9911796707
TMI Blog1996 (11) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants replied to the show cause notice and among the various pleas taken on merits by them is that the appellants were under the bona fide belief that the items fabricated by them could not be considered as goods for the purpose of excise levy as no new product by reason of cutting, bending, drilling of holes came into existence. The appellants have also taken the plea that they are State Government Undertaking and the materials which were manufactured are for captive use only to facilitate the operation regarding supply of electricity to the transmission lines. The learned Counsel cited a number of judgments of the Hon ble Supreme Court in support of the plea of the appellants that unless there was positive action on the part of the appellants to suppress any facts with intent to evade payment of duty, the longer period of limitation could not be invoked. The judgments cited in this connection are the following : 1989 (40) E.L.T. 276 Chemphar Drugs Liniments 1989 (40) E.L.T. 159 ACC Ltd. v. CCE 1989 (40) E.L.T. 472 Electrical Mfg. v. CCE 1989 (43) E.L.T. 195 SC Padmini Products v. CCE 1991 (55) E.L.T. 130 Tibrewal Industries v. CCE The learned Counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad taken the pleas as to how the charges of suppression with intent to evade payment of duty could not be sustained against the appellants. He has pleaded that the learned lower authority has not referred to any of the pleas urged by the appellants nor is there any finding entered in the impugned order that the appellants had suppressed any fact with intent to evade payment of duty. In his order, the learned Counsel pleaded, the lower authority has dealt with the following items : (1) Street light fittings (2)Stay rods ( (3)Cross arms (4) Panel arms 5) CT Meter Box (6) Various types of clamps (7) Earth pipes (4) Panel Boards The learned Counsel referred us to the proceedings drawn by issue of the show cause culminating in the impugned [order] and pleaded and urged that CT Meter Box and panel boards are not subject matter of levy and yet the learned lower authority has proceeded to advert to these items which were not the subject matter of levy in the proceedings while at the same time the adjudicating authority has not referred to purlins, which was mentioned as one of the items for demand of duty. He has pleaded that the various items enumerated above have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which prima facie appear to be items which can be taken to have acquired new name and character and use and by reason of which these can be considered as new product for the purpose of excise levy. Inasmuch as we propose to dispose of the appeal on ground of limitation, we are not entering any finding on the merits of the issue on ground of excisability of the goods. We observe that in the Annexure to the show cause notice, in the opening para, it has been set out as under : M/s. Kerala State Electricity Board is a statutory Board under the Government of Kerala charged with the responsibility of generation and distribution of electricity within the State of Kerala. In discharge of this duties, the Board constructs generating stations and sets up networks for distribution of electricity all over the State. Various items required for this purpose are partly purchased from outside sources and partly fabricated in their own yards. Central Mechanical Division, Pallom under the Board inter alia undertakes the fabrication of various items like street light fittings, panel boards, C.T. Meter Box, clamps, cross arms, stay rods, trusses, etc., in their fabrication section and workshop s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther section. The pole casting work has been shifted to the Civil wing only on 1-4-1991 and prior to that the work was under the Electrical wing. So there had been no occasion or chance for the civil wing to look into the excisability of the processed articles. The duty on P.S.C. poles casted by job workers are reimbursed/advanced by us as they have been held as manufacturers by the Hon ble Tribunal as per order reported in 1990 (47) E.L.T. (62). The present show cause notice is issued to the Executive Engineer, C.M. Division, Pallom. The officers who held charge of this Division had no chance, in the past, to examine the excisability of the materials as they were not well versed with excise formalities and procedure. Since the practice was continuing for long there had been no chance for the Executive Engineer to examine the excisability of the goods processed in the workshop under his charge. In these circumstances it is not correct to say that the Kerala State Electricity Board has acted wilfully with intention to evade duty. It is our bona fide belief that the articles processed in the Mechanical Division are not excisable. Further the K.S.E. Board is constituted by the Govt. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate withholding of information is required to be established. The alleged intention of the K.S.E. Board to evade payment of duty has not been proved by the Department. The K.S.E. Board being a constitutional creature under the Govt. of Kerala cannot commit and did not commit an act deliberately to evade payment of duty. The members, officers and employees of the Board shall be deemed to be public servants when acting or purporting to act in pursuance of any of the provision of the Electricity (Supply) Act, 1948 as per Sec. 81 ibid. Therefore neither the Board nor the officers can perform any deliberate action amounting breach of law. Assuming, but without admitting, if any breach of law is involved, it is only an act of non-compliance out of ignorance, and such mistake may be viewed as a technical mistake and not a wilful action. Since the Board or its officers have not wilfully done any act with intent to evade payment of duty, it is submitted that the extended period of limitation under proviso (i) of Section 11A of the Act may not be invokable and in such circumstances only the normal period of 6 months under Section 11A alone will operate. The following judgments and decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tribunal) - Tibrewal Industries v. Collector. The Tribunal in that case held that penalty not justified in the absence of mala fides for lapses to file declaration, obtain licence and pay duty. Manufacturing activity of the appellant is not clandestine and its failure to give declaration, obtain licence and pay duty not mala fide and not amounting to suppression. The Tribunal has relied on the decision of the Hon ble Supreme Court in the case of M/s. Chemphar Drugs and Liniments reported in 1989 (40) E.L.T. 276. The judgment and decisions quoted above suggest that mere inaction or negligence on the part of a manufacturer will not amount to suppression of facts with intention to evade payment of duty. Something positive other than inaction is required to establish suppression of facts. There is nothing on record to show that the K.S.E. Board has wilfully suppressed any facts with a motive to evade payment of duty. The articles processed in our workshop are not standard or conventional goods. These articles are of special designs and drawings and intended for a particular use. These items of articles are generally not available in market for purchase and sale. In that sense the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber of case laws wherein they have urged that the Hon ble Supreme Court has held in the circumstances of the manufacture of goods, unless something positive is shown that the appellants have withheld information with intent to evade payment of duty the longer period of limitation cannot be invoked. The learned lower authority has taken note of these pleas of the appellants and in spite of that there is no finding entered on the pleas made by the appellants in this regard. Therefore, a finding has to be entered by the adjudicating authority on what basis according to him the longer period of limitation would be invokable against the assessee. We observe that it is one thing to attribute something in the show cause notice but another thing to upheld the charge based on evidence. But in the present case there is no finding to sustain the charge against the appellants. To sustain the charge what is required to be shown is that the basis which has been laid in the show cause notice should be substantiated after taking into consideration the pleas of the appellants in regard to that. In the present case the learned lower authority has not traversed the pleas made by the appellants and me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken by the Tribunal has been that subjecting angles and channels to cutting and punching would not amount to manufacture . Of course conversion of steel materials into angles and channels may amount to manufacture . The question is not whether such conversion amounts to manufacture ; the question is whether subjecting such angles and channels to process which can be described as cutting and punching amounts to manufacture . The clear and consistent view of the Tribunal has been in the negative. 8. In the circumstances, as observed by the Supreme Court in Paragraph 6 of the judgment in the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise, Ahmedabad, reported in l995 (76) E.L.T. 241 (SC) reference to a particular item in the Tariff Schedule is not decisive and it is always open to the assessee to prove that the particular item, in spite of being mentioned in the schedule would not be subject to duty either because it is not goods or it is not manufactured or it is not capable of being marketed. 9. The only other question which remains for consideration is whether the amendment brought about in the definition manufacture of Section 2(f) of the Act has an effe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
