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TMI Blog2024 (8) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent has recorded all the transactions in question in their books of account, therefore, it cannot be assumed that the respondent can suppress the fact. Moreover, the respondent was entitled for the cenvat credit of inputs used for the manufacture of their final product which amounts to substantial reduction of the duty liability on the final product. It is also observed that undisputedly manufactured goods i.e. gears are used in the agricultural equipment, therefore, the bonafide belief of the respondent that it is correctly classifiable as parts of rotary tiller cannot be doubted - there is no suppression of fact or malafide intention on the part of the respondent for mis- classification of the goods i.e. gears and accordingly, the demand was rightly set aside on the ground of time bar. The classification of goods particularly in the facts of the present case is highly debatable in as much as the manufactured goods meant for agricultural equipment in a common sense can be classified as parts of agricultural equipment under CETH 84329090 but as per the strict interpretation of interpretative rule for classification the goods may be classifiable under 84834000 - since admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared their goods and classification thereof correctly to the department, there is clear suppression of fact. Hence, the demand for the extended period is sustainable. 3. Shri Paresh Sheth, learned counsel appearing on behalf of the respondent submits that undisputedly gears are manufactured for Rotary Tiller which is an agricultural equipment. The gear is used solely and principally for Rotary Tiller which is an agricultural equipment. The gear is correctly classified under heading no 82349090. On this basis the demand of excise duty classifying the gear under 84344000 is not correct and legal. 3.1 He further submits that the demand for the period 01.04.2011 to 31.03.2013 was raised by show cause notice dated 02.05.2016. In the facts of the present case where the issue involved is of classification , no suppression of fact can be alleged , therefore, the entire demand is time bar. He further submits that the respondent have recorded all the transactions of the impugned case in their various books of account. The respondent had a bonafide belief that since they have manufactured goods namely gear is solely and principally meant for agricultural equipment i.e. rotary tiller, such ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012(285) ELT 438(Tri. Ahmd.) is squarely applicable to this case. Therefore I hold that the entire demand raised beyond the normal limitation period is not sustainable and is liable to be dropped in-toto. Also, since the allegation of suppression is not maintainable, and since there is no case of confiscation of the goods, the question of upholding the penalty imposed under Rule 25(1) of Central Excise Rules, 2002 read with Section 11AC(1)(b) of Central Excise Act, 1944 does not survive and accordingly recovery of interest at appropriate rates under Section 11AA of Central Excise Act, 1944 also does not survive. 4.1 From the above finding it is observed that Learned Commissioner (Appeals) has cited the fact that other manufacturers of the identical goods were also classifying the gears under CETH 84329090 as per para 23.11 of Order-In-Original. Therefore, this is one of the reason that the appellant had a bona fide belief about the classification which we do not find any fault in the said finding. We further find that various courts have taken a consistent view that when there is dispute of classification, the malafide intention cannot be attributed to the assesse and it cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under 7220 1229 and 7220 2029 respectively. It is a settled legal position that if the goods cannot be classified under a classification which has been proposed in the show cause notice, then even if its correct classification is different than the classification claimed by the assessee, the entire show cause notice fails on this point itself. In this regard, we take support from following judgments : Sedna Impex India Pvt Ltd. 2017 (347) ELT 317 (Tri. Chennai) Maruti Fabrics Impex 2016 (343 ELT 963 (Tri.) Ravi Dyeware Co. Ltd. 2014 (301) ELT 421 (Tri.) Samar Polytex Ltd. 2009 (238) ELT 621 (Tri. Del.) In view of the above judgments, it is settled that the department cannot travel beyond the proposals made in the show cause notice. In the present case the impugned order travelled completely beyond the classification proposed in the show cause notice. Therefore, on this ground also, the impugned orders are not sustainable. As regard the submission made by learned counsel regarding demand being time barred, we find that the entire case is based upon Mill Test Certificate or the documents produced by the appellant. The Nickel content was very much available in the Mill Test Certific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Appeals) dated 16.08.2012 and thereafter the order dated 17.02.2014. In view of the proceedings which was pending since 2012 and the department itself had preferred an appeal, it cannot be said that the department was not aware of the classification of the products as declared in the instant bills of entry by the appellant and therefore no fault can be found on the part of the appellant as 9 out of the 10 bills of entries were filed before the final order was passed by the Tribunal on 10.01.2018 and the Order-in-Appeal by the Commissioner (Appeals) was holding the field. In this regard we would like to refer to the observations made by this Tribunal in an appeal filed by the Customs Broker of the appellant against the present impugned order as under: 11. In the order, the Principal Commissioner obfuscated the fact that the final order of this Tribunal was passed on an appeal by the revenue as the Commissioner (Appeals) had decided the classification in favour of the importer. Until the final order was passed by this Tribunal on 10.1.2018, the order of the Commissioner was binding on both sides. Of the bills of entry listed in the impugned order, all except one were filed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner, suppressed or mis-stated the facts wilfully to evade the payment of duty. 12. The law on invocation of extended period of limitation is well settled. Mere omission or merely classifying the goods/services under incorrect head does not amount to fraud or collusion or wilful statement or suppression of facts and therefore the extended period of limitation is not invocable. Reliance is placed on the decision of the Tribunal in Incredible Unique Buildcon Private Ltd. 2022 (65) GSTL 377. 17. We are unable to find any proof of show cause notice or from the impugned order. intent to evade either from the Mere omission or merely classifying its services under an incorrect head does not amount to fraud or collusion or wilful misstatement or suppression of facts. The intention has to be proved to invoke extended period of limitation. Supreme Court has delivered the judgment in the case of Larsen Toubro dated 20 August, 2015, prior to which there was no clear ruling that services which involved supply or deemed supply of goods could only be classified under WCS. The appellant had been classifying its services (which also involved supply/use of goods) under the CICS and Revenue never o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to do what he might have done and not that he must have done, does not render it suppression. 13.1 Without multiplying too many decisions on the principle justifying or rejecting the invocation of the extended period of limitation, we would just refer to the citations: 2004 (166) ELT 151 (SC) - Hyderabad Polymers (P) Ltd., vs. Commissioner of Central Excise, Hyderabad 2006 (197) ELT 465 (SC) Nizam Sugar Factory vs. Collector of Central Excise, Andhra Pradesh 2004 (164) ELT 236 (SC) ECE Industries Ltd., vs. Commissioner of Central Excise, New Delhi. 2003 (153) ELT 14 (SC) P B Pharmaceuticals (P) Ltd., vs. Collector of Central Excise 2015 (324) ELT 8 (SC) Caprihans India Ltd., vs. Commissioner of Central Excise, Surat 14. We have also considered the decisions cited by the learned Authorised Representative for the revenue on the issue of extended period of limitation, however, we feel that in the facts of the present case the same would not be applicable for the simple reason that the earlier proceeding on the subject matter (Order in Original dated 27.7.2012 annexed as Annexure B‟ in the Appeal paper book) was decided without allegation of suppression and mis-statement of mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be equated to manufacture. Further, in Para 8 of the said order, it was observed that the manufacture of an article known as marble could be said to be complete only after all or most of these processes are undergone to result in a distinctly different commodity. The issue was decided in favour of the assessee mainly on the ground that Department has not established with any material evidence to show that marble slabs could be considered as a different and distinct commercial commodity. It the instant case also the Deptt. has not established with any evidence how it is understood in commercial parlance to show that the items are different and distinct from the original and it is not mere cuttings, edging or trimming but something more than has taken place to consider as the process of manufacture and altogether new item emerged. We are not concerned with the logical analysis or the personal opinion of the authorities below in considering the issue but material evidence. Even after passing the order in the case of Fine Marble Minerals and same was approved by the Supreme Court, the Department has not taken any steps to substantiate its contention with evidence. In the case of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttributed to the appellants in the facts and circumstances of this case which we have already narrated above. 8. In the premises, we are of the view that since the demand is not contested on merits for a period within six months, we confirm the duty with respect to the period which is within a period of six months from the date of receipt of Show Cause Notice. But the duty beyond the period of six months from the date of receipt of Show Cause Notice is barred by limitation and the demand of the same in terms of the impugned order is hereby set aside. In the facts and circumstances, we have already come to the conclusion that there are no mala fide on the part of the appellant. We set aside the penalty imposed on the appellants. The appeal is allowed partially in the above terms. From the above decisions, coupled with the discussion made on the facts of the case, we are of the view that the demand is not sustainable on limitation also. In the case of Quippo Energy Pvt Ltd (Supra), this tribunal considering the issue of time bar on the dispute of classification passed the following order:- 17. However, we find force in the submissions of the learned advocate that the extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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