9911796707
TMI Blog2024 (7) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... uly discharged the same and the same has not been disputed by the Revenue. The agreement entered into by the appellant, it transpires that the said arrangement is between the appellants and Film Producer Companies (FPCs) for a specified period, and the scope of activities or work to be performed by the appellant is provided in the Article 2 Assignment of Rights and Article 5 Reserved Rights, clearly brings out the rights that have been offered to the appellants as defined under clause 1.17, as said works relate to only songs and song videos of the film; whereas the rights retained by FPCs include all other rights in exploiting the film for various purposes including merchandising, gaming, animation films, remaking etc.; Intellectual Property Rights (IPR) including copyrights of the producer in the film. Thus, the basis for treating the rights obtained by the appellants in the agreement and marketing of music and song video as the activity of marketing and promotion of films, in the impugned order is factually incorrect and is not based on any evidence - From the various clauses of the agreement and the number of activities carried out by the appellants, it could be clearly conclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights owner as their clients. Whether the adjudged demands and penalties imposed by the Commissioner of CGST, Mumbai West is legally sustainable or not, under the Finance Act, 1994? - HELD THAT:- there was no suppression of any information, inasmuch as the appellant have provided complete details in respect of the audited accounts and the balance sheets for the disputed period. It is found from the factual details that the entire data having been provided to the investigation officers of the DGGI, there is no justification to claim suppression of facts in such a situation. Further, it is found that there is no evidence or any document to indicate that the appellants in any manner had attempted to evade service tax - invocation of extended period for demand of service tax in the present cases is not sustainable. Consequent to this, it is also found that the penalty imposed on the appellants under Section 78 ibid also does not survive on the above grounds. The activities undertaken by the appellant in the present set of facts is not liable to service tax under the taxable category Business Auxiliary service - the impugned order dated 27.02.2021 is liable to be set aside to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. During the investigation conducted by DGGI, the appellants have submitted to the DGGI various documents through reply letters dated 05.01.2015, 10.04.2015 and e-mail reply dated 15.04.2015; besides this DGGI also recorded statement of the Senior Manager Accounts who is also a qualified Chartered Accountant representing the appellants on 13.04.2015. As a result of the detailed investigation, DGGI concluded that the Film Production companies/ original rights owners by permitting the use of copyright of the musical work of the films to the appellants are providing services which are not taxable being Copyright services in respect of original musical works; however, the appellants has to pay, in addition to the monetary consideration namely Minimum Guaranteed Royalty amount , a non-monetary consideration in the form of provision of service of marketing, publicising and promoting the film/film music. Thus, DGGI concluded that the service provided by the appellants to the FPCs are taxable under the category of Business Auxiliary Service (BAS) as defined under Section 65(105) (zzb) of Chapter V of the Finance Act, 1994 for the period up to 30.06.2012. Subsequent to the introduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nimum Guarantee (MG) and the other is the share of future profits earned by the appellants by exploitation of the rights assigned, which is known as Overflow . As the appellants become the owners of the copyrights of songs or audio visuals, it is in their own interest that they undertake efforts to market their rights are required by the appellant in the songs and audio visuals. Such marketing efforts are undertaken by the appellants with intent to increase the popularity and consequentially the demand for purchase of the songs and audiovisuals and thereby earn more revenue. The advertising cost is paid by the appellants to various channels where the respective service providers advertise the songs/audio visuals and charge the advertisement fee to the appellants along with applicable service tax paid by them. The amount so spent by the appellants on its own marketing efforts undertaken for themselves is known as Marketing Spend . It is also provided in the agreement that common business profits can be derived only after Recoupment of all costs from the gross revenue earned by the appellants. Further, it is also clearly provided in the said the agreement that an upper cap of marketi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgement of Coco Cola India in the case of Superior Drinks Pvt. Ltd. Vs. Commissioner of Central Excise, Nagpur-I 2019TIOL-2266-CESTAT-MUM. 3.4 On the issue of limitation, learned Senior Advocate had stated that as the issue is relating to classification of services, interpretation of definition of taxable service there cannot be any attribution of suppression of facts on the appellant. Further, it is a settled position of law that where a bonafide belief prevails about non-levy of service tax and in matters of interpretation, extended period is not invocable and the appellant cannot be blamed with wilful mis-statement or suppression of facts. In view of this, he pleaded that the demand of service tax for extended period and consequential penalties cannot be sustained. 3.5 Learned Senior Advocate relied upon the following orders of the Tribunal in support of their stand: - (i) Superior Drinks Pvt. Ltd. Vs. Commissioner of Central Excise, Nagpur-I 2019-TIOL-2266-CESTAT-MUM. (ii) McDonalds India Private Ltd. Vs. Principal Commissioner of Service Tax, Delhi-I Final Order No.51264/2019 dated 27.03.2019. 4.1 Learned Authorised Representative (AR) appearing for the Department, reite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order dated 27.02.2021, that the learned Commissioner had examined the agreements entered into by the appellants have held as follows:- 42. The SCNs have basically relied upon two such agreements. 1. Between M/s Sony Music and Dharma Productions P. Ltd. dated 19.04.2012 and 2. Assignment of Copyright agreement dated 28.06.2013 between M/s. Viacom 18 Media Pvt. Ltd., M/s. Rakesh Omprakash Mehra Pictures Pvt. Ltd. and M/s. Sony Music Entertainment India Pvt. Ltd. Further, by referring to the various clauses of the agreement, the learned Commissioner had concluded as follows:- 42.2 I observe that though Sony Music is entitled to draw up an exhaustive marketing plan for promoting the Sales, Sony Music and the FPC are deciding the marketing budget for the marketing, publicity and promotion of the Film and Said Works. Further Sony Music shall incur the Marketing Spend as per the marketing plan agreed with the Producer in order to maximize the promotion and publicity of the Film and the Said Works. Accordingly, I find that though the FPC has transferred the copy rights in music to Sony Music, they still are controlling the marketing strategy by way of deciding the quantum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciate that the music when played through virtual media carries out a very crucial role in attracting the viewers /crowd pulling to watch the movies. Hence the release of music is strategically timed prior to release of film with the sole idea of promoting and marketing the film. Further at times where events are held for promotion of film prior to its release and show cased across different platforms like GEC, News, Music Channels, Regional Channels etc., the star cast perform to different songs from the film, music of which has already been popularized by then by the MPCs. Therefore, the exploitation of Music Right is so managed that the film gets maximum promotion. He further concluded that 46. M/s. Sony Music being copy right holders of Music should have ideally had interest only in promotion of music and not promotion of films. But by way of negotiable instrument they are under obligation to even promote films. The promotion of films has been integrated with promotion of film music and this too is at a cost, by way of Marketing Spend which is allowed to be recouped by M/s. Sony Music. Further as submitted by the Noticee Company in their submissions, the Movie Marketing budge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants, whether it would be covered under the taxable service of Business Auxiliary service or not, we would like to refer to the legal provisions of levy of service tax under the Finance Act, 1994 and the rules framed thereunder as it existed during the disputed period which are extracted and given below: Finance Act, 1994 Definitions. Section 65. In this Chapter, unless the context otherwise requires, [ Prior to substitution by the Finance (No. 2) Act, 2004, w.e.f. 10-9-2004. ]( 19) business auxiliary service means any service in relation to, (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection or recovery of cheques, accounts and remittance, evaluation of prospective customer and public relation services, and includes services as a commission agent, but does not include any information technology service. Explanation. For the removal of doubts, it is hereby declared that for the purposes of this clause information technology s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Explanation 1. For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to, (A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or (B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section. Explanation 2. For the purposes of this clause, the expression transaction in money or actionable claim shall not include (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. For the purposes of this section, (a) consideration includes-- (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed; (iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or sellin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yrights and the appellants upon payment of service tax have claimed credit of service tax paid; (ii) music and song video is released for exploitation of music through various audio, video channels, for which the channels charge service tax and the appellants pay such tax and take credit of the same; (iii) appellants starts receiving the incomes on account of monetization of music rights, in physical form by way of selling CDs/VCDs/DVDs/ Blue Ray etc. and in digital form such as streaming of songs in websites of Savaan.com, Gaana.com etc., and downloading of music from iTunes, YouTube and caller ring back tones. The appellants collects and pays applicable service tax on such receipt of incomes; (iv) The receipts in the form of income from monetization of music rights till it achieves the total of minimum guarantee, marketing commitment and ad-hoc additional percentage, no amount is remitted to the FPCs; and (v) the receipts when they cross the above total amount at (iv) above, then agreed share payable to FPCs are paid to them as recoupment charges, and the FPC pay service tax on such overflow. From the above, it could be seen that the various charges incurred in promotion of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes viewing of films and thus the appellants have rendered Business Auxiliary Service is not either justified in terms of the legal provisions of the Finance Act, 1994 or has been established in terms of the factual evidences in the present case. 8.4 We have also noted that there are variant modes of business transactions between the Film producer and distributor, distributor and sub-distributor or area distributor or exhibitor (theatre owner) even though claimed as sale of goods to fall under Entry 54 List II or Entry 92A List I, it has been held by the Hon ble High Court of Madras in the case of AGS Entertainment Pvt. Limited Vs. Union of India 2013 (32) S.T.R. 129 (Mad.) that Parliament is well within its legislative competence in levying service tax resorting to Entry 97 of List I and the levy under Section 65(105)(zzzzt) in respect of Copyrights is not ultra vires the Constitution. But the present set of facts do not relate to the service tax levy on temporary transfer of copy rights, on which the appellants have claimed that due service tax has also been discharged. 8.5 Further, the question of treating various amounts paid under a contract as consideration by the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sirous of procuring all rights of Songs and Songs Videos (as hereinafter defined) and the producer has agreed to assign the Rights (defined hereunder) for a limited period to Sony Music on the terms and conditions hereinafter appearing. NOW THIS AGRREMENT WITNESSETH AND IT IS HEREBY AGREED by and between the parties hereto as follows: 1. DEFINITIONS: In this agreement, unless the context otherwise admits, the following expressions shall have the meaning assigned to them as under: xxx xxx xxx xxx 1.4 Broadcasting Right shall mean the right to communicate the Said Works to the public through the media of television (terrestrial or cable, satellite, pay or free, cable TV, DTH, broadband, IPTV, and any other form), radio (whether satellite or traditional, AM/FM/DAB. All India Radio and Internet Radio) and in any and all manner and media now and hereinafter known in the future. 1.7 MG Amount shall have the meaning as ascribed in Clause 7.1 herein. 1.8 Marketing Spend shall have the meaning as ascribed in Clause 9.2 herein. 1.17 Said Works shall mean the Song(s), its remix, dialogues in the Songs and Song Video(s), whether singly or collectively as well as any Background Music Score in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.1 The Rights not specifically assigned under this Agreement are being retained by the Producer and the Producer shall be entitled to deal with such rights in any manner as it may deem fit. 5.2 It is clarified that the Rights granted under this Agreement shall not include the rights: 5.2.1 In relation to any and all intellectual property rights including copyright of the Producer in the Film; 5.2.2 To exploit the Background Music Score; 5.2.3 To exploit the Film for the purpose of merchandising: 7 . CONSIDERATON 7.1 In consideration of the Rights exclusively assigned herein, Sony Music shall pay minimum guaranteed sum of Rs. 10,00,00,000/- (Rupees Ten Crores only) ( MG Amount ) in the manner and on the dates specified in Schedule 1 but subject to receipt of invoice for the MG Amount. 7.2 The MG Amount shall be exclusive of all applicable taxes including service tax and Value Added Tax ( VAT ). It is clarified for avoidance of any doubt that any and all such taxes (like service tax and/ or VAT as and when applicable) shall be paid by Sony Music in addition to the MG Amount. Sony Music shall be entitled to deduct only the applicable tax deductible at source before making the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, Subhash Road-A, Vile Parle (E), Mumbai 400 057, bearing Pan Number AAACM9164E (hereinafter referred to as Assignors/Viacom18 which expression shall, unless repugnant to the context or meaning thereof, include its successors-in interest, and assigns) of the FIRST PART. 2. RAKYESH OMPRAKASH MEHRA PICTURES PVT. LTD. , a company incorporated under the Companies Act, 1956, having its office at 14 Pali Village, Bandra (West), Mumbai 400 050 bearing Pan Number AADCM8879K (hereinafter referred to as ROMPPL Which expression shall, unless repugnant to the context or meaning thereof, include its successors in interest, and assigns) of the SECOND PART 3. SONY MUSIC ENTERTAINMENT INDIA PVT. LTD ., having its office at at 92, Main Avenue, Santacruz (West), Mumbai 400 054, bearing Pan Number AAICS1766Q (hereinafter referred to as Assignee which expression shall, unless repugnant to the context or meaning thereof, include its successors-in interest, legal representatives, administrators, executors, nominees and assigns) of the THIRD PART. The First Part and the Second Part are jointly referred to as Assignors. The First Part, Second Part and Third Part are jointly referred to as Parties BACKGRO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, modifications and re-enactments thereof) or any other law governing rights in intellectual property and exploitation thereof, as independent rights, irrespective of whether such rights are remunerative or non-remunerative Assignee shall be the owner of the original plate, within the meaning of the Copyright Act 1957 and any extensions or modifications thereof, and of each Contract Works for the Term and Territory. 3 . CONSIDERATION 3.1 In lieu of the Copyrights in the Contract Works assigned hereby by the Assignors to the Assignee, the Assignee agrees to pay to Viacom18 a non-refundable (subject to termination clause below) sum of Rs. 6,50,00,000/- (Rupees Six Crore Fifty Lack only) exclusive of all taxes as a minimum guaranteed Royalty amount (Royalty MG Amount), Which sum shall be payable in the following manner and treated as a debt, which will cease, on the delivery of the deliverables by the Assignors; 4. DELIVERABLES 4.1 The Assignors shall deliver the following delivery material, publicity and promotional material free of charge to the Assignee on or before the Delivery Date: 4.2 The Masters containing all the Songs, forming part of the Film, in CD format, perfectly edit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50:50. The overflow royalty is inclusive of all applicable taxes. SCHEDULE 1 The Contract Works 1. Master / Songs of the film wherein 8 Songs shall be original Song (along with the underlying Musical and Lyrical works) owned by Assignors (Particulars and details of the Film are given in Schedule 2). xxxx xxxx xxxx xxxx 2. Song Video / s of the film (Particulars and details of the Film are given in Schedule 2) (Song Video / s based on the songs listed above) 3. And all the Literary (lyrics of the Songs) and Musical work contained and embodied in the Songs and Song Videos, in the Film or created / composed / embodied / contained in the film. 4. Minimum 150 images derived from the Film and Song videos and those delivered hereunder as part of artworks and promotional material. 5. Dialogues subject to a maximum of 15 minutes (on the audio cinema property, where dialogues will be on exclusive basis, but otherwise dialogues will be on non-exclusive basis), Background score of the Film. 6. Or parts thereof of any of the above. 9.2 From plain reading of the aforesaid agreement entered into by the appellant, it transpires that the said arrangement is between the appellants and Film Producer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranchisee to the McDonalds, as it is the franchisee themselves who are benefitting out of such expenses and not the McDonalds. The relevant paragraph of the said order is extracted and given below: 32. In the instant Appeal, as noticed above, the franchisee had to expend not less than 5% of the gross sales in a particular year towards the advertisement of its Restaurant. The amount was not required to be deposited in any fund of the franchisor for advertisement or promotion of the franchisor. Thus, the decision of the Tribunal in Subway Systems will not come to the aid of the Department. 33. What further transpires from the agreement is that there is no obligation cast upon the franchisee to incur any expenditure on advertising the brand name, service marks and trademarks of the franchisor. Any indirect result, because of advertisement cannot, therefore, be called an extra consideration in terms of section 67 of the Act. Unless an amount is charged by the service provider to the service recipient, it does not enter into an equation for determining the value on which Service Tax is payable. 34. A Larger Bench of the Tribunal in Bhayana Builders (P) Ltd. vs Commissioner of Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provider has to be for the service provided. Therefore, it is not any amount charged which can become the basis of value on which service tax becomes payable but the amount charged has to be necessarily a consideration for the service provided which is taxable under the Act. By using the words for such service provided the Act has provided for a nexus between the amount charged and the service provided. Therefore, any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67. The cost of free supply goods provided by the service recipient to the service provider is neither an amount charged by the service provider nor can it be regarded as a consideration for the service provided by the service provider. In fact, it has no nexus whatsoever with the taxable services for which value is sought to be determined. 36. The aforesaid view was reiterated by the Supreme Court in Intercontinental Consultants, wherein it was observed: 23. Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lves who are benefitting out of such expenses and not the Appellant. xxx xxx xxx xxx 42. It was, therefore, in the business interest of the franchisee to enhance its sale by causing advertisements. The advertisement, therefore, was for promotion of the Restaurant operated by the franchisee and merely because the trade names, service marks, trademarks of the franchisor also appear in the advertisement, no extra consideration flows to the franchisor. The order of the Principal Commissioner, therefore, suffers from a fundamental error as it rejects the contention of the Appellant that the advertisement was for the business promotion of the franchisee. 49. In the first instance, as noticed above, the Appellant did not receive any consideration for advertisement made by the franchisee in terms of Clause 5 of the agreement. The Principal Commissioner, therefore, fell in error in concluding that some non-monetary consideration had been received by the Appellant towards the advertisement made by the franchisee, which non monetary consideration was required to be determined under Rule 5(1) of the 2006 Rules. Even if it is assumed that some non monetary consideration had been received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the charge of Service Tax under section 66 has to be on the value of taxable service i.e. the value of service rendered by the assessee and the quantification of the value of service can, therefore, never exceed the gross amount charged by the service provider for the service provided by him. On that analogy, the High Court opined that the scope of Rule 5 goes beyond the scope of section 67 which was impermissible as rules could be framed only for carrying out the provisions of Chapter 5 of the Act. In taking this view, the High Court observed that the expenditure or cost incurred by the service provider for providing the taxableservice can never be considered as the gross amount charged by the service provider for such service provided by him. 52. In the Appeal filed by the Department, the Supreme Court noticed the various reimbursable claims which were included in the gross value. The Supreme Court noted that Rule 5 does bring within its sweep the expenses which are incurred while rendering the service and are reimbursed and, therefore, what was required to be decided was whether section 67 of the Act permits subordinate legislation to be enacted as was done by Rule 5. It n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... principal to principal basis. Accordingly, the Hon ble Supreme Court had held that advertisement expenses incurred by dealer/distributor at its own cost, half of it borne by the manufacturer, does not call for deduction out of the trade discount and it is uncalled for. 9.6 The above orders of the higher judicial forum clearly provide that the activities undertaken by the appellants with the FPCs under a contract such as marketing and promotion of music and song videos of film under a temporary transfer arrangement are not liable to service tax as Business Auxiliary Service . Further, we also find that the agreements entered by the appellants also provide for certain expenses to be incurred by them which could be an adjustment from the revenues. Thus, we do not find that sharing of part of the consideration alone under the contractual obligations would tantamount to provision of service towards Business Auxiliary Services, provided by appellants by treating the rights owner as their clients. 10.1 As regards the penalties proposed in the show cause notice, the learned Commissioner had imposed penalty equal to the amount of service tax demanded under Section 78 ibid. 10.2 The legal pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Central Excise, Raipur [(2013) 9 SCC 753 = 2013 (288) E.L.T. 161 (S.C.)] the Supreme Court discussed its previous judgments to determine the applicability of the proviso to Section 28 of the Customs Act for extension of limitation period for issuing notice for payment of duties that have not been levied, short-levied or erroneously refunded. The relevant paragraphs of the judgment are excerpted below : 9. The show cause notice was issued on 2-8-2001, more than six months after the appellant had imported furnace oil on behalf of Uniworth Ltd. in January, 2001. This time period of more than six months is significant due to the proviso to Section 28 of the Act. The Section, at the relevant time, read as follows : 28. Notice for payment of duties, interest, etc. - (1) When any duty has not been levied or has been short-levied or erroneously refunded, or when any interest payable has not been paid, part paid or erroneously refunded, the proper officer may, - (a) in the case of any import made by any individual for his personal use or by Government or by any educational, research or charitable institution or hospital, within one year; (b) in any other case, within six mont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proviso to Section 28 of the Customs Act. The relevant paragraphs are excerpted below : 13. This Court, in Pushpam Pharmaceuticals Co. v. Collector of Central Excise, Bombay [1995 Supp (3) SCC 462], while interpreting the proviso of an analogous provision in Section 11A of The Central Excise Act, 1944, which is parimateria to the proviso to Section 28 discussed above, made the following observations : xxxxxx xxxxxx xxxxxx 18. We are in complete agreement with the principle enunciated in the above decisions, in light of the proviso to Section 11A of the Central Excise Act, 1944. However, before extending it to the Act, we would like to point out the niceties that separate the analogous provisions of the two, an issue which received the indulgence of this Court in Associated Cement Co. Ltd. v. Commissioner of Customs [(2001) 4 SCC 59] 3, at page 619 in the following words : 53. ... Our attention was drawn to the cases of CCE v. Chemphar Drugs and Liniments [(1989) 2 SCC 12], Cosmic Dye Chemical v. CCE [(1995) 6 SCC 117], Padmini Products v. CCE [(1989) 4 SCC 275], T.N. Housing Board v. CCE [1995 Supp (1) SCC 50] and CCE v. H.M.M. Ltd. (supra). In all these cases the Court was conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions misstatement and suppression of facts are to be qualified by the word wilful , as was done in the Cosmic Dye Chemical case while construing the proviso to Section 11A, the making of such a wilful misstatement or suppression of facts would attract the provisions of Section 28 of the Customs Act. In each of these appeals it will have to be seen as a fact whether there has been a non-levy or short-levy and whether that has been by reason of collusion or any wilful misstatement or suppression of facts by the importer or his agent or employee. (Emphasis supplied) 23 . It is important to note the proviso to Section 11A of the Excise Act at this stage. It states that : Where any duty of excise has not been levied or paid or has been shortlevied or short-paid or erroneously refunded, by the reason of - (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act or of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collect such tax. Further, there seems to be no difference in language of the proviso to Section 11A of the Excise Act and Section 73(1) of the Finance Act. Since, the pith and substance of both these provisions is the same, the various judgments of the Supreme Court discussing the interpretation of proviso to Section 11A of the Excise Act can be extended to interpret Section 73(1) of the Finance Act. Further, since proviso to Section 28 of the Customs Act is parimateria to proviso to Section 11A of the Excise Act (as held in Uniworth), the interpretation of proviso to Section 28 may also be extended to interpret the proviso to Section 73 of the Finance Act. Uniworth (supra) is also authority on the meaning of wilful misstatement and suppression of facts ; the Court held that : 12. ... The conclusion that mere non-payment of duties is equivalent to collusion or wilful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... euticals Co. v. C.C.E. [1995 (78) E.L.T. 401 (S.C.)], this Court has held that the extended period of five years under the proviso to Section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact. 26 . Again, the Supreme Court in Continental Foundation Joint Venture Holding v. Commissioner of Central Excise, Chandigarh-I [(2007) 10 SCC 337 = 2007 (216) E.L.T. 177 (S.C.)], held that : 10. The expression suppression has been used in the proviso to Section 11A of the Act accompanied by very strong words as fraud or collusion and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invok ..... X X X X Extracts X X X X X X X X Extracts X X X X
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