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TMI Blog2007 (10) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... attracted despite the factum there has been suppression of material fact arising out of the confessional statement made by the Chief Executive of the Assessee Company?" 3. The facts necessitated to be exposited are that the assessee is engaged in steel fabrication of parts of transformers and motors under Chapters 84 & 85 of the Schedule to the Central Excise Act, 1985 and the Assessee was availing the facility of Modvat credit on inputs under Rule 57-A of the Central Excise Rules, 1944 (hereinafter referred to as 'rules') during the period April, 1989 to April, 1993. The assessee, as set fourth, had transferred the goods by obtaining gate passess showing the respective bills/invoices. 4. On 3-2-1994, the Officers of Central Excise Department went to the factory of the assessee and scrutinized the record. They found that the Modvat credit of the duty paid on their inputs i.e. paints and welding electrodes in RG-23A Part-II during the aforesaid period was on the basis of gate passes and certificates without accounting for the inputs in RG-23A Part-I. The credit of duty so taken amounted to Rs. 1,97,616.45 and the same was utilized for payment of duty on the finished products. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts; that the extended period of limitation stipulated u/s 11A(1) of the Central Excises & Salt Act cannot be made applicable inasmuch as there has been no fraud or suppression and in any case there has been no intention to evade any tax; that the filing of the duty paying documents received subsequent to the receipt of Modvatable inputs in the factory of the manufacturer tantamount to compliance with the provisions of Rule 57-G of the Central Excise Rules; that the authority below has erroneously imposed the penalty in the absence of mens rea; and that the facts on record had not been scrutinized in proper perspective keeping in view the provision that enables the department to invoke the extended period of limitation. 7. Tribunal considering the stand of the assessee and the stance put forth by the department came to hold that the factual matrix did not establish that there had been suppression of the facts or any fraudulent commission of the act on the part of the assessee to attract the proviso which confers the powers on the department to take shelter under the extended period of limitation; that barring the bald statement that the assessee had suppressed the facts not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pex Court in Tamil Nadu Housing Board v. Collector of Central Excise, Madras - 1994 (74) E.L.T. 9 (S.C.) wherein a two-Judge Bench of the Apex Court has held thus : "A bare reading of the proviso indicates that it is in nature of an exception to the principal clause. Therefore, its exercise is hedged on one hand with existence of such situations as have been visualised by the proviso by using such strong expression as fraud, collusion etc. and on the other hand it should have been with intention to evade payment of duty. Both must concur to enable the Excise Officer to proceed under this proviso and invoke the exceptional power. Since the proviso extends the period of limitation from six months to five years it has to be construed strictly. The initial burden is on the department to prove that the situations visualised by the proviso existed. But once the department is able to bring on record material to show that the appellant was guilty of any of those situations which are visualised by the section, the burden shifts and then applicability of the proviso has to be construed liberally. When the law requires an intention to evade payment of duty then it is not mere failure to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the goods not only by itself, but also by those from whom it bought or to whom it sold the products. The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end-fittings in the declaration to the Department. It may be noted that in the declaration it was so described. The Tribunal was of the view, and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts. Therefore, from this conduct suppression is established. The fact that the Department visited the factory of the appellant and they should have been aware of the production of the goods in question were no reason for the appellant not to truly and properly describe these goods. As a matter of fact not only did the appellant, as found by the Tribunal did not describe these goods properly but also gave a misleading description. 11. In the aforesaid view of the matter, we are of the opinion that the Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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