1994 (9) TMI 86 - SC - Central Excise

Whether there has been a mis-statement, in so far as there has been a failure to include the quantity of Rapidogens manufactured during the relevant period in the statement furnished alongwith the classification list as well as the declaration appended thereto? Held that - Considering the appellant s case that he thought bona fide that he need not include the value of the Rapidogens in his declaration, for the reason that the said product was fully exempt from duty under Notification No. 180/61, dated November 23, 1961 it is also brought to our notice that on the date of filing of his declaration, two High Courts had taken the view that the goods exempted from duty are not includible within the definition of excisable goods as defined in clause (d) of Section 2. No doubt, two other High Courts had taken a contrary view. The appellant s factory is in the State of Maharashtra and the Bombay High Court had not taken a view one way or the other. In the above circumstances and because the facts establish that the mis-statement of facts in the declaration filed by the appellant - or the suppression of facts therein, as the case may be - cannot be called wilful, the appeal is allowed.

Summary

Issues:
- Interpretation of Exemption Notifications
- Allegations of false declaration and revocation of benefits
- Application of Section 11A for duty recovery
- Requirement of wilfulness in mis-statement or suppression of facts
- Consideration of bona fide belief in declaration submission

Interpretation of Exemption Notifications:
The appellant, engaged in dye manufacturing, claimed exemption under Notification No. 71/78 for Naphthol ASG, which allowed duty exemption if the total production did not exceed a specified limit. The appellant's declaration stated a production value below the limit, based on which the benefit was granted. However, a notice was issued alleging false declaration as the value exceeded the limit due to Rapidogens production, exempt under another notification. The Assistant Collector revoked the benefit, leading to appeals.

Allegations of false declaration and revocation of benefits:
The appellant explained that Rapidogens' exemption led to the omission of its value in the declaration, assuming it was not required. Despite this explanation, the benefit was revoked, and duty was levied for a period exceeding six months before the notice. The Collector and Tribunal upheld the revocation, emphasizing that mis-statement or suppression of facts, regardless of intent, attracts a larger period of limitation under Section 11A.

Application of Section 11A for duty recovery:
Section 11A provides a six-month limitation for duty recovery, extending to five years in cases of fraud, mis-statement, or contravention with intent to evade duty. The Tribunal held that intent was immaterial in cases of mis-statement or suppression of facts, justifying the extended limitation period for duty recovery.

Requirement of wilfulness in mis-statement or suppression of facts:
The judgment clarified that wilfulness is essential for mis-statement or suppression of facts to trigger the extended limitation period under Section 11A. The intent to evade duty must be present in such actions, distinguishing inadvertent errors from deliberate attempts to avoid duty obligations.

Consideration of bona fide belief in declaration submission:
The appellant argued a bona fide belief that Rapidogens' value need not be included in the declaration due to its exemption under another notification. The appellant's belief was supported by legal uncertainties and differing High Court opinions on the inclusion of exempted goods in declarations. Given the lack of wilfulness in the mis-statement, the Supreme Court allowed the appeal, emphasizing the importance of intent in determining duty liability.

Conclusion:
The Supreme Court's decision favored the appellant, considering the absence of wilfulness in the mis-statement of facts. The judgment highlighted the significance of intent in duty-related declarations and emphasized the need for clarity in interpreting exemption notifications to avoid unintended duty liabilities.