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TMI Blog2008 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... dule to the Central Excise Tariff Act,1985 and 2106.9099 of the present First Schedule to the Central Excise Tariff Act, 1985; (ii) the goods viz., "SAKTHI"/"STC" branded Tamarind Rice Powder, Lemon Rice Powder, Garlic Rice Powder, Dhall Powder and Chilly Chutney Powder should not be classified under Sub Heading 2103.90 of erstwhile First Schedule to the Central Excise Tariff Act,1985 and 2103.9040 of the present First Schedule to the Central Excise Tariff Act, 1985; (iii) as to why the extended period under the proviso to Section 11A(1) of Central Excise Act,1944 should not be invoked and Central Excise Duty amounting to Rs.3,99,66,776/- and Educational Cess of Rs.5,76,352/- totalling Rs.4,05,43,128/- for the period from September,2002 to October,2006 should not be demanded on the goods manufactured and cleared without payment of duty; and (iv) as to why penalty should not be imposed under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. 2. The petitioner is stated to be a Private Limited Company incorporated under the Companies Act,1956 engaged in the manufacture and sale of various spices and other masala powders falling under Chapt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt has become final. 2(d). The remaining three items, viz., (i) Garlic Mix (presently called as garlic rice powder); (ii) Lemon rice powder; and (iii) Bajji Bonda powder, did not form part of the earlier litigation. In June and July,1998, the Government imposed levy on spices and the petitioner applied for registration and the registration certificate was given in favour of the petitioner in CE 250151 5186 Sl.No.7/98 and the petitioner has filed the classification list in terms of the then existing Rule 173B of the Central Excise Rules, 1944 and all the above said six products were classified by the petitioner under Chapter 9 and the same was accepted by the Department. 2(e). The petitioner by its letter dated 02.06.1998, has proposed to use the packing materials belonging to M/s.Sakthi Devi Spices Private Limited, having brand name "SANTHI" for packing bajji bonda mix and has agreed to discharge the duty of excise and the same was acknowledged by the respondents and returns have been filed for the month of June and July,1998. The Government, by Notification No.17/98, has exempted levy of excise duty with effect from 18.07.1998. Accordingly, the petitioner has filed ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d application. According to the petitioner, all the six items have already been classified as spices and statutory declaration has been approved, and therefore, the impugned show cause notice seeking to demand duty for the period from September,2002 to October,2006, served on the petitioner on 08.10.2007, invoking the extended period of limitation of five years under the proviso to Section 11A of the Act,1944, is without jurisdiction and the same is without any authority of law. 2(h). The impugned show cause notice is challenged on various grounds including that when the earlier show cause notice has been set aside, subsequent proceedings on the same issue cannot be initiated on the basis of alleged suppression of facts and by invoking the extended period of limitation; that the earlier decision of this Court, viz., [ P.C.Duraisamy vs. Assistant Commissioner of Customs Central Excise, Erode-1 (2002 (140) ELT 77 (Mad.)] is binding on the respondents in respect of three items; that in respect of remaining three items which were not the subject matter of earlier writ petition the petitioner has already filed statutory declaration under Rule 173B under erstwhile Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classifying and availing duty exemption meant for Small Scale Industries by using the brand name "Sakthi" and logo "STC", which belong to P.C.Duraisamy, as proprietor of M/s.Sakthi Trading Company. 3(c). The second respondent, based on report, has visited the premises of the petitioner on 13.10.2005 and took statements from various persons, including one D.Senthil, Director of the petitioner Company; Nachiappan, Manager and P.C.Duraisamy, Managing Director. Since the petitioner has failed to furnish the requisite complete information relating to the ingredients of their products, the second respondent had to issue the impugned notice based on the available records. 3(d). It was, because of the suppression of various material facts, Section 11A(1) of the Central Excise Act,1985 was invoked for extended period, by claiming the amount as stated in the impugned show cause notice. The petitioner, instead of replying to the impugned show cause notice, has chosen to file the writ petition, which according to the respondents is not maintainable. 3(e). According to the respondents, the only Company which had registration certificate was one M/s.Sakthi Trading Company, which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b heading No.0903.00 and if the petitioner manufactures any other thing, it does not fall under Chapter 9 and if the petitioner fails to inform the same and file return, it amounts to suppression of facts and therefore, the respondents are entitled to invoke Section 11A(1) of the Central Excise Act,1944. 3(h). The petitioner in this writ petition has not registered themselves with the respondents and no returns have been filed and therefore, it is not correct for the petitioner to state as if the respondents were already aware of the operation of the petitioner. It is also the further case of the respondents that by making claim from September,2002 to October,2006, they invoked the extended period of five years limitation and not beyond that period. According to the respondents, it is the petitioner, who has misrepresented and misled by filing of the writ petition against the show cause notice which is a clear abuse of process of law. 3(i). According to the respondents, M/s.Sakthi Trading Company, which is the petitioner in the earlier writ petition has produced three products, which were disputed therein, wherein the contents of spices in the goods were ranging from 55% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed and a new product emerges and therefore, the process of mixing would amount to manufacturing. It is also stated that even earlier in a case filed before this Court by M/s.Sakthi Trading Company, there was no decision on classification of the goods and the decision was merely based on the contents of the counter affidavit filed by the Department and even then this Court has given liberty to the respondents to proceed in the event of difference in the manufacture. It is also stated that the remaining three items, viz., Garlic mix (presently called garlic rice powder); lemon rice powder and bajji bonda powder have not formed part of the previous litigation. 4. Mr.N.Venkataraman, learned counsel appearing for the petitioner would contend that even under the earlier show cause notice, which was quashed by this Court, three items of same products were questioned which is conceded by the respondents in the counter and therefore, the respondents are not entitled to reagitate the issue by the impugned show cause notice. He would also submit that based on the order passed by this Court, the refund order has been passed by the Department on 06.01.2000. He would rely upon the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 77 (Mad.) has no bearing for the simple reason that it related to the proprietary concern, viz., M/s.Sakthi Trading Company, whereas the present petitioner Company is incorporated under the Companies Act and therefore, the question of applicability of various judgments referred to by the learned counsel for the petitioner does not arise. He would also state that the earlier show cause notice and the returns were filed by the proprietary concern, viz., M/s.Sakthi Trading Company represented by P.C.Duraisamy as its proprietor and therefore, M/s.Sakthi Trading Company is not a petitioner before this Court in this writ petition. According to the learned counsel, the constituents of the spices and their character in the manufactured goods are different, as found in the investigation. He would also rely upon the judgment of the Supreme Court in 2007 (214) E.L.T. 485 (SC) [ A.P.Products vs. State of Andhra Pradesh] . His contention is that the petitioner is carrying on manufacturing of various goods in different names and the only registered company is M/s.Sakthi Trading Company and all other manufacturing units have been suppressed and therefore, the respondents are entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner to undergo the process of filing show cause and pursuing the statutory remedies. In view of the stand taken in the counter affidavit itself, the show cause notice so far as it relates to articles included in 0903.00 is quashed. It is however made clear that if there is any other item manufactured by the petitioner not coming within the aforesaid entry, it would be open to the opposite party to proceed in accordance with law. Subject to the aforesaid observation, the writ petition is disposed of without any order as to costs." 8. A reading of the said judgment makes it abundantly clear that M/s.Sakthi Trading Company is a proprietary concern with Mr.P.C.Duraisamy as its proprietor. Further, the operative portion of the judgment of this Court as enumerated above, has only resulted in quashing of the show cause notice based on the contents of the counter affidavit and no legal principle has been laid down or any law has been declared. It is also on record that the earlier case was filed by only M/s.Sakthi Trading Company represented by its proprietor P.C.Duraisamy, which has been registered as per the provisions of the Central Excise Act and the present writ petitioner i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dal powder, Idly, Dosa Powder, Chilly Powder, lemon rice power, bajji bonda mix, which have been manufactured and sold directly to buyers outside are cleared in wholesale to the sister concern like M/s.Sakthi Aromatic Masala Pvt. Ltd., which was found out on investigation and the various constituent legal personalities, which are functioning in the same address have not been registered and it was in those circumstances, after obtaining the statement from various persons, the impugned show cause notice came to be issued. 11. Whether M/s.Sakthi Trading Company, which is stated to have been founded by P.C.Duraisamy as its proprietor has subsequently become a Private Limited Company in the name of petitioner Company is a matter, which has to be decided on the facts, especially under the circumstances that the impugned show cause notice speaks about the constitution of various Companies in the same address with the said P.C.Duraisamy, his wife and son as Directors and these issues cannot be decided under the writ jurisdiction based on affidavit as it is held by this Court in 2008 TIOL 55 HC Mad.CX [ Madura Coats Limited, Madurai vs. The Commissioner of Central Excise, Madurai ] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where the excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded due to the reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act, the recovery can be made for a period of five years. The explanation to the said Section also states that in cases where the service of notice is stayed by the Court, then the period of such stay shall be excluded for the above determination of period of one year or five years as the case may be. For proper appreciation of the legal position, Section 11A(1) is extracted hereunder: "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-levied or short-paid or [erroneously refunded, whether or not such non-levy or non-payment, short levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder], a Central Excise Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extended period under Section 11A of the Act has no application. The facts of the present case cannot be compared to the said judgment of the Supreme Court at all. 16. Again, the judgment relied on by the learned counsel for the petitioner in Hyderabad Polymers (P) Ltd., vs. Commissioner of Central Excise, Hyderabad [2004 (166) E.L.T. 151 (SC)], has no application at all. That was a case, wherein in an identical circumstance in respect of earlier notice, amount demanded was dropped and therefore, the subsequent notice on the basis of suppression of material fact was not entertained under Section 11A of the Central Excise Act,1944. The Supreme Court in that case has held as follows: "6. The Collector has given a categoric finding that the earlier Show Cause Notice raised a demand on a similar issue and for an identical amount. That Show Cause Notice had been dropped. In our view the Tribunal was wrong in still holding that there was suppression of fact or material. This Court has in the case of ECE Industries Limited vs. Commissioner of Central Excise, New Delhi reported in 2004 (164) E.L.T. 236 (S.C.) held as follows:- "4. In the case of M/s.P B Pharmace ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice. 18. It is also stated that the point of classification is not raised. It is well settled that the question of classification relates to disputed question of facts and that cannot be decided in the writ petition and the High, Court while exercising its jurisdiction under Article 226, should be very slow in interfering with the fiscal statute. A Division Bench of this Court in Writ Appeal No.771 of 2000 dated 19.07.2007 ( The Superintendent of Central Excise, Range I "D" Division, Chennai and others vs. Mayil Mark Nilayam, A Partnership Firm rep. By its Managing Partner, Chennai) while allowing the appeal filed by the Department has held as follows: "4. Further, in respect of classification, in the case of Assistant Commissioner of Sales Tax, Kerala vs. P.Kesavan Co. reported in 1996(81) E.L.T.7 (S.C.), the Supreme Court affirmed its view that the revenue authorities are in better position to seek and appreciate necessary evidence to determine whether a particular product would fall under a particular entry or not and Courts ought not entertain the writ petitions on such issues and rather direct the writ petitioner to agitate their grievances befor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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