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TMI Blog2025 (4) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... tral excise duty on the articles of jewellery manufactured and cleared by them during the period 1.03.2016 to 30.0 6.2017. They were not charging central excise duty from the customers till December 2016. From 01.01.2017, the appellant collected the central excise duty from the customers on the invoices and paid the same under GAR-7 challans, however, they did not file any central excise returns during the period 1.03.2016 to 30.06.2017. The central excise duty liability on the articles of jewellery manufactured and cleared by them, was found to be as under:- CHART Details of excisable sales Assessable Value of Rate of Central Excise Duty Central Excise Duty payable On the basis of Trial Balance/details submitted by PPJ 4,68,88,50,377 1% 4,68,88,504/- On "PENDENT" 10,52,23,867 1% 10,52,239 On invoices having incorrect description 6,45,598 1% 6,456 Exemption claimed twice in respect of 2,88,356 1% 2,884 On invoices having description as 24 CT 3,42,904 1% 3,429 On goods exported without fulfilling the conditions prescribed for export of excisable goods without payment of duty 65,69,20,723 1% 65,69,207 Total 545,22,71,825 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in the form of gold coins classifiable under 7114 and liable to 'nil' rate of duty under Entry 200 of notification no.12/2012 dated 17.03.2012, which have remained the same, even after substitution of the new Entry 199 imposing central excise duty. iv). The entire sale proceeds of Rs.2,74,28,94,752/- as reflected in the balance sheet and trial balance was the net value realised by the appellant which was required to be treated as inclusive of duty. Appellant is entitled to the benefit of cum-duty as they did not collect any duty from their clients. v). The appellant is entitled to SSI benefit in terms of notifications. SSI benefit has been wrongly denied considering the turnover of 2015-16 as 1198.64 whereas the gold Jewellery became taxable only with effect from 1.03.2016 and in March 2016, the turnover was Rs.1.71 crores only. vi). The entire demand was barred by limitation as show cause notice was issued on 14.11.2019 for the period 1.03.2016 to 30.06.2017, which is after the expiry of period of limitation of two years as per Section 11 A(1)(a) of the Act. The provisions of section 11A(4) cannot be invoked as it is not a case of fraud or collusion or wilful misstatem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res and for FY 2015-16 was Rs.793 crores. viii). The extended period need not be proved once accepted in view of the decision of the Tribunal in Satya Power & Limited versus Commissioner, Central GST, Central, Excise and Customs, Raipur. ix). Penalty on the appellant under Rule 26 has been correctly imposed in view of his statement. 7. We may first consider the preliminary objection of the impugned order being passed ex-parte without affording sufficient opportunity of being heard. We find that the appellant had neither filed any reply to the show cause notice nor participated in the adjudication proceedings. The personal hearings were fixed on 19.03.2021, 20.04.2021, 29.06.2021, 29.07.2021 and 15.06.2022, however, the appellant failed to appear. In so far as the plea taken with reference to the order of the Supreme Court on COVID-19 pandemic, it needs to be appreciated that time was extended by the Supreme Court only on the issue of limitation and not on the hearing of the matters. The scope of the suo moto petition before the Supreme Court as is evident from the Order dated 10.01.2022 is that the Court took cognizance of the difficulties that might be faced by litigants in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11A(11) of the Act. That the issue of delay has to be considered in the facts of each case, as to whether there were circumstances or insurmountable exigencies, which makes it impracticable for the adjudication to take place [(M/s. Swatch Group India Pvt. Ltd. Vs. Union of India-2023 (386) ELT 356 (Del.)]. If the appellant wanted to take such a plea, it was incumbent to make specific application giving specific details to show that the adjudication should have been concluded within the prescribed time and the extended period of 7 months taken was un-reasonble and unjustified. Merely making the submissions without any such details deprived the Revenue to contest the same and hence this is one of the reasons that we are not inclined to entertain this plea in the present case. Moreover, the extended period of 7 months is really not enormous more so for the reasons that the period had fallen during the COVID pandemic and there could have been some eventualities in the prevailing conditions. We, therefore, reject the plea that the impugned order needs to be set aside, in view of the decision in M/s. Kopertek Metals Pvt. Ltd. (supra). 9. Before considering the matter on merits, we need ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t introduced the Articles of ‗Jewelry' (Collection of Duty) Rules, 2016 vide Notification No.34/2016-CE (NT) dated 26.07.2016. Rule 3(f) defined the "Articles" to mean articles of jewelry falling under Heading 7113 and the expression "Articles of Jewelry" shall have the meaning assigned to it under Chapter Note-9 of Chapter 71 of the Tariff Act. 13. The Government of India issued the Circular No.1042/13/2016-CX dated 26.07.2016 simplifying the export related procedures of excise duty on articles of jewellery as under:- "2. In this context, pending finalisation of the procedure for exports, in consultations with the Department of Commerce and trade and industry, (i) There shall be no requirement for taking central excise registration by a manufacturer or principal manufacturer or a jeweller, who exports 100% of articles of jewellery manufactured by him or got manufactured by him on job work basis, subject to the following conditions that: .................. ................... a) the manufacturer or principal manufacturer or a jeweller, as the case may be, gives a bank guarantee for excise duty payable of articles of jewellery over and above the bank guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri R.R.Singla as to whether 'pendant' is an article of jewellery or not. To which, he categorically stated on the basis of the invoices that pendant is a kind of locket, which is generally worn in a chain around the neck and is an article of jewellery and exemption was claimed as purity of these items was mentioned as 24 CARAT, which suggested that it was a kind of gold coin. So the contention of the appellant that the goods have been classified as articles of jewellery on the basis of the statement of Shri R. R. Singla is not correct as they were rather based on the invoices produced by the appellant. Apart from this, we find that Rule 3(f) of the Articles of Jewellery (Collection of Duty) Rules, 2016 defines "articles of jewellery" as under:- "3.(f) "articles" means articles of jewellery or both falling under Heading 7113 of the Tariff Act, wherein the expression "articles of jewellery" shall have the meaning assigned to it as under chapter note 9 of chapter 71 of the Tariff Act;" Chapter Note 9 reads as : "9. For the purpose of heading 7113, the expression "articles of jewellery" means: (a) Any small objects of personal adornment (for example, rings, bracelets, ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serial no.3, and the entries thereto, the following serial number and entries shall be substituted, namely:- (1) (2) (3) 3. First clearances of the articles of jewellery or parts of articles of jewellery or both for home consumption, other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby, emerald or sapphire, falling under Chapter Heading 7113 of the First Schedule upto an aggregate value not exceeding ten crore rupees made on or after the 1st day of April in any financial year, from the whole of the duty of excise specified thereon in the First Schedule: Provided that during the period starting from 1st march, 2016 and ending on 31st March, 2016, the exemption shall apply to the first clearances of the articles of jewellery or part of articles of jewellery or both for home consumption, other than articles of silver jewellery but inclusive of articles of silver jewellery studded with diamond, ruby emerald or sapphire, falling under Chapter Heading 7113 of the First Schedule, upto to an aggregate value not exceeding eighty five lakh rupees." Nil As discussed by the Adjudicating Authority, the total clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants have referred to Board Circular No. 749/65/2003-CX, dated 26-9-2003 claiming cum-duty benefit. For the goods already sold to the customer, it is an accepted principle that the assessee would be entitled to cum-duty benefit as the duty component now cannot be recovered separately from the customers. In other words, the sale price of the goods is to be treated as inclusive of duty component. The Explanation to Section 4(1) of Central Excise Act makes it clear. We, therefore, hold that the appellants are entitled to cum-duty benefit for the subject goods already sold." The aforesaid decision has been affirmed by the Apex Court as reported in 2018 (361)ELT A-80. The present case is squarely covered by the said decision and the appellant is entitled to claim the benefit of cum-duty value. 20. The next issue to be considered is whether the demand of Rs.65,69,207/- on exported goods is sustainable as these clearances did not qualify as 'export' under Rule 19 of Central Excise Rules, 2002 which reads as under :- "Export without payment of duty. - RULE 19. (1) Any excisable goods may be exported without payment of duty from a factory of the producer or the manufacturer or t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government of India vide Circular No. 1021/9/2016 - CX dated 21st March 2016, constituted a high level Sub-Committee and till finalisation of the recommendations, laid down that, "exporters will be allowed to export on self declaration and submission of LUT to customs without the need to get LUT ratified by central excise, prevailing system will continue." 22. Pursuant to the report made by the Sub-Committee, the Government of India vide Circular no. 1042/30/2016 - CX dated 26 July 2016, simplified the procedure relating to export on articles of jewellery till the finalisation of the procedure for exports. The relevant paragraph of the Circular reads as:- "Subject: Export related procedural simplifications-excise duty on articles of jewellery falling under heading 7113-regarding 2. In this context, pending finalisation of the procedure for exports, in consultations with the Department of Commerce and trade and industry, - (i) There shall be no requirement for taking central excise registration by a manufacturer or principal manufacturer or a jeweler, who exports 100% of articles of jewellery manufactured by him or got manufactured by him on job work basis, subject to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant has not furnished any Letter of Undertaking/Bank Guarantee/Bond before the Customs or Central Excise authorities. The submission made by the learned Counsel that the goods have been undoubtedly exported stands proved by the documentary evidence and therefore, confirmation of duty demand on exported goods is erroneous, needs to be accepted. It is not the case of the Revenue that the goods have not been exported rather, the only allegation is that the procedure laid down for availing the benefit of exporting the goods without payment of excise duty have not been followed by the appellant while making the export which is contrary to the principle that a substantive right cannot be denied for want of procedural formalities. We therefore, do not find any substance in raising the demand on the goods exported merely on the ground that the conditions prescribed for export of excisable goods without payment of duty has not been fulfilled. 23. Coming to the issue of limitation, we find that the show cause notice has been issued on 14.11.2019 raising the demand for the period 1.03.2016 to 30.06.2017, which, according to the appellant is beyond the period of limitation of two years pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andni Chowk Branch, Pitampura Branch and Gurgaon Branch [RUD-7(iv)]. v. Chart showing export sales from 01.04.2016 to 31.12.2016 [RUD-7(v)]." By 28.11.2017, on the basis of self assessment, the appellant deposited amount of Rs.4,93,99,620/- towards excise duty and therefore vide letter dated 29.11.2017, the appellant requested for closure of investigation by waiver of show cause notice. Further, as asked for by the Department, the appellant vide letter dated 11.06.2018 submitted copies of all invoices (printouts of computer generated invoices) issued by them from all their branches during the period 1.03.2016 to 31.12.2016 for which exemption has been claimed. Considering the conduct of the appellant in submitting all the documents and cooperating in all manner by explaining the details and further depositing a substantial amount towards excise duty, we are of the opinion that the appellant had not suppressed any material facts. Rather it is because of the assistance and willingness on the part of the appellant that everything came to the knowledge of the department. It was, therefore incumbent on the department to have issued the show cause notice within the normal period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso to section 73(1) does not refer to a scenario where there is an omission or failure to pay duty without the presence of such intention. 28. In the case of Mahanagar Telephone Nigam Ltd versus Union of India & Ors.,W.P.( C) 7542 of 2018 dated 6.4.2023 the Delhi High Court observed that merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had wilfully suppressed any material fact and therefore, no intent to avoid tax can be inferred by non-disclosure of the receipt in the service tax returns. 29. Following the aforementioned decisions and the dictum that mere suppression of facts is not enough, the Tribunal in a latest decision in M/s. Aglowmed Ltd. Versus Commissioner of Central Goods & Service Tax, Dehradun-Excise Appeal NO.51902 of 2021 Final Order No.50310 of 2025 dated 17.02.2025, where the extended period of limitation was invoked for wrongly availing the benefit of the exemption notification held that the appellant had disclosed all the relevant facts and submitted all the relevant documents and therefore the show cause notice could have been issued within the normal period contemplated under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate act with mens rea to suppress and thereby evade, however, the impugned order do not demonstrate the mens rea. The Bench, further observed that the appellant had recorded all the transactions in its records and when called for during investigation, provided full facts to the department based on which the SCN was issued and the appellant did not dispute the demands of service tax which he paid along with interest, even before the show notice was issued. Considering the conduct of the appellant during the investigation in providing all the information and paying the service tax with interest to the extent is not disputed has made out a case for seeking waiver of penalty by invoking Section 80. 32. Applying the ratio of the aforementioned decisions of the Tribunal in the case of Tiger Logistics and M/s Aglowmed, the conduct of the appellant in fully cooperating with the department and submitting all the requisite documents which the department called upon from time to time and further paying the excise duty latest by 28.11.2017, the show cause notice could have been issued within the normal period as per section 11 A(1) of the Act. Also, in the present case, it cannot be said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eights and Measures Act and the Packaged Commodities Rules and the appellants were required to declare RSP on the packages. Thus, the appellants were fully aware of the legal requirements. In spite of such knowledge, the appellant chose not to comply with the law in complete defiance of the law. There was no reason for the appellant to entertain any reasonable belief that they were not required to declare the RSP on the packages. The question is when an appellant deliberately defies a statutory requirement, can they be allowed to get away with it and obtain the benefit under some other law." 34. In view of our findings above on the issue of extended period of limitation, we are of the view that the penalty of equivalent amount imposed under Section 11 AC(1)(c)read with Rule 25 of the Rules is unsustainable. 35. We cannot ignore the fact that the appellant had taken the registration with the central excise authorities on 29.07.2016, however, did not file the returns for the period 01.03.2016 to 30.06.2017 nor charged the excise duty from their customers during the period 01.03.2016 to December 2016. The failure to file service tax returns is a violation but the said violation can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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