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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 ..... 8.29 and 4016.19 and the question of MODVAT facilities. Accordingly, in our opinion, CEGAT came to a wrong conclusion for wrong reasons and therefore, we allow this appeal and set aside the judgment and order of the CEGAT and restore the order of the Commissioner. - 3158 of 2000 - - - Dated:- 23-9-2005 - S.N. Variava and Tarun Chatterjee, JJ. [Judgment per : Tarun Chatterjee, J.]. - Appellant M/s. Anand Nishikawa Co. Ltd. is a manufacturer of rubber profiles which product after extrusion is subject to notching or drilling of a few holes or slitting. The appellant had classified such extruded rubber profiles under sub-heading 4008.29 of the Central Excise Tariff which attracted Nil rate of duty. The Revenue, however, classified such rubber under Heading 4016.19. 2.According to Revenue, the operations like notching, drilling and slitting are "further working" and in view of Note 9 to Chapter 40, these goods fall outside Heading 40.08. Accordingly, a show cause notice was issued in October, 1995 demanding duty of over Rs. 2.18 crores for the period from September 1990 to February, 1994 under the proviso to Section 11A of the Central Excise Act, 1944 (hereinafter referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before we take up, for our consideration, this question, involved in this appeal, it would be fit and proper to refer to erstwhile Rule 10 of the Central Excise Rules and Section 11A of the Act prior to and after its amendment in 2000. On the question of recovery of duties not levied or not paid or short-levied or not paid in full or erroneously refunded, erstwhile Rule 10 of the Central Excise Rules as it read at the relevant point of time and so far as it is relevant for our purposes is set out as under : "Rule 10. Recovery of duties not levied or not paid, sort-levied or not paid in full or erroneously refunded. - (1) Where any duty has not been levied or paid or has been short-levied or erroneously refunded or any duty assessed has not been paid in full, the proper officer may, within six months from the relevant date, serve notice on the person chargeable with a duty which has not been levied or paid, or which has been short-levied or to whom the refund has erroneously been made, or which has not been paid in full, requiring him to show cause why he should not pay the amount specified in the notice : Provided that - (a) where any duty has not been levied or paid, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efunded whether or not such non-levy or non-payment, short-levy or short-payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the Rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice : Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words "one year", the words "five years" were substituted." 7.We have carefully examined the erstwhile Rule 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -levy or non-payment, short-levy or short-payment or erroneous refund, as the case may be, was on the basis of approval of the classification list supplied by the assessee from time to time. That apart, the present Section 11A of the Act also fixes the period of limitation for initiating a recovery proceeding within one year from the relevant date which was six months under the erstwhile Rule 10 of the Central Excise Rules and Section 11A prior to the 2000 amendment. However, the amendment with respect to change in limitation period from "six months" to "one year" was made effective from 12-5-2000. Therefore, this amendment is not relevant for the purpose of this case. 11.Let us now look into the proviso of Section 11A of the Act as it stands now. It clearly says that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty by such person, the provisions of this sub-section shall have effect as if for the words 'one ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification list supplied by the assessee from time to time. This amendment was brought in order to negate certain decisions of this Court and also High Courts in India saying that it would not be open to the Central Excise Officer to initiate a recovery proceeding under Section 11A of the Act, if the classification lists supplied by the assessee were approved by the department from time to time. 16.As noted herein earlier, the erstwhile Rule 10 of the Central Excise Rules and Section 11A prior to the 2000 amendment did not postulate that, in cases of approval by the Department, a proceeding for recovery of duties, for non-levy or non-payment, short-levy or short-payment or erroneous refund, could be initiated within six months or one year or five years, as the case may be from the relevant date but it is evident that by the amendment in Section 11A of the Act in the year 2000, in cases of approval also of the classification lists supplied 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 11A of the Act so as to overcome the decision insofar as past and concluded proceedings were concerned. Therefore, consequent to the retrospective amendment, the view that classification already settled due to attaining of finality cannot be disturbed is no longer valid law. 18.In view of the decision in Cotspun Ltd.'s case (supra) Section 11A by Act No. 10 of 2000 was amended with retrospective effect from 17-11-1980. The vires of the aforesaid amendment was, however, challenged. In a recent decision by this Court in the case of Easland Combines, Coimbatore v. Collector of Central Excise, Coimbatore [2003 (3) SCC 410], this Court has upheld the validity of the amendment and also held that on account of such amendment, the decision in Cotspun Ltd.'s case (supra) has ceased to be a good law. However, another two-Judges Bench decision of this Court took a contrary view and held that the amendment had not altered the basis of 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 decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als on record. If CEGAT was justified in holding that there was "suppression of facts" by the appellant either regarding their method of process of the product in question and applicability of different classification lists, then certainly CEGAT was correct in holding that extended period of limitation under proviso to Section 11A of the Act could be applied in the facts and circumstances of the case. In that event, this Court would not be in a position to interfere with the order impugned in this appeal. 22.Therefore, let us now examine whether CEGAT was justified in holding that there was "suppression of facts" in the matter of disclosure of manufacturing process or applicability of the classification lists supplied by the appellant or not. It is seen that Revenue alleged that the appellant had never disclosed to it that they were carrying on process of notching, slitting, punching, slotting etc. on rubber profiles and if they had done so 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 R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant were duly approved from time to time regularly by the Excise authorities and only in the year 1995, the department found that there was "suppression of facts" in the matter of post-forming manufacturing process of the products in question. Furthermore, in view of our discussion made herein earlier, that the department has had the opportunities to inspect the products of the appellant from time to time and, in fact, had inspected the products of the appellant. Classification lists supplied by the appellant were duly approved and in view of the admitted fact that the flow-chart of manufacturing process submitted to the Superintendent of Central Excise on 17-5-1990 clearly mentioned the fact of post-forming process on the rubber, the finding on "suppression of facts'' of the CEGAT cannot be approved by us. This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay [1995 Supp (3) SCC 462], while dealing 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs from that decision that this Court also held that if any classification was due to mis-interpretation of the classification list, suppression of facts could not be alleged. From this judgment, it is therefore clear that since the Excise authorities had collected samples of the products manufactured by the appellant and inspected the products and the relevant facts were very much in the knowledge of the Excise authorities and nothing could be shown by the Excise authorities that there was any deliberate attempt of non-disclosure to escape duty, no claim as to "suppression of facts" could be entertained for the purpose of invoking the extended period of limitation within the meaning of proviso to Section 11A of the Act. 29.Similarly, in the case of Collector, Central Excise, Jamshedpur v. Dabur India Ltd. [2005 (121) ECR 129 (SC)], this Court held that the extended period of limitation was not available to the Department as classification lists filed 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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