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TMI Blog2005 (9) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 (hereinafter referred to as 'the Act'). The Commissioner by his order dated 2nd August 1996 discharged the show cause notice, inter alia, on the ground that proviso to Section 11A of the Act was inapplicable in the facts of the case. In his order, the Commissioner observed that the authority had knowledge of the manufacturing process of the appellant and was seized of the matter from the very beginning and on few occasions, the department officers visited the factory for collection of samples and study etc. Adverse inference was also drawn by the Commissioner in his order dated 2nd August, 1996 against the department as show cause notice did not deal with the correspondence exchanged between the appellant and the department on the issue of classification from the year 1988. An appeal was carried by the Department against the aforesaid order of the Commissioner before the Customs, Excise and Gold (Control) Appellate Tribunal, (hereinafter referred to as "CEGAT") New Delhi which was allowed by the CEGAT on the issue of limitation that is to say extended period of limitation under proviso to Section 11A of the Act would be available in the facts of this case. However, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where any duty has not been levied or paid, has been short-levied or has not been paid in full, by reason of fraud, collusion or any willful mis-statement or suppression of facts by such person or his agent, or (b) where any person or his agent, contravenes any of the provisions of these rules with intent to evade payment of duty and has not paid the duty in full, or (c) where any duty has been erroneously refunded by reason of collusion or any willful mis-statement or suppression of facts by such person or his agent, the provisions of this sub-section shall, in any of the cases referred to above, have effect as if for the words "six months", the words "five years" were substituted." 5.Proviso to this Rule 10 as noted hereinabove, however, increases a period of six months to five years where there has been "suppression of facts" or the like on the part of the Assessee. Section 11A of the Act was introduced by Act No. 25 of 1978 w.e.f. 17-11-1980 in substitution of Rule 10 which was omitted. Section 11A of the Act was as under :- "11A. Recovery of duties not levied or not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if, for the words "one year", the words "five years" were substituted." 7.We have carefully examined the erstwhile Rule 10 of the Central Excise Rules, Section 11A of the Act as introduced in the year 1980 and Section 11A of the Act after the amendment in the year 2000. From a plain reading of Rule 10 of Central Excise Rules, we find that the proper officer is conferred with power to recover duties not levied or not paid or short-levied or not paid in full or erroneously refunded to initiate recovery proceedings within six months from the relevant date. However, Rule 10 of the Central Excise Rules and Section 11A of the Act prior to the 2000 amendment, did not say that recovery of duties not levied or not paid or short-levied or not paid in full or erroneously refunded could be done even where the classification of the goods was approved by the Department. 8.Section 11A of the Act as it stands today, however, confers powers not on the 'proper officer' but on a Central Excise Officer to initiate recovery proceedings when any duty of excise has not been levied or not paid or has not been short-levied or not paid in full or erroneously refunded whether or not such non-levy or non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evade payment of duty by such person, the provisions of this sub-section shall have effect as if for the words 'one year' the words 'five years' were substituted. 12.A bare reading of the provisions made under Section 11A(1) together with the proviso to it, it is abundantly clear that ordinarily notice to show cause has to be issued within one year from the relevant date. However, in order to attract proviso to Section 11A of the Act, that is to say, for extended period of limitation within 5 years from the relevant date, it is necessary to be satisfied that the non-levy, short-levy, or erroneous refund has occurred on account of either of the following :- (1) fraud, (2) collusion, (3) willful mis-statement or suppression of facts, (4) contravention of the Excise Act or Rules with an intent to evade payment of duty. 13. So far as the present case is concerned, we shall keep it in our mind that the present case concerns only with "suppression of facts". Statement of Objects and Reasons for amending Section 11A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the assessee and accepted by the department from time to time, it would be open to the Central Excise Officer to initiate a recovery proceeding against the assessee under Section 11A of the Act within six months or one year or five years, as the case may be, from the relevant date. That being the position, we are, therefore, of the view that in spite of some decisions of this Court or other High Courts of India holding that a recovery proceeding under Section 11A of the Act could not be initiated for recovery of duties when the classification lists supplied by the Assessee were approved by the Department from time to time, due to the 2000 amendment in Section 11A, recovery proceedings can now be initiated even when the classification lists supplied by the assessee were approved by the department from time to time. In the case of Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.)], it was held that the levy of excise duty on the basis of an approved classification list is not a short-levy and therefore, differential duty cannot be recovered on the ground that it was a short-levy and therefore, the erstwhile Rule 10 of the Central Excise Rules or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment in Cotspun Ltd.'s case (supra) and on a reference from that Bench, the matter came up for consideration in the case of ITW Signode India Ltd. v. Collector of Central Excise [2004 (3) SCC 48], before a three-Judge Bench. In that decision, the amendment was not found to be ultra vires of the Constitution and it held that the amended Section 11A of the Act is a valid piece of legislation. 19.On behalf of the Appellant, learned Counsel Shri V. Sridharan had drawn our attention to proviso to Section 11A of the Act which has already been noted herein earlier and contended that extended period of limitation as mentioned in proviso to Section 11A of the Act in the facts of this case could not be attracted and the Central Excise Officer could not invoke proviso to Section 11A of the Act. Before we examine this submission of the learned Counsel for the appellant, we must note that the CEGAT in the impugned order held that the Central Excise Officer in the facts of this case was entitled to invoke extended period of limitation within the meaning of Section 11A of the Act as there was "suppression of facts" while supplying the classification list. As noted herein earlier, provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it would amount to "further working" thereby rendering the products classifiable under sub-heading 4016.19 and not classifiable under sub-heading 4008.29. It was also the case of the Revenue that these operations came to the knowledge of the Revenue only when an investigation commenced in the present matter by the Directorate General of Anti-Evasion which resulted in the issue of the show cause notice dated 19th October, 1995. 23.In the impugned order, CEGAT on perusal of the correspondence between the appellant and the department was unable to find any disclosure in writing by the appellant with respect to post-forming processes like notching, drilling etc. From the materials on record which were produced before the authorities and also from the orders of the CEGAT and the Commissioner, it can be seen that the department had the opportunity to inspect the products of the appellants and in fact, the factory of the appellants was inspected by them. It may be true that the appellants might not have disclosed the post-forming process in detail but from the correspondence and other materials on record, it cannot be conceived that the authorities were not aware of the facts as, we gat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly, it does not mean any omission and the act must be deliberate and willful to evade payment of duty. The Court, further, held :- "In taxation, it ("suppression of facts") can have only one meaning that the correct information was not disclosed deliberately to escape 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 render it suppression." 27.Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the Assessee were duly approved by the authorities from time to time. In that decision this Court followed its earlier judgment in O.K. Play (India) Ltd. v. Collector of Central Excise, Delhi-III (Gurgaon) [2005 (66) RLT 657 (SC)], held that in cases where classification lists filed by the Assessee were duly approved, the extended period of limitation would not be available to the Department. 30.For the reasons aforesaid, we are of the view that the CEGAT was not justified in holding that the extended period of limitation would be available to the Department for initiating the recovery proceedings under Section 11A of the Act on a finding that there was suppression of facts by the appellant. Accordingly, it was not open to the Excise authorities to invoke proviso to Section 11A of the Act and therefore, the demand of the Revenue must be restricted to six months prior to the issue of notice dated 19-10-1995 instead of five years. In view of this conclusion, it is not necessary for us to consider the question of applicability of the classification lists namely of 4008.29 and 4016.19 and the question of MODVAT facilities. Accordingly, in our opinion, CEGAT came to a wrong conc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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