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TMI Blog2024 (9) TMI 1244X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was ever put to notice about any discrepancy. This apart, audits were regularly conducted for the period from December 2003 to March 2006 and April 2003 to April 2004, but no discrepancy was noticed by the officers conducting the audit. The appellant had also maintained a register for fly-ash stock on monthly basis for use of fly-ash above 25% by weight and the appellant had claimed exemption from payment of central excise duty under the notification dated 01.03.2002 since fly-ash of over 25% by weight was used in the manufacture of AC Pressure Pipes. The appellant had not suppressed facts relating to use of fly-ash by more than 25% by weight in the manufacture of AC Pressure Pipes. This is for the reason that information as contemplated under the Trade Notice was provided by the appellant to the department, and most importantly information contained in Form D-3 relating to receipt of fly-ash. The show cause notice nor the impugned order have denied the providing of such information by the appellant to the department. The show cause notice merely alleges that subsequent investigation revealed that the appellant had manipulated the records regarding the actual receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be mala fide. If a dispute relates to interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to be made on the basis of his own judgment and in a bona-fide manner. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self-ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 10,00,000/- (Rs. Ten Lacs Only) on Shri Sanjay Kanoria Managing Director/vice Chairman of M/s. A. Infrastructure Ltd. Hamirghrh, Bhilwara Rajasthan under Rule 26 of the Central Excise Rules, 2002. (vi) I impose penalty of Rs. 10,00,000/- ( Rs. Ten Lacs Only) on Shri V. K. Gupta, Chief General Manager of M/s. A. Infrastructure Ltd. Hamirghrh, Bhilwara Rajasthan under Rule 26 of the Central Excise Rules, 2002. (vii) I impose penalty of Rs. 5,00,000 /- (Rs. Five Lacs Only) on Shri Darpan Jain, Proprietor, M/s. Kaka Roadlines, Kota, Rajasthan under Rule 26 of the Central Excise Rules, 2002. (viii) I impose penalty of Rs. 5,00,000 /- (Rs. Five Lacs Only) on Shri Parasmal Mehta Prop Proprietor, of M/s. Robin Roadways, Bhilwara, Rajasthan under Rule 26 of the Central Excise Rules, 2002. (ix) I impose penalty of Rs. 5,00,000 /- (Rs. Five Lacs Only) on Shri Jai Kumar Singhvi, Proprietor, of M/s. Sanghvi Transport, Nimbahera, Rajasthan under Rule 26 of the Central Excise Rules, 2002. (emphasis supplied) 3. Excise Appeal No. 51686 of 2021 has been filed by Darpan Jain, Proprietor of M/s. Kaka Roadlines, Kota for quashing the order dated 31.03.2021 in so far as it imposes penalty of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contracts for supply of fly ash were given to the transporters, but no contract was entered into with the thermal power stations, as the fly ash was available free of cost; (ii) Fly ash was lifted from the thermal power stations by the transporters/truck drivers and supplied to the appellant; (iii) However, incoming fly ash transported by transporters was not weighed till April 2005 and the quantity was taken in stock on the basis of number of trucks that arrived and their standard carrying capacity, i.e., 14 MT; and (iv) It is only with effect from April 2005 that the appellant started weighing the incoming fly ash at a nearby Dharamkanta, namely, M/s. Shreeenath Computerized Dharamkanta, Hamirgarh. 11. The appellant has been supplying AC Pressure Pipes to various State Governments, Semi-Government Organizations, as well as to the Private Sector for supply of drinking water since 1985. Details of sales made to Public Health Engineering Departments of the State Governments during the relevant period 2003-04 to 2005-06, as stated by the appellant, are given below: Details of Supply of AC Pressure Pipes and Couplings to PHED/Govt. Year Qty procured from KSTPS (MT) Qty procured from S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper account in such form and in such manner as the Commissioner of Central Excise having jurisdiction may specify in this behalf, for receipt and use of fly-ash or phosphogypsum or both, in the manufacture of all goods falling under Chapter 68 of the First Schedule and files a monthly return in the form and manner, as may be specified by such Commissioner of Central Excise, with the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, having jurisdiction. 13. As per Trade Notice dated 16.05.1997, manufacturers using fly-ash or phosphogypsum in the manufacture of asbestos cement products are required to maintain and submit certain returns, irrespective of fly-ash percentage used in the manufacture of the products. The appellant claims that it maintained and submitted the following records: (i) Form A- Daily account for the receipt and issue of raw materials for the manufacture of excisable goods and the quantity of excisable goods manufactured out of the same in the prescribed format. (ii) Form B- Segment wise and Batch wise raw materials consumed in the manufacture of excisable goods and quantity of excisable goods manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticees to show cause why:- (i) benefit of exemption notification dated 01.03.2002, as amended, should not be denied for the period December 2003 to March 2006; (ii) central excise duty amounting to Rs. 11,02,12,141/- should not be demanded and recovered in terms of the proviso to sub-section (1) of section 11A of the Central Excise Act, 1944; (iii) interest as determined under the provisions of section 11AB of the Finance Act should not be recovered; and (iv) penalty should not be imposed under section 11AC of the Finance Act read with rule 25 of the Central Excise Rules. 21. The allegations made in the show cause notice are: (1) The appellant was engaged in the manufacture as asbestos, cements pipes and coupling. It availed benefit of exemption notification dated 01.03.2002 as amended and was clearing asbestos cement pipes manufactured with the use of fly ash by showing quantity of fly ash not less than 25%. (2) Investigations revealed that the appellant fabricated its record of fly ash which was submitted to the department. The record seized from M/s Shreenath Computerized Dharamkanta and the statement of employees showing fictitious nature of weighment slips and GRs established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal and proper. However, we find that the Department's case is also not without basis as enough evidence has been collected against the Appellant which needs to be verified by the adjudicating authority before fastening the Central Excise duty of that magnitude and also imposition of penalty on the other appellants. This has not been followed. 14. In view of above, we are of the opinion that the case needs to be remitted back to the adjudicating authority so as to follow mandatory conditions prescribed under Section 9D of the Act. Accordingly, we remand the matter to the adjudicating authority by setting aside the impugned order. It is also pertinent to examine the various records and returns and D-3 intimations as prescribed by the Trade Notice by the Commissionerate in order to invoke extended period of limitation as per Section 11A of the Act. Needless to say, the procedure prescribed under Section 9D of the Act shall be followed in letter and spirit, by the adjudicating authority. With these directions we allow the Appeal by way of remand. It is also expected that the remand proceedings will be completed by the adjudicating authority within three months from the receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section shall have effect, for the words one year, the words five years were substituted . (emphasis supplied) 30. It would be seen from a perusal of sub-section (1) of section 11A (1) of the Central Excise Act that where any duty of excise has not been levied or paid, the Central Excise Officer may, within one year from the relevant date, serve a notice on the person chargeable with the duty which has not been levied or paid, requiring him to show cause why he should not pay the amount specified in the notice. 31. The proviso to section 11A (1) of the Central Excise Act stipulates that where any duty of excise has not been levied or paid by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made there under with intent to evade payment of duty, by the person chargeable with duty, the provisions of the said section shall have effect as if, for the word one year , the word five years has been substituted. 32. It is not in dispute that the entire demand that has been confirmed under the impugned order is for the extended period of limitation. 33. To appreciate the contention advanced by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon'ble Supreme Court has observed that in case the non-payment of duty is intentional and by adopting any means as indicated in the proviso then the period of notice and a priory the period for which duty can be demanded gets extended to five years. I also rely on the decision of the Hon'ble Tribunal in the case of Magnum International (2008 (11) STR 176) in which it was held that non-filing of correct return itself is sufficient ground for invoking the extended period under section 73 of the Act as they have, willfully with a mala fide intention to evade the duty, filed wrong information to the department. Suppression means failure to disclose full information with the intent to evade payment of duty as held by Hon'ble Supreme Court in case of Continental Foundation Jt. Venture Vs CCE, Chandigarh-I reported at 2007 (216) ELT 177 (S.C). In view of the above extended period is invokable and therefore, the proviso to Section 11A (1) of the Central Excise Act, 1944 is applicable for recovery of duty so evaded. Cases relied upon by the assessee in this regard are not applicable in the present case in view of the above reasons that the suppression of facts is establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised regarding non-utilization of fly-ash. 36. It is in the light of the aforesaid facts that the allegations made in the show cause notice dated 31.12.2008 regarding invocation of the extended period of limitation has to be examined. The show cause notice alleges that the appellant claimed the benefit of exemption notification dated 01.03.2002 and cleared asbestos cement pipes manufactured by it with the use of fly ash by showing quantity of fly ash as not less than 25% by weight, but investigations revealed that the appellant had fabricated the records and thus suppressed facts by giving wrong information in the statutory returns about the production and utilization of fly ash with an intent to evade payment of central excise duty. 37. The Commissioner, in regard to the invocation of the extended period of limitation, observed that in the era of self assessment an assessee is required to maintain correct records and fulfill the conditions and since suppression means failure to disclose full information with the intent to evade payment of duty , the extended period of limitation contemplated under the proviso to section 11A (1) of the Central Excise Act would be invocable. 38. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for use of fly-ash above 25% by weight and the appellant had claimed exemption from payment of central excise duty under the notification dated 01.03.2002 since fly-ash of over 25% by weight was used in the manufacture of AC Pressure Pipes. 41. It is only on 31.12.2008 that a show cause notice was issued to the appellant proposing to deny benefit of the exemption notification dated 01.03.2002 for the period from December 2003 to March 2006 based primarily on the statements of the dharamkanta owner, truck drivers and officials of KSTPS. According to the allegations made in the show cause notice, the appellant had manipulated the records to show receipts of fly-ash over and above the actual receipts. 42. The Commissioner has held in the impugned order that D-3 intimations were not required to be filed and they were submitted only to save its skin , in case of detection, and, therefore, do not warrant consideration. It is not understood as to why D-3 intimations were not required to be filed when the Commissioner had prescribed such a procedure. In any case, the intimation provided ample opportunity to the department to verify physical receipts of the fly ash. The submission of D-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It is in this context that the Supreme Court observed that the act must be deliberate to escape payment of duty. The relevant observations are: 2. ***** The Department invoked extended period of limitation of five years as according to it the duty was shortlevied due to suppression of the fact that if the turnover was clubbed then it exceeded Rupees Five lakhs. ***** 4. A perusal of the proviso indicates that it has been used in company of such strong works as fraud, collusion or willful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful 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 six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. (emphasis supplied) 49. The Supreme Court in Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh2007 (216) E.L.T. 177 (S.C.) also observed, in connection with section 11A (4) of the Excise Act, that suppression means failure to disclose full information with intention to evade p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bona fide belief. (emphasis supplied) 52. The Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others W.P. (C) 7542 of 2018 decided on 06.04.2023, also observed as follows: 28. In terms of the proviso to Section 73 (1) of the Act, the extended period of limitation is applicable only in cases where service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, or collusion, or wilful misstatement, or suppression of facts, or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of service tax. However, the impugned show cause notice does not contain any allegation of fraud, collusion, or wilful misstatement on the part of MTNL. The impugned show cause notice alleges that the extended period of limitation is applicable as MTNL had suppressed the material facts and had contravened the provisions of the Act with an intent to evade service tax. Thus, the main question to be addressed is whether the allegation that MTNL had suppressed material facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k information. It is under sub-rule (1) of rule 6 of the Central Excise Rules, 2002 that the assessee is expected to self-assess the duty and sub-rule (3) of rule 12 of the 2002 Rules provides that the proper officer may, on the basis of information contained in the return filed by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. 25. Departmental instructions to officers also emphasise upon the duty of officers to scrutinize the returns. The instructions issued by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d period of limitation given in the impugned order is that the appellant was operating under self-assessment and hence had an obligation to assess service tax correctly and take only eligible CENVAT credit and if it does not do so, it amounts to suppression of facts with an intent to evade and violation of Act or Rules with an intent to evade. We do not find any force in this argument because every assessee operates under self-assessment and is required to self-assess and pay service tax and file returns. If some tax escapes assessment, section 73 provides for a SCN to be issued within the normal period of limitation. This provision will be rendered otiose if alleged incorrect self-assessment itself is held to establish wilful suppression with an intent to evade. To invoke extended period of limitation, one of the five necessary elements must be established and their existence cannot be presumed simply because the assessee is operating under self-assessment. (emphasis supplied) 55. The Tribunal in M/s. Kalya Constructions Private Limited vs. The Commissioner, Central Excise Commissionerate, Udaipur Service Tax Appeal No. 54385 of 2015 decided on 15.11.2023 observed as follows: 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the assessee under sub-rule (1), and after such further enquiry as he may consider necessary, scrutinize the correctness of the duty assessed by the assessee. Sub-rule (4) of rule 12 also provides that every assessee shall make available to the proper officer all the documents and records for verification as and when required by such officer. Hence, it was the duty of the proper officer to have scrutinized the correctness of the duty assessed by the assessee and if necessary call for such records and documents from the assessee, but that was not done. It is, therefore, not possible to accept the contention of the learned authorized representative appearing for the Department that the appellant should have filed a proper assessment return under rule 6 of the Rules. (emphasis supplied) 57. Civil Appeal No. 4246 of 2023 (Commissioner of CGST, Customs and Central Excise vs. Sunshine Steel Industries) filed by the department to assail the aforesaid decision of the Tribunal in Sunshine Steel Industries was dismissed by the Supreme Court on 06.07.2023 and the judgment is reproduced below: Delay condoned. 2. Heard learned counsel for the appellant. 3. This Court is not inclined to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee s action of including the value of deemed exports within the value of domestic clearances. (emphasis supplied) 59. What, therefore, transpires from the aforesaid decisions is that there can be a difference of opinion between the department and an assessee. An assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self-assessment. If some duty escapes assessment, the officers of the department can always call upon the assessee to submit further documents and he may also con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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