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TMI Blog2008 (8) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal, New Delhi (for short, 'the Tribunal') in Appeal No. E/505/03-NB(SM) raising the following substantial question of law: "Whether non-invoking/quoting of extended period of limitation and by not quoting the relevant section or rule vitiates the proposed action when the charges of fraud practiced and suppression of facts resorted to by the party in wrong availment of Modvat credit have been discussed clearly in detail in the Show-cause notice?" 4. Briefly, the facts are that a show-cause notices were issued to the respondent-assessees in all the aforesaid four appeals on 17-6-1999 with the allegations that they have contravened the provisions of rules 57A and 57G of the Central Excise Rules, 1944 (for short, 'the Rules') for having fraudulently availed Modvat credit to the tune of lakhs of rupees. The fraud came to the notice of the department during the course of inspection. On 22-7-1998, search was conducted on the premises of M/s. Shobhit Impex, Abohar, M/s. Gandhi Chem-fert Industries, Old Fazilka Road, Abohar and M/s. Gandhi Metal (P.) Ltd., Old Fazilka Road, Abohar on 23-7-1998. It was found that M/s. Shobhit Impex had a godown located at Chak Sidhu Complex, Malout R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing noticees, as detailed against each, under rule 57-I(4) of Central Excise Rules, 1944 on noticee Sr. Nos. 1 to 3, 6 to 12; under rule 173Q of Central Excise Rules, l944 on noticee Sr. Nos. 4 and 5 and under rule 209A of Central Excise Rules, 1944 on noticee Sr. Nos. 13 and 14. Sr. No. Name of the party (M/s.) C.E. duty payable Amount of penalty imposed (Rs.) In words (Rs.) 1. Leader Engg. Works, Jalandhar 3,94,502.00 3,94,502 Three lakhs ninety four thousand five hundred and two only. ... ... ... 3. Vardhman India Products, Jalandhar 57,119.78 57,119 Fifty seven thousand one hundred and nineteen only. ... ... ... 6. Aman Engg. Works, Jalandhar 61,527.00 61,527 Sixty one thousand five hundred and twenty seven only. ... ... ... 12. V.K. Valves (P.) Ltd., Jalandhar 43,746.00 43,746 Forty three thousand seven hundred and forty six only." 6. Aggrieved against the order passed by the Commissioner, the assessees preferred appeals before the Tribunal, who relying upon the judgment of the Hon'ble Supreme Court in CCE v. H.M.M Ltd. 1995 (76) ELT 497, accepted the appeals by holding that in the case in hand, the extended period of limitation in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 174 of Central Excise Rules, 1944 and engaged in the manufacture of Valves & Corks falling under Chapter Sub-heading 8481.80 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) have contravened the provisions of rules 57A, 57G of the Central Excise Rules, 1944 (hereinafter referred to the 'Rules') inasmuch as the aforesaid have wrongly/fraudulently availed/passed on Modvat credit to the tune of: ** ** ** 2. During the course of inspection of Central Excise Range, Abohar on 22-7-1998 when alleged wrongful/fraudulent availment of Modvat was noticed, the Hqr. Central Excise Preventive team, Chandigarh-II in association with the Central Excise staff of Jalandhar & Sangrur Divisions searched the registered office situated at Gandhi Lodge, College Road, as well as godown at Chak Sidhu Complex, Malout Road, Abohar of M/s. Shobhit Impex, Abohar. ** ** ** Sh. Om Parkash Gandhi as Managing Partner of M/s Gandhi Chem-fert Industries, in his statement dated 23-7-1998 (copy enclosed as 'annexure'), admitted the recovery of records pertaining to M/s. Shobhit Impex, from the premises of M/s. Gandhi Chem-fert Industries, Abohar. Sh. Om Parkash Gandhi reiterated that all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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." The period of limitation provided for dealing with a case in the normal circumstances is one year from the relevant date. However, in case it is found that the duty has not been levied or paid or short-levied or shortpaid by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act and the Rules framed thereunder, the period of limitation to initiate the proceedings is five years. 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No. 1/98 dated 1.8.98. ** ** ** (iii) M/s Vardhman India Product, Jalandhar have availed modvat credit to the tune of Rs. 57,119.78 on 1 (one) invoice issued by M/s Shobhit Impex, Abohar. However, as discussed in the previous paras, the goods of invoice no. 52 dated 22.12.97 have never reached M/s Vardhman India Product, Jalandhar. Sh. Sandeep Jain of M/s Vardhman India Product has admitted in his statement dated 31.7.98 that they had received only the invoice without any goods. I find that they have wrongly availed and utilized Modvat credit amounting to Rs. 57,119.78 and is recoverable from them under Rule 57I(1) and are liable to penal action under Rule 57I(4) of Central Excise Rules, 1944. This amount has already been deposited vide their TR-6 Challan No.1 dated 1.8.98. ** ** ** (vi) M/s Aman Engg. Works, Jalandhar have availed modvat credit to the tune of Rs. 61,527.04 on 1 (one) invoice issued by M/s Shobhit Impex, Abohar. However, as discussed in the previous paras, the goods of invoice no. 56 dated 26.12.97 issued by M/s Shobhit Impex, Abohar have not been received by M/s Aman Engg. Works, Jalandhar as Sh. Ashok Sharma S/o Sh. Des Raj Sharma Prop. M/s Aman Engg. Works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Relevant para thereof is extracted below: "......The mere non-declaration of the waste/by-product in their classification list cannot establish any wilful withholding of vital information for the purpose of evasion of excise duty due on the said product. There could be, counsel contended, bona fide belief on the part of the assessee that the said waste or byproduct did not attract excise duty and hence it may not have been included in their classification list. But that per se cannot go to prove that there was the intention to evade payment of duty or that the assessee was guilty of fraud, collusion, misconduct or suppression to attract the proviso to Section 11A(1) of the Act. There is considerable force in this contention. If the Department proposes to invoke the proviso to Section 11A(1), the show cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case are considered in the light of the enunciation of law, as referred to above, the inescapable conclusion would be that the impugned order passed by the Tribunal is not in conformity with the same. The only contention raised by learned counsel for the assessee before the Tribunal was that in the show cause notice, there is no allegation about the suppression of facts with intention to evade payment of tax. Referring to the judgment of Hon'ble the Supreme Court in H. M. M. Limited's case (supra), the Tribunal opined that it must be alleged in the show cause notice that the duty of excise has not been levied or paid by reason of fraud, collusion or wilful misstatement or suppression of facts on the part of the assessees or by reason of contravention of any of the provisions of the Act or Rules made thereunder. 16. A perusal of the contents of the show cause notice issued to the assessees in the present case clearly establishes that the parties in the present case had fraudulently/wrongfully availed modvat credit, which was not admissible to them under the Act and the Rules and, therefore, there was evasion of excise duty. This necessarily meant that had the parties no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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