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TMI Blog2019 (4) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... leared both from the factory gate as well as on stock transfer from depots situated at Bangalore and Ernakulam. It appears that the First Respondent filed returns with regard to factory gate clearances. However, with regard to sales from their depots, the First Respondent was unsure about the method of valuation thereof for purposes of calculating the differential duty on such sales. Accordingly, by letter dated 10. 10. 2001, the First Respondent requested the Superintendent of Central Excise, Gummidipoondi Range, to advise as to the method to be adopted for depot sales on stock transfer from the First Respondent's factory so as to arrive at the differential duty. 3.The Superintendent of Central Excise does not appear to have responded to this request for advice. Thereafter, by letter dated 03.01.2002, the First Respondent informed the Superintendent of Central Excise that it had removed excisable goods on stock transfer basis from its depots at Bangalore and Ernakulam and that duty had been paid on the said goods at a price nearer to the depot price because the same was not ascertainable at the time of removal. The First Respondent further set out the assessable value at the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut that there was an aggregate short payment of duty for the period 12/2001 to 7/2005 of Rs. 87,24,986/-. It was further alleged that the assessable value was deliberately mis-declared by the First Respondent with intention to evade payment of duty. Therefore, it was alleged that the short paid duty is recoverable from the First Respondent under proviso to Sub Section 1 of Section 11 A of the Central Excise Act, 1944(the Central Excise Act). It was further alleged that the First Respondent is liable to pay interest and penalty under the relevant sections of the Central Excise Act. 5.On receipt of the aforementioned show cause notice, the First Respondent filed an Application under Section 32 E of the Central Excise Act before the Customs and Central Excise Settlement Commission on 10.04.2006. From the said Application, it is clear that the total amount of duty involved in the dispute is Rs. 87,24,986/-, which corresponds to the principal demand under the show cause notice. It is also clear from the Application that the additional amount of duty accepted as payable by the First Respondent is a sum of Rs. 34,87,039/-. The said Application requests for waiver of duty to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in the Central Excise Act. Therefore, the Petitioner requested the Settlement Commission to reject the application filed by the assessee. 7.At the hearing on 04.07.2006, the Settlement Commission heard both parties. With regard to the invocation of the extended period of limitation under the proviso to Sub-Section 1 of Section 11 A of the Central Excise Act, the Settlement Commission stated that excise duty can be demanded for the extended period only if there is misstatement or suppression of facts. In this regard, the Settlement Commission held that the Applicant therein/1st Respondent herein had been regularly writing to the Department seeking advice about the method to be adopted for arriving at the value of goods sold from the depots and that it was clear that the Department had not replied to those letters. The Settlement Commission also adverted to the fact that the applicant therein had informed the Department about the payment of differential duty and had enclosed detailed worksheets indicating as to how they had arrived at the differential duty. The Settlement Commission further held that the Applicant therein had cleared the goods under proper invoices and that m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon the judgement of the Hon'ble Supreme Court in ESCORTS JCB vs. COMMISSIONER OF CENTRAL EXCISE (2002) 146 ELT 31 (SC).(the Escorts JCB case). He also relied upon the judgment of the Hon'ble Supreme Court in PRABHAT ZARDA FACTORY LTD Vs. COMMISSIONER OF CENTRAL EXCISE (2002) 140 ELT 497 wherein the judgment in the ESCORTS JCB case was followed. With regard to the jurisdiction of the Settlement Commission, the learned counsel for the Petitioner relied upon the judgment of a Division Bench of the Karnataka High Court in THE COMMISSIONER OF CUSTOMS Vs. A.MAHESHRAJ, 2006 (195) ELT261 Kar, wherein the Division Bench held that Chapter XIV A of the Customs Act cannot be relied upon in cases of mis-declaration wherein the applicant for settlement was a smuggler and the Settlement Commission had deemed fit to levy penalty of Rs. 25,000/- on the Applicant. 10.In response, the learned counsel for the First Respondent submitted that it is an admitted fact that the First Respondent had repeatedly requested for clarification as to the proper mode of calculating the assessable value in respect of depot sales on stock transfer basis. He further pointed out that in respect of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements. Significantly, he relied upon the judgment of the Hon'ble Supreme Court in the COMMISSIONER OF CENTRAL EXCISE Vs. ROYAL ENTERPRISES(cited supra) wherein the Hon'ble Supreme Court held that the Tribunal was correct in concluding that there was no suppression of facts with intent to evade duty. In the said judgment, the Hon'ble Supreme Court adverted to other judgments, including the judgment in PUSHPA PHARMACEUTICALS COMPANY Vs. COLLECTOR OF CENTRAL EXCISE, BOMBAY(cited supra) wherein it was held as follows: "Section 11 A 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 both in law and even otherwise is well known. In normal understanding it is not different than what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for clarification or communicated with regard to payment of differential duty, which included the methodology adopted for calculation thereof, if it intended to suppress facts so as to evade payment of excise duty and that these communications were not responded to by the Central Excise Department. 14.As regards the legal issue, it is pertinent to refer to section 11-A of the Central Excise Act, which reads, inter alia, as follows: Section 11A. Recovery of duties not levied or not paid or shortlevied or short-paid or erroneously refunded.- (1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason, other than the reason of fraud or 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. (a) the Central Excise Officer shall, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been so levied or paid or which has been so shortlevied or short-paid or to whom the refund has erroneously been made, requiring him to show cause w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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