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TMI Blog1997 (6) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the Central Excises and Salt Act, 1944, as it originally stood, till it was replaced by Central Excise Tariff Act, 1985. The appellant claim to have availed the exemption of the excise duty under Notification No. 5/70, dated 31-1-1970, under which cement commonly known as sagol and obtained by heating lime stone and burnt coal in a kiln is exempted from the whole of duty of excise leviable thereon. The appellant would contend that at all relevant time right from the inception of the manufacture of the said product by the appellant - firm, the authorities were fully aware of the fact relating to the manufacturing process and the nature of the product. In 1976 the jurisdictional Inspector of Central Excise appears to have sent sample of the petitioner - appellant's product for a test report to ascertain whether the product should be classified under Tariff Item No. 14 (paints) or any other tariff item. By a communication dated 25-2-1978, the Superintendent of Central Excise appears to have informed the appellant that the product was not cement based water paint, but calcium hydroxide in powder and the authorities on that account dropped the idea of classification under Tariff It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used for white washing the walls. A chemical test was also said to have been conducted of the product to know whether it conforms to all properties of sagol cement and the chemical expert's report dated 16-6-1987 revealed that the product was composed mainly of calcium oxide, calcium carbonate, [silica] and little amount of iron oxide. At the same time, analysing the properties of the respective products, Janathacem on the one hand and the sagol cement on the other hand, it appears, the authorities came to the conclusion that the physical and chemical properties of the two samples were widely different and they could not be treated as identical. On that basis and consequent upon the amendment to Section 11A by the Amendment Act, 1985, show cause notices were said to have been issued invoking the extended period of limitation of five years and the proceedings stood also transferred to the Collector of Central Excise, for further consideration. The earlier two show cause notices issued by the Assistant Collector of Central Excise, Rajapalayam, dated 22-11-1984 and 20-4-1985, as noticed supra, was taken up for de novo enquiry by the Collector of Central Excise, Madurai, in view of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a demand for a sum of Rs. 9,61,050.74 came to be issued, for the period from November, 1979 to March, 1985 under Rule 9(2) of the Rules read with proviso to Section 11A(1) of the Central Excises and Salt Act. A penalty of Rs. 1,00,000/- was levied under Rule 173Q of the Central Excise Rules. It is the said order of the Collector of Central Excise, which came to be challenged in the above writ petition. 7.The learned single Judge, as noticed earlier, did not agree with the grounds of challenge urged by the learned counsel before him. After adverting to the consideration and conclusions arrived at by the Collector of Central Excise in Paragraphs 12, 13 and 19 of the order under challenge, the learned single Judge rejected the writ petition expressing his agreement with those conclusions. The learned single Judge observed that from a perusal of Paragraphs 12, 13 and 19 of the order of the Collector of Central Excise, a deliberate mis-representation on the part of the petitioner is obviously disclosed and having regard to the fact that there had been a mis-statement of facts regarding the eligibility of the product for exemption, it inevitably follows that the proviso to Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in this regard is not in conformity with the law on the subject and on the other hand, is opposed to the well settled principles in this regard. The learned Senior Counsel further contended that merely from the fact that the Department has come to the conclusion that the product is not sagol cement and the appellant has now not questioned such classification, there is no justification for the learned single Judge to come to the conclusion that the case is one of deliberate mis-statement on the part of the appellant of the relevant facts with regard to the classification of the product and entitlement of the exemption. Our attention has been invited to some of the relevant decisions of the Apex Court in support of the stand taken that the case on hand will not attract the proviso to Section 11A of the Act and that the Department cannot invoke the extended period of limitation. 9.Per contra, Mr. Venkatasubramanian, learned Additional Central Government Standing Counsel, appearing for the Department, with equal vehemence and force and in adopting the reasons assigned by the learned single Judge, contended that no interference is called for in this appeal at the instance of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Their Lordships of the Apex Court observed as hereunder : "Aggrieved thereby, the revenue has come up in appeal to this Court. In our opinion the order of the Tribunal must be sustained. In order to make the demand for duty sustainable beyond a period of six months and up to a period of five years in view of the proviso to sub-section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances, there was any fraud or collusion or wilful mis-statement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Collector of Central Excise, Vadodara [1994 (74) E.L.T. 3] the Apex Court observed that once the Department accepted the price list, acted upon it and the goods were cleared with the knowledge of the Department, then in absence of any amendment in law or judicial pronouncement the reclassification should be effective from the date the Department issued the show cause notice. It was further observed that the clearance with the knowledge of the Department would indicate that there was no intention to evade payment of duty. 13.In Cosmic Dye Chemical v. Collector of Central Excise [1995 (75) E.L.T. 721 (S.C.) = 1995 (6) SCC 117], the necessary ingredients to appreciate the right to avail the extended period of limitation under the proviso to Section 11A, once again came up for consideration of the Apex Court. The words "mis-statement or suppression of facts" were construed thus : "Now so far as fraud and collusion are concerned, it is evident that requisite intent, i.e. intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "mis-statement or suppressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 11A of the Act, so as to justify the Department to invoke the extended period of limitation in a case where the Department was fully aware of all the relevant facts and even after drawing samples of the product and then received technical reports was satisfied and had no grievance of the classification claimed. The Department having initially been convinced of the fact that the product answered the description of `Sagol' cement as claimed by the appellant and allowed the appellant to clear the goods by availing of the exemption inspite of being possessed of full facts of the manufacturing process and the nature of the product it is not given to the Department to now claim or attribute to the appellant any suppression of facts or mis-statement of facts, either wilfully or with intent to evade payment of duty which have been held to be essential pre-requisites to attract the proviso to Section 11A of the Act. The learned single Judge, in our view, has committed a serious error in assuming that there was mis-statement of fact and that has obviously and merely carried away by the observations contained in the very order impugned in the writ petition that there was mis-state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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