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TMI Blog2018 (5) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... ards clubbing, the Appellate Tribunal held that the appellants in these appeals are two different manufactures, but finished goods are produced using the machinery and product facilities in the unit of the appellant in appeal no. 196 of 2005. We must note here that even in the reply of the appellants in both the appeals to the show cause notice, this factual allegation is not disputed. Therefore, it was rightly held that the clearances are required to be aggregated in terms of the Notification No.1/93CE. - on the aspect of clubbing, it is not possible to find fault with the finding. There is a specific allegation in the show cause notice that the goods actually manufactured were not declared which amounts to willful suppression of material facts with the intention of evading the duty on Battery parts. The show cause notice is based on what was revealed in the visit of the Preventive Section to the factories and investigation carried out thereafter. The Appellate Tribunal held that it was not merely a question of wrong classification, but it was a case of suppression. Appeal dismissed - decided against appellant. - Central Excise Appeal No. 196 of 2006 and 198 of 2006 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants on 31st July 1999. The allegation in the show cause notice is that the appellants have suppressed the fact that the goods produced by the appellants fall under Chapters 84, 85 and 91 as parts of the machinery depending upon end use and the goods do not fall under Chapter 39. Hence, the same attract excise duty. It is stated in the show cause notice that the appellant in Appeal No.196 of 2006 gave declarations for the years 1994 95 to 1998 99 declaring that the goods manufactured by them are articles of plastic, plastic water filter elements, cylinders, disks falling under SH 3926.90. The appellant in the other appeal submitted declarations for the same period claiming that it was manufacturing Articles of Plastic Plastic articles reinforced by moulded components falling under SH 3926.90. It was further alleged that from the invoices and the statements of the customers, it is found that apart from the manufacture of the items stated in the declarations, the appellants were manufacturing complete filters, battery parts, compressor parts, solenoid valve parts which have not been mentioned in the declarations filed with the department. It was alleged that the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier. It was submitted that the extended period of limitation cannot be invoked. 5. The order -in -original was passed on 20th December 2001 by the Commissioner confirming the demand and imposing penalty as set out in the order. He proceeded to confiscate the plant, land, building, machinery belonging to the appellants. Being aggrieved by the said order, appeals were preferred before the Appellate Tribunal which have been decided by the impugned Judgment and order. We must note here that in the impugned order, it is specifically recorded that the advocate for the appellants stated that the dispute in relation to classification of filter and parts, humidifier parts, valve parts and gauges is not being contested considering the small amounts involved. The first finding recorded in the impugned Judgment is that the appellant in Appeal No.196/2006 is a proprietary concern belonging to one Shri R.S. Shanbhag and the appellant in Appeal No.198/2006 is a partnership firm of Shri R.S.Shanbhag's wife and son. It was found that the factories of these two appellants are functioning in two nearby premises at B 35 and B 33, Girikunj Industrial Estate, Mahakali Caves Road, Andheri (Ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants to avail input duty credit subject to verification and for treating the sale price as cum -duty -price, a limited order of remand was made by the Appellate Tribunal. 8. The learned senior counsel appearing for the appellants has taken us through the impugned orders and the findings recorded. He invited our attention to paragraph 7.2 of the show cause notice and urged that as far as the appellant in Appeal No.196/2006 is concerned, the suppression of fact cannot be established and, therefore, extended period of limitation cannot be applied. The learned senior counsel firstly pointed out that there is no suppression of material facts with the intention of evading tax. He invited our attention to declarations made from time to time by the appellants. He pointed out that the appellants declared that they manufacture articles of plastic. They also mentioned headings or sub headings. He pointed out that the process of manufacture is also disclosed in the declarations made. He relied upon various notifications. He invited our attention to the decision of the Apex Court in the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay 1995 (75) ELT 721 (SC). He submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payment of duty. He submitted that in the light of findings of fact, no interference can be made. 11. We have considered the submissions. Before we go to the show cause notice, it will be necessary to make reference to the extent of factual dispute before the adjudicating authority and the Appellate Tribunal. In paragraphs 29 and 30 of the order of the Commissioner (adjudicating authority), it is stated thus: 29. I have gone through the case records and oral as well as written submissions made by the noticees. In the SCN the main allegation is regarding classification of 8 items as under: a. Filter/filter elements parts 8421.00 1994 -95 b. Filter 8421.00 1995- 96 to 1998- 99 c. Filter elements/parts 8421.00 d d. Battery Parts (Vent plugs etc.) 8507.00 1994 -95 to 1998- 99 e. Humidifier parts 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of plastic, plastic water filter elements, cylinders, disks , falling under S.H. 3926.90. Whereas from the actual invoices (Annexure C1 to C5) and as confirmed by their customers (Annexure B) it is found that apart from the filter elements/parts i.e elements, cylinders and discs. M/s.Sansuk Industries are also engaged in manufacture and clearance of complete filters, battery parts, compressor parts, solenoid valve parts which have not been mentioned or declared in the Central Excise Declaration filed by them. 5.1 In the case of M/s.Shandar Products it is seen from the Central Excise declarations filed by them for the years 1994 95 to 1998 99 that the full description of the goods manufactured by them has mentioned as Articles of plastics Plastic Articles reinforced by moulded components , falling under S.H. 3926.90. Whereas from the actual invoices (Annexure C1 to C6) and as confirmed by their customers (Annexure B) it is found that M/s.Shandar Products are factually engaged in manufacture and clearance of complete filters, filter elements parts, battery parts, compressor parts, solenoid valve parts which have not been mentioned or declared in the Central Excise Declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are concerned, the premises of both M/s. Sansuk Industries and M/s. Shandar Products have to be collectively treated as one factory and not as two independent factories in terms of Section 2(e) of CEA, 1944. The clearances of the said finished products will therefore have to be treated as clearances as two manufacturers from one factory....... (emphasis added) 13. Ultimately, in paragraph 6.2, it is alleged thus: 6.2 These facts of interdependency in installation of machines, manufacturing activities and financial interest between both the said units have also been not mentioned or declared in the respective Central Excise Declaration for the years 1994 95 to 1998 99 of M/s. Sansuk Industries and M/s. Shandar Products. This also appears to amounts to willful suppression of the facts with the intention of evading Central Excise Duty. 14. A reply was given to the show cause notice. There is a reference to the declarations made by the appellants for the years 1987 88 to 1994 95. In reply, a legislative history of classification of articles of plastic has been set out. It was pointed out in the reply that majority of the demand has been raised in respect of goods cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered by the list and cannot be called as filters falling under Chapter 84.21. Therefore, it was held that vent plugs are classifiable under Chapter 85.07 as battery parts. Thereafter the Commissioner proceeded to deal with the classification of other products such as filter parts, humidifier, valve parts and gauges. A finding of fact was recorded that the said items are classifiable as under: 1. Filter Parts Ch. 84.21 2. Humidifier Ch. 8481.99 3. Valve Parts Ch. 84.79 4. Gauges Ch. 90.31 Thereafter the Commissioner proceeded to decide the issue of clubbing. 17. As regards the extended period of limitation, it was held that the appellants never declared manufacture or clearance of Plastic Spill, Proof Vent Plugs, Microporous Vent Plugs, Aqua Trap Vent Plugs etc. in their declarations. 18. Now, coming to the impugned judgment of the Appellate Tribunal, we must note here that in paragraph 2 of the order, a conces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, i.e., intent to evade duty is built into these very words. So far as misstatement or suppression of facts are concerned, they are clearly qualified by the word willful preceding the words misstatement or suppression of facts which means with intent to evade duty. The next set of words contravention of any of the provisions of this Act or Rules are again qualified by the immediately following words with intent to evade payment of duty . It is, therefore, not correct to say that there can be a suppression or misstatement of fact, which is not willful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis statement or suppression of fact must be willful. (emphasis added) In the case of Pushpam pharmaceuticals (supra), it was held thus: 4. Section 11A empowers the Department to reopen proceedings if the 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. The meaning of the word b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Additional Collector of central Excise that the show cause notice was time barred under the main part of Section 11A since it was issued after the expiry of the period of six months stipulated therein but the Additional Collector sustained the notice on the ground that it was within five years impliedly holding that the purported action was under the proviso to Section 11 A of the Act. There is no dispute that the show cause notice cannot be sustained under sub section (1) of Section 11A unless the proviso is attracted. Admittedly, it is beyond the period of limitation of six months prescribed under Section 11A(1) but it is within the extended period of 5 years under the proviso to that sub section. Now in order to attract the proviso it must be shown that the excise duty escaped payment by reason of fraud, collusion or willful mis statement or suppression of fact or contravention of any provision of the Act or of the Rules made thereunder with intent to evade payment of duty. In that case the period of six months would stand extended to 5 years as provided by the said proviso. Therefore, in order to attract the proviso to Section 11A (1) it must be alleged in the show cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are more than one and if the excise department places reliance on the proviso it must be specifically stated in the show cause notice which is the allegation against the assessee falling within the four corners of the said proviso. In the instant case that having not been specifically stated the Additional Collector was not justified in inferring (merely because the assessee had failed to make a declaration in regard to waste or by product) an intention to evade the payment of duty. The Additional Collector did not specifically deal with this contention of the assessee but merely drew the inference that since the classification list did not make any mention in regard to this waste product it could be inferred that the assessee had apparently tried to evade the payment of excise duty. (emphasis added) 21. In the show cause notice, in paragraph 4.1 which we have quoted above, the list of articles manufactured by the appellants has been set out which are not declared in the declarations filed by them with the department. In paragraph 5.2 of the show cause notice, it is specifically alleged that there is a willful suppression of facts with the intention of evading duty. Copi ..... 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