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TMI Blog2011 (5) TMI 865X X X X Extracts X X X X X X X X Extracts X X X X ..... thin the meaning of the said expression under the said Tariff Entry, therefore, cannot be accepted. - Decided against the assessee. Scope of Show cause notice - traversing beyond the scope of the show cause notice – Assessee contends that that the case pleaded thereunder was to the effect that the folders manufactured by the appellants were part of cartons whereas the findings arrived at by the authorities below are that the folders fall within the ambit of the word ‘container’ – Held that:- it is difficult to accept the contention that merely by using the word at one place as carton in the show cause notice, the authorities can be said to have traversed beyond the scope of show cause notice for having arrived at the finding that the product in question falls within the ambit of the word ‘container’ - Adjudicating authority cannot be said to have traversed beyond scope of show cause notice for finding that impugned product fell within the ambit of ‘container’. Bar of limitation - Bona fide belief – Suppression of facts - Held that:- a specific defence was raised in reply to the show cause notice that pursuant to the Board’s instructions dated 2-9-1986 and referring to the packing m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted search of the premises of the appellant firm on 8-9-1998 and it was followed by the investigation and in the course thereof apart from panchanama of the search, the statements of the proprietor of the firm and of the authorized signatory came to be recorded and thereafter, the show cause notice came to be issued in relation to the period from April, 97 to March, 98 requiring the appellants to show cause against the classification of the product declared by the appellant as folder under Chapter sub-heading 4819.19 of the CETA and consequently demanding the duty as well as imposition of penalty for suppressing the relevant facts. The show cause notice was contested by the appellants under their reply dated 22-1-2003. The adjudicating authority, however, confirmed the classification under Chapter sub-heading 4819.19 of the CETA, 1985 in relation to the product which was classified as the folder by the appellants and confirmed the demand of duty to the tune of Rs. 1,10,800/- in relation to the period from April, 97 to March, 98 along with interest thereon and imposed equal penalty on the firm and further penalty of Rs. 25,000/- on Shri D.B. Agarwal, the authorized signatory and em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r case of traversing beyond the scope of the show cause notice by holding that the folders would amount to container. In that regard, reliance is placed in the decision of the Apex Court in the matter of Commissioner v. Toyo Engineering India Ltd. reported in 2006 (201) E.L.T. 513 (S.C.), Commissioner of Cen. Excise, Nagpur v. Ballarpur Industries Ltd. reported in 2007 (215) E.L.T. 489 (S.C.), Commissioner of Central Excise, Bhubaneswar-I v. Champdany Industries Ltd. reported in 2009 (241) E.L.T. 481 and Commissioner of C. Ex., Chandigarh v. Shital International reported in 2010 (259) E.L.T. 165 (S.C.). It was then sought to be contended that the show cause notice could not have been issued on 30-12-2002 in relation to the period from April, 97 to March, 98 as it was not issued within the period of one year from the relevant period. Drawing our attention to the decision in the matter of Kushal Fertilisers (P) Ltd. v. Commissioner of Customs & Cen. Excise, Meerut reported in 2009 (238) E.L.T. 21 (S.C.), Nizam Sugar Factory v. Collector of Central Excise, A.P. reported in 2006 (197) E.L.T. 465 (S.C.), it was sought to be contended that the department was fully aware of the facts rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessarily enclosed from all four sides. He further submitted that the decisions which are sought to be relied upon in relation to the contention about the limitation of one year are totally irrelevant to the facts of the case as the suppression of relevant fact was revealed to the department much after the expiry of the relevant period and therefore, Nizam Sugar Factory and Khushal Fertilisers (P) Ltd's cases are of no relevancy to the case in hand. He also submitted that the authorities did not travel beyond the scope of the show cause notice and there is no substance in the contention that there was no suppression of relevant fact and that the appellants' bona fide believes that the product was classifiable under the CSH 4901.90. In support of his contention that prima facie case of bona fide belief is required to be made out, reliance was sought to be placed on the decision in the matter of Spie Capag S.A. v. Commissioner of Central Excise reported in 2009 (243) E.L.T. 50 (Tri.-Mumbai). 5. The learned advocate for the appellants has submitted that the decision of the Tribunal in Spie Capag S.A has been stayed by the Bombay High Court and the said order is reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in three different senses : in a broad sense, it means a receptacle which contains; in a narrow sense, it means a receptacle in which articles are covered or enclosed and transported; and in a more limited sense, it means enclosures used in shipping or railway for transport of goods. Having considered the expression in three different senses, it was also observed by the Apex Court that : "if used in a broad sense, 'container' would include a tray because it is receptacle which contains articles and, therefore, an egg tray would be a 'container'. But an egg tray would not be a 'container' in a narrow sense because articles placed in it are not covered or enclosed and they cannot be transported as such". Further, referring to the expression 'container' as used in CSH 48.18 as was in force at the relevant time, it was held thus : "Considering the expression 'container' in the context in which it is used in the relevant tariff item, we are of the opinion that the said expression has to be construed to mean 'packing containers' which are analogous to boxes and cartons, that is, an enclosed receptacle which can be used for storage and transportation of articles. Egg trays being recep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that entries thereunder are not confined to 'containers' which are enclosed on all sides and they can include containers which are open on one side or more. Being so, the decision of the Apex Court in G. Claridge & Company Ltd.'s case can be of no help to the appellants in the matter in hand. 10. The decision of the Tribunal in United Paper Products was clearly based on the decision of the Apex Court in G. Claridge & Company Ltd.'s case. That was also a case prior to the amendment to the said Tariff Entry and hence this decision is also of no help to the appellants. 11. The ground that the product being not enclosed on all four sides, it cannot be container within the meaning of the said expression under the said Tariff Entry, therefore, cannot be accepted. 12. The next ground which is sought to be canvassed is traversing beyond the scope of the show cause notice. In this regard drawing our attention to the show cause notice, it was contended on behalf of the appellants that the case pleaded thereunder was to the effect that the folders manufactured by the appellants were part of cartons whereas the findings arrived at by the authorities below are that the folder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of discussions above and the investigations carried out, it appears that the assessee has manufactured the printed tops and folders in disassembled form, used for packing hosiery like vests, are correctly classifiable under Central Excise Chapter sub-heading 4819.19 chargeable to the central excise duty". 15. It was further observed in the show cause notice that "it is very clear that Shri Agarwal was well aware of the fact that the item 'folder' was an inherent fitment used inside the box with a view to adequately protect and keep the packed product in position." 16. In response to the said show cause notice under reply dated 22-1-2003 while understanding the allegations in the show cause notice , the appellants had categorically stated that "it is further alleged that we were clearing folders/supporters declaring them as tops/folders so as to match the description with CSH 4821.00 of CETA, 1985, it is also further alleged that the folders/supporters are inherent fitments used in the packing of vests. It is stated that Shri Agarwal confirmed the use. It is further stated that the folders supplied by us are entered in the ledger account of M/s. Rupa & Co. under the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond the show cause notice is purely an afterthought. Once it is clear from the records that the contention about traversing beyond the show cause notice is not sustainable in the facts and circumstances of the case, the decisions of the Apex Court in Toyo Engineering, Ballarpur Industries, Champdany Industries and Shital International can be of no help to the appellants. Undoubtedly, law that the authorities cannot traverse beyond the show cause notice is well settled. However, each case will have to be considered on the basis of the facts of that case, taking into consideration the allegations in the show cause notice and of findings arrived at by the authorities in proper respect. Being so, the challenge in this ground also is not sustainable. 19. The next point which relates to the point of limitation of one year to be counted from 8-9-1998. The argument is essentially on the ground that the premises were searched on 8-9-1998 and at least on that date all the necessary facts came to the knowledge of the department, even assuming that the department was not aware of those facts. Undisputedly, the premises of the appellants were searched on 8-9-1998 and panchanama in tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of facts having come to the knowledge of the department pursuant to the efforts by the department and suppression thereof by the appellants. In these circumstances, therefore, the decision in Khushal Fertilisers (P) Ltd's case is of no help to the appellants. As far as the decision in Nizam Sugar Factory, it is essentially in relation to the issue as to whether the department can invoke the extended period of limitation by issuing second show cause notice in spite of the fact that the department had already issued first show cause notice relating to the subsequent period. Para 8 of the decision in Nizam Sugar Factory's case, discloses the same. The same has not revealed whatsoever in the case in hand. The last point which is sought to be raised is that there was no case for invocation of the extended period of limitation as no positive act which can disclose intention to evade payment of duty has been disclosed and mere inaction or failure on the part of the manufacturer cannot justify invocation of extended period of limitation. The proposition of law as is canvassed can hardly be disputed. However, the same has been considered with reference to the facts of the case. Referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclosed for your perusal." 20. The contention is sought to be countered on behalf of the department while contending that the averments in the reply discloses thorough knowledge of the provisions of law to the appellants and if at all there was any doubt in the mind of the appellants, nothing prevented the appellants from seeking clarification from the department. Undoubtedly, no such clarification was sought for and there was clear attempt to evade the payment of duty and hence it cannot be said to be a case of bona fide belief on the part of the appellants. 21. As already stated above, the appellants have sought to rely upon four decisions in this regard. In Padmini Products' case, it was held that when in view of the Trade Notices there is scope for believing that the goods were entitled to exemption and consequently no licence is required to be taken out, then the extended period of limitation for demand under Section 11A was inapplicable and mere failure on negligence on the part of the manufacturer either not to take out a licence or not pay duty in case where there was scope for doubt, does not attract the extended period of limitation. 22. In Chemphar Drug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pipe as excisable goods. Besides, the Tribunal has in the Hindustan Shipyard [1987 (28) E.L.T. 586 (Tri. - Del.)] and Richardson and Cruddas [1988 (38) E.L.T. 176 (Tri. - Del.)] cited supra has held, that in works contracts if new commodity comes into existence it would be excisable. When there were so many case laws holding that the goods are excisable and when the contract also puts them on notice that the pipes will be dutiable, the plea of bona fide belief cannot be accepted." The ruling is a complete answer to the plea of bona fide belief sought to be raised by the appellants. 26. The law that extended period cannot be invoked in cases where the facts are already known to the department is well settled law. Similarly, whether there was a bona fide belief for the assessee for non-payment of duty on a particular product, is essentially a question of fact to be decided on the basis of materials placed on record in this regard. Undisputedly, once the department disclosed suppression of facts, the same can be countered by the assessee with the plea of bona fide belief. However, in such cases, the burden lies on the assessee to place on record the necessary materials in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Products. The assessee without disclosing the necessary information regarding the product manufactured by it, merely on the basis of non-applicable circular and by taking into consideration various other packing materials had choosen himself to consider the product to be non-dutiable; that was certainly conscious/deliberate withholding of information from the department. Being so, the decision in Chemphar Durgs & Liniments rather than assisting the appellants would justify the action taken by the department in the case in hand. 29. As regards the decision in Continental Foundation Jt.Ventrue, it is on the point where facts are known to both the parties. There is not even a whisper about knowledge of the facts to the department prior to 8-9-1998 while responding to the show cause notice and, therefore, we wonder how this decision can be of any help to the appellants. 30. For the reasons stated above, therefore, in our considered opinion, we find no case for interference with the impugned order. 31. As regards the penalty in question, once it is apparent that there was suppression of the relevant facts and extended period was invocable, obviously, penalty cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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