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TMI Blog2011 (9) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... case of any mis-interpretation of Notification/ classification/ valuation etc show cause notice can always be issued within one year for correction. - the demand of duty beyond the period of limitation set aside. - E/2939/2006 - A/1654/WZB/AHD/2011 M/225/WZB/AHD/2009 - Dated:- 19-9-2011 - Mrs. Archana Wadhwa, Shri B.S.V Murthy, JJ. Represented by: Shri M.H. Patil, Advocate Shri T.C. Nair, Consultant for Appellants Shri R.S. Srova, JDR for Respondent Per: Archana Wadhwa: The appellant is engaged in the manufacture of transformers falling under Chapter 85 of the first schedule to the Central Excise Tariff Act, 1985. During the period relevant for the purposes of present appeal, they supplied the transformers to power projects of various State Electricity Boards or Corporations, after availing exemption in terms of Notification No.108/95-CE. The said exemption was availed by the appellant under due intimation to the Revenue authority and on production of certificate issued by the project implementing authority and duly countersigned by Principle Secretary to the State Government. 2. Inasmuch as the said project to whom the supplies were made, were finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and of duty beyond the period of limitation cannot be confirmed. We order accordingly. 6. As regards demand within the period of limitation, learned advocate has strongly contended that the clearances stand effected by them on the basis of the certificates issued by the proper authority. The same were cancelled subsequently even after issuance of show cause notice. As such, when the certificate for exemption was issued by the project implementing authority, duly countersigned by the Principle Secretary to the State Government, exemptions cannot be denied. The said certificates were valid certificates at the relevant time and their subsequent cancellation will not have any retrospective effect. For the above proposition, they placed reliance on the Supreme Court decision in the case of M/s Vadilal Chemicals 2005 (192) ELT 33 (SC) as also on the Larger Bench decision of the Tribunal in the case of M/s HICO Enterprises 2005 (189) ELT 135 (Tri-LB). It stand contended before us that the appellants cannot be expected to perform an impossible task of ascertaining whether Japan Bank of International Co-operation was a recognized/notified international organization and had to rely upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order, respectfully. 11. The facts have been elaborated in Para 1 to 4 of the order proposed by my Ld. Sister and therefore same are not repeated but wherever required additional facts incorporated during the discussion. 12. In view of the fact that the decision in M/s. Polycab Wires Pvt. Ltd. Anr. Vs. CCE Vapi [2009(90).RLT.161 (CESTAT-Ahmd.)] was the majority decision holding that extended period of limitation is not available and the facts are comparable, I agree with the Ld. Sister that the demand of duty beyond the period of limitation cannot be confirmed. The duty demand within the period of limitation in my opinion is to be confirmed for the reasons discussed below. 13. The proposal for recovery has been made under Section 11A of Central Excise Act, 1944 and since it has already been held that extended period cannot be invoked, the relevant provisions relating to recovery within the period of limitation of one year applicable during the period under dispute is reproduced below :- "Section 11A. Recovery of duties not levied or not paid or short-levied or short paid or erroneously refunded - (1) When any duty of excise has not been levied or paid or has been short- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant since facts are identical. The observation of the Hon'ble Andhra Pradesh High Court which are relevant to the issue before me are reproduced below:- Para 10............It is by now well settled that conditions prescribed for grant of exemption are mandatory for availing of the exemption, and Courts in exercise of power under Article 226 of the Constitution cannot direct the grant of exemption overlooking the conditions specified therein (See State of Jharkhand v. Ambay Cements). Exemption provisions have to be strictly construed and before any claim based thereon is granted, it should be established that the conditions prescribed therefore in the exemption provisions are satisfied. In the case on hand, the condition precedent has not been satisfied namely that the goods in question are intended to be supplied to a project financed by an international organization which has been so declared in pursuance of Section 3 of Act 46 of 1947. Admittedly, JBIC is not one such organization declared under the provisions of Section 3 of Act 46 of 1947. Once the essential condition of Notification No. 108 of 1995, as above, is not satisfied, the issuance of certificate by the impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption Notification have been satisfied." 11. Any exemption provision in a statute or notification issued pursuant to the powers conferred under the statute would have the force of law and such a provision for exemption has to be construed strictly. A person invoking the exception or seeking exemption must establish that he is covered thereby. In the instant case, the petitioner has failed to establish that the condition precedent specified in the Exemption Notification has been satisfied. Once it is held, as it must be that the petitioner does not qualify for exemption under Notification No. 108/95, the position in law becomes clear that a certificate issued in terms of para (c)(ii) by the implementing authority can be of no avail or assistance to the petitioner claiming exemption. The implementing authority (A.P. TRANSCO) is only empowered or authorised to issue a certificate, as already noticed, if the project being implementing is financed by an international organisation. A certificate in terms of para (c)(ii) by the implementing authority cannot by itself confer exemption as it is not the implementing authority that is empowered to grant exemption. The implementing authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in Clause 2.2 reads as under. "(i)Clause 15.2A(e), ITB, Vol.-I of bidding documents: Bidders offering goods from within the purchaser's country shall consider their bid price taking into account deemed export benefits, if any. The details regarding availability of such benefits may please be obtained from the address given below. Director General (Foreign Trade), Government of India, Udyog Bhavan, NEW DELHI-110001. The bidder must give all information required for issue of project authority certificate in the form provided in terms of the import - export policy along with his bid. The project authority certificate will be issued on this basis only and no subsequent change will be permitted. Where such project authority certificates are issued by the purchaser, excise duty will not be reimbursed separately. Bidders are solely responsible for obtaining any deemed export benefits which they have considered in their offer and in case of failure to receive such benefits, on any reason including statutory variation or change in the policy of Government of India or JBIC Japan during the performance of the contract the purchaser will not compensate the bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by A.P. TRANSCO were issued under a bona fide mistake and impression that JBIC is one of the recognised international organisations. Such certificates, it was contended, do not and cannot clothe the petitioner with any rights. The doctrine of promissory estoppel is not attracted because the certificates have been cancelled no sooner A.P. TRANSCO learnt of its mistake. 15. Sri A. Rajasekhara Reddy, learned Senior Standing Counsel for Central Government, on behalf of the other respondents, contended that the question of estoppel or promissory estoppel does not arise in the case on hand. The petitioner not being eligible for grant of exemption in terms of the Exemption Notification, cannot take the aid of promissory estoppel, much less, against the Central Government or the Excise authorities. The letter relied upon by the petitioner granting permission by the Excise authorities is one traceable to Rule 173(b) of the Excise Rules. Pursuant to the self-removal procedure, there can be no estoppel against making assessment or collection of duties not paid or short-levied. Such power is to be found in Section 11A of the Central Excise Act. Reliance has been placed upon the judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta Iron Steel Co. (TISCO) [2001(129). ELT.434 (Tri.)] and BPR Tex Prints [2001(136).ELT.935 (Tri.)] in support of their contention that certificate issued by the project implementing authorities even if issued wrongly, is valid till its cancellation. The decision of the Tribunal in the instant cases are not relevant. The appellants TISCO had not filed an appeal against the order of the Divisional Commissioner and therefore it was held that the order attained finality. In BPR Tex Prints case also what was under consideration was finality of adjudicating order passed. Therefore both the judgments cited are not relevant to the facts of the case. 17. The next question that arises is the effect of production of certificate to the Assistant Commissioner before clearance is discussed as follows :- (a) Let us assume that the appellants produced the certificate to the Assistant Commissioner before clearing the goods and the Assistant Commissioner himself finds out that Bank of Japan is not one of the International Agency and immediately advised the party that they are not eligible for clearing the goods for the reason that the Bank is not one of the Agency covered by the notification. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly shows even in that case the excise duty was paid. Therefore, this decision is clearly not applicable. Further, even Hon'ble High Court, which in exercise of powers under Act-226 of Constitution could have allowed the exemption on the ground of Revenue neutrality, did not allow the same. Moreover, exemption Notification have to be construed strictly is no longer res-integra. In view of the above, the appeal is to be decided in the following manner :- (a) The duty demand for the period beyond one year from the date of Show cause notice is set aside. (b) The penalties imposed under Section 11AC on the appellants are set aside. (c) The matter is remanded to the Commissioner for re-quantification of the duty within the limitation period under section 11A without invoking extended period. (B.S.V. Murthy) Member (T) DIFFERENCE OF OPINION Whether the demand for the period within limitation period is to be confirmed and matter remanded to original adjudicating authority for re-quantification of demand as held by Member (Technical) or the impugned order is to be set aside in totality and allow the appeal with consequential relief to the appellant as held by Member (Judi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral excise department cannot issue show cause notice subsequently for recovering differential duty as held by learned Member (Judicial) or the department can issue show cause notice as held by Member (Technical). iv) Whether the fact that even if duty was paid by the appellant, they would have been eligible for refund of terminal excise duty from DGFT would render the entire exercise revenue-neutral and accordingly the demand cannot be sustained as held by learned Member (Judicial) or even in a revenue-neutral situation, the central excise department can recover the differential duty in accordance with the provisions of Section 11A of Central Excise Act as held by Member (Technical). (Archana Wadhwa) Member (J) (B.S.V. Murthy) Member (T) (Pronounced in Court on 22.9.2010) Opinion of 3rd Member on Difference of Opinion between the Bench in the case of IMP Power Ltd. Vs. CCE Vapi and vice versa Appeal No.E/2936/06 Per: M.V. Ravindran: This difference of opinion is placed before me as per the directions of Hon'ble President of CESTAT for deciding the points of differences in the matter which are reproduced as under: Difference of Opinion i) Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he certificates earlier given by the project implementing authorities under the said notification were cancelled. It is his submission that in the show cause notice issued to assessee the demand from the appellant, was for the extended period. It is his submission that both the Hon'ble Members have already dropped the demand for the extended period and there is no dispute on that point. It is his submission that the dispute is regarding within the period of limitation. He would draw my attention to the provisions of Section 11A. It is his submission that since the clearances were under valid certificates issued by project implementing authorities, duly countersigned by principal secretary, based on which the clearances made, should not affect the clearances already made and there cannot be any demand. For this proposition, he relies upon the following decisions: 1. Sneha Sales Corporation [2000 (121) ELT 577 (SC)] 2. Taparia Overseas [2003 (161) ELT 47 (Bom.)] 3. Titan Medical Systems [2001 (151) ELT 254 (SC)] 4. Sampat Raj Dugar [1991 (58) ELT 163 (SC)] 3. It is his submission that once Project Implementing Authority issued a certificate duly countersigned by the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the learned Commissioner are not at all relevant and are distinguishable in this case. 9. Learned SDR would submit that the issue involved in this case is regarding the demand of the non-levy/wrong-levy from the assessee under the provisions of Section 11A of the Central Excise Act, 1944. It is his submission that the learned Member (Technical) has clearly come to the conclusion that provisions of Section 11A would be applicable in this case. He would submit that after amendment to provisions of Section 11A, the demand of the duty within the limitation period would be correct and needs to be upheld. He would submit that identical issue was before the Hon'ble High Court of Andhra Pradesh in the case of Sterlite Industries (India) Ltd. - 2005 (189) ELT 266. It is his submission that in this case of Sterlite, an identical issue of the benefit of Notification No. 108/95, as JBIC being an international organization or not was being considered by the Hon'ble High Court and it has been held that there is no promissory estoppel is taxation and since the funding is done by an international organization which is not as per the United Nations Act, and the benefit of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words one year, the words "five years" were substituted : Explanation . - Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of one year or five years, as the case may be. (1A) When any duty of excise has not been levied or paid or has been short-levied or short paid or erroneously refunded, by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neously refunded, the person, chargeable with the duty, may pay the amount of duty [on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid : Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and, then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of "one year" referred to in sub-section (1) shall be counted from the date of receipt of such information of payment. Explanation 1. - Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or was short-levied or was short-paid or was erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded within one year by the authorities. Learned counsel was at pains to convince me that the clearances effected by the assessee, during the relevant period was on production and was not an approval or acceptance but was a permission. I am unable to accept the explanation put forth by the learned counsel. As it stands today, the provisions of Section 11A(1) of Central Excise Act, 1944, empowers the Revenue Authorities to demand any duty within the period of limitation, if said duty was not levied or paid or has been short levied or short paid based upon any approval, acceptance or assessment relating to the rate of duty or valuation of excisable goods. In the case in hand, the Revenue Authorities had allowed the clearances of the assessee, based upon the certificates produced by them in pursuance granting the benefit of Notification No. 108/95. The said certificates are admittedly cancelled by the Project Implementing Authority. If that be so, then the provisions of Section 11A(1) will apply in full force in this case. 14. As regards the various judgments relied upon by the learned counsel to submit that in his case there cannot be any duty liability. I find that in those cases, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them on the project from the DGFT authorities, subject to the provisions and the conditions of the refund as has been envisaged by the DGFT authorities. 18. In view of the foregoing findings, the difference of opinion is answered as under: 1. Provisions of Section 11A(1) will be applicable to the clearances made within the limitation period even if the exemption was granted to the assessee, when the goods were cleared based upon the valid certificates at the time of clearances. 2. The subsequent cancellation of the valid certificate can result in denial of exemption as provisions of Section 11A(1) were retrospectively amended by the parliament and was in force on the date when the clearances took place. 3. Non challenging or non-cancellation of the certificate at the time of clearances will be of no consequence as I have already held in point No.2 that subsequent cancellation of the valid certificate will result in denial of exemption. 4. Even in revenue-neutral situation, the department can recover the differential duty in accordance with the provisions of Section 11A of the Central Excise Act, 1944. 5. In view of the forgoing I agree with the view taken by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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