting to Rs. 11,02,12,141/-: The Commissioner confirmed the demand for Central Excise duty amounting to Rs. 11,02,12,141/- for the period December 2003 to March 2006, asserting that the appellant had cleared excisable goods in the guise of exempted goods. The demand was based on alleged discrepancies found during investigations, which included statements from the dharamkanta owner, truck drivers, and officials of KSTPS, suggesting that the appellant had fabricated records. 3. Imposition of Penalties: Penalties were imposed on the appellant and several individuals under Section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002. The penalties included: - Rs. 11,02,12,141/- on the appellant. - Rs. 10,00,000/- each on the Managing Director/Vice Chairman and the Chief General Manager. - Rs. 5,00,000/- each on three transporters. The penalties were based on the findings that the appellant had willfully suppressed facts and manipulated records to evade payment of duty. 4. Invocation of the Extended Period of Limitation: The extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act was invoked, allowing the department to issue a show cause notice beyond the normal one-year period, extending it to five years. The Commissioner justified this by stating that the appellant had suppressed facts with an intent to evade payment of duty. However, the appellant contended that they had maintained all required records and submitted necessary returns, and that there was no suppression of facts or intent to evade duty. Tribunal's Findings: The Tribunal examined the issue of the extended period of limitation first, as deciding this in favor of the appellant would negate the need to address other issues. The Tribunal noted that the appellant had maintained all required records and submitted necessary returns, including Form D-3 intimations, to the jurisdictional division and range offices. The Tribunal found no evidence that the appellant had suppressed facts with an intent to evade duty. The Tribunal emphasized that mere suppression of facts is insufficient; there must be a deliberate attempt to evade payment of duty. The Tribunal cited several Supreme Court decisions, including Pushpam Pharmaceuticals and Anand Nishikawa Co. Ltd., which clarified that suppression must be deliberate to escape payment of duty. The Tribunal concluded that the appellant had not willfully suppressed facts and that the extended period of limitation could not be invoked. Conclusion: The Tribunal set aside the impugned order dated 31.03.2021 passed by the Commissioner, as the entire demand fell within the extended period of limitation, which could not be invoked. Consequently, the Tribunal allowed Excise Appeal No. 50983 of 2021 and related appeals, quashing the demand for duty and penalties imposed on the appellant and other individuals.
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