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TMI Blog2008 (12) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... d the effect of the amendments brought about by the Finance Act, 2000, which was in the form of a Bill in the Finance Bill, 2000, at the time when the final order was passed by the first respondent-Tribunal, and in view of the limited prayer of the learned counsel appearing on behalf of the petitioner and considering the fact that certain aspects, as noted above, had not been considered, when the first respondent-Tribunal had passed the impugned order, dated 18-4-2000, the final order of the first respondent-Tribunal, dated 18-4-2000, made in Appeal No. E/441/98, is set aside and the first respondent-Tribunal is directed to pass appropriate orders, on merits, and in accordance with law, considering all the relevant issues, in particular, the applicability of the first proviso to Section 11A of the Central Excise Act, 1944, to the petitioner, uninfluenced by its findings in its earlier decision, dated 18-4-2000. - 3081 of 2001 - - - Dated:- 23-12-2008 - Shri M. Jaichandren, J. [Order]. - Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the second respondent. 2. It is stated that the petitioner is a public Limited Company incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion, or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made therein, with intent to evade payment of duty, by such person or his agent, a demand could be made, within a period of five years from the relevant date, by the concerned authority. The classification of the goods has to be determined in terms of the Central Excise Tariff Act, 1985, which provides the rate of duty applicable to the excisable goods. As such, the petitioner had filed the classification lists, classifying the various goods manufactured by the petitioner-company and the said classification lists were approved from time to time. With the amendment of Rule 173B, the petitioner has been filing declarations, as required thereunder. The petitioner had filed a classification list in the year, 1988, claiming classification of Alkyd Resins under Chapter sub-heading 3907.50 of the Central Excise Tariff Act, 1985. The said classification was approved by the Assistant Commissioner, after due verification. Subsequently, the classification list was again approved in the year, 1989. The petitioner has been clearing the goods in terms of the Approved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the petitioner, on 27-11-97, confirming the demand in the show cause notice, on untenable grounds and imposing a penalty, under Rules 9(2), 173Q and 226 of the Central Excise Rules, 1944, to the tune of Rs. 10 lakhs, on the petitioner. 5. It has also been stated that Section 35B of the Central Excises and Salt Act provides for an appeal against the orders of the second respondent before the first respondent Tribunal. Accordingly, the petitioner had preferred an appeal before the first respondent Tribunal, which had heard the appeal on various dates, effectively, from 25-1-99 to 31-3-2000. Thereafter, the appeal was reserved for orders. At the time of the commencement of the arguments during the early part of the year 1999, the petitioner had filed a brief note containing the list of citations and judgments. Thereafter, a Full Bench of the Supreme Court had delivered a judgment in the case of Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633]. In the said case the Supreme Court had held that the differential duty cannot be recovered on the ground of short levy when the duty has been paid in terms of the approved classificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the face of the record, in the order of the first respondent-Tribunal, dated 18-4-2000. Therefore, the petitioner had moved the first respondent-Tribunal seeking rectification of the mistake in the final order by filing a Miscellaneous Application. However, the first respondent-Tribunal had dismissed the Miscellaneous Application by its Miscellaneous Order No. 535/2000, dated 28-11-2000, on the ground that the order had been passed based on the written submissions which do not contain any reference to the Collector of Central Excise, Baroda v. Cotspun Ltd. 1999 (113) E.L.T. 353 = [1999 (7) SCC 633] and that the grounds urged before the first respondent-Tribunal for rectification of a mistake, which were in fact fresh grounds, had not been raised at the time of the passing of the final order, dated 18-4-2000. Since the order of the first respondent had been passed contrary to the judgment of the Supreme Court in the Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633] and the other relevant decisions of the Supreme Court, it is per incuriam and hence, it is without jurisdiction and without the authority of law. In such circumstances, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department at any stage. Even in the letter, dated 16-11-92, the petitioner had mentioned that Polyester based on alkyds are only modified by drying oil fatty acids. They did not disclose that the final product is the blend of alkyd resins. The relevant extract of Note to Chapter 34 states as follows : "Heading No. 32.08 includes solutions (other than collection) consisting of any of the products specified in heading Nos. s39.13 in volatile organic solvents when the weight of the solvent exceeds 50 percent of the weight of the solution." Thus, it is evident that it is an inclusive note and it does not exclude other varnishes containing less than 50% of the solvent by weight. Since all these grades of resins are essentially used as insulating varnishes, as is evident from the technical data sheets and statements, for imparting electrical insulating properties, and mechanical strength such as surface production, they should have been classified as insulating varnishes, under 3208.40 of the Central Excise Tariff Act, 1985. However, the assessee had neither declared the correct classification of the product nor made the complete data available to the department to classify the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the payment of duty, the department had to proceed against the petitioner-company, under the proviso to Section 11A of the Central Excise Tariff Act, 1944. Therefore, the contention of the assessee that the demand is time-barred cannot be sustained. 10. It has been further stated that the order of the first respondent-Tribunal had been passed based on the written submissions of the assessee which did not contain any reference to Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633]. The grounds urged before the first respondent-Tribunal are therefore, grounds which were not raised at the time of the passing of the final order, dated 18-4-2000. As such, the contentions raised by the assessee, are not acceptable in law. All the submissions of the assessee had been taken into account while the final order had been passed by the first respondent-Tribunal. The classification lists were proved only on the basis of the information furnished by the assessee. However, on investigation, the information furnished by the assessee were proved to be incorrect. The petitioner had not disclosed the fact that the final product is a blend of Alkyd Resins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the classification lists filed during the period June, 1988 to February, 1993, were approved. When it was found that the classification lists for the disputed period had been approved, the decision of the Supreme Court in Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633] ought to have been applied. The miscellaneous application filed by the petitioner had been dismissed by the first respondent-Tribunal, by its miscellaneous order, dated 28-11-2000, stating that the decision of the Supreme Court in Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633] had not been relied upon by the petitioner at the first instance. 12. The first respondent-Tribunal had failed to note that in the written submissions filed on behalf of the petitioner, a specific issue had been raised, as decided in the Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 = 1999 (7) SCC 633], that there can be no demand for differential duty when the classification lists had been approved. The first respondent Tribunal had overlooked this vital aspect, while passing the final order, dated 18-4-2000, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944, during the period commencing on and from 17-11-1980 and ending on the date on which the Finance Act, 2000, received the assent of the President, demanding duty on account of non-payment, short-payment, non-levy, short-levy, or tax refund, within a period of six months or five years as the case may be from the relevant date, as defined in Clause (ii) of sub-section (3) of that Section shall be deemed to be and to always have been for all purposes, validly and effectively issued or served under that Section, notwithstanding any approval, acceptance, or assessment, relating the rate of duty on or value of the excisable goods, by any Central Excise officer, under any other provision of the Central Excise Act or the rules made thereunder. Further, the following explanation had been inserted in the validation Act. The explanation reads as follows : "Explanation. - For the removal of doubts it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this Section had not come into force". 14. Therefore, in terms of the validation Act, the department was entitled to demand duty even in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the initiation of the petitioner and hence, no show cause notice, proposing a change of classification, was required to be issued, is clearly contrary to law. Further, the first respondent was holding that Alkyd Resins manufactured by the petitioner was classifiable under Heading 3208.40 is contrary to law. The very demand made against the petitioner is contrary to the decisions of the Supreme Court and the levy of penalty, is also illegal. 17. The learned counsel for the petitioner had submitted that the Finance Bill, 2000, which made substantial changes in Section 11A of the Central Excise Act, 1944, due to the Supreme Court judgment, was introduced in the Lok Sabha, on 29-2-2000, but had not been passed as an Act, either at the time of the arguments before the first respondent-Tribunal or at the time of the passing of the final order, on 18-4-2000. Therefore, the judgment of the Supreme Court, in Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633], held the field on the date of the said order. According to the judgment of the Supreme Court, in Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) = 1999 (7) SCC 633], was holding the field on the date of the order. In terms of the said judgment, when the clearances are made in terms of approved classification or price lists, there can be no short-levy. Even assuming, without admitting, that the judgment of the Supreme Court, in Collector of Central Excise, Baroda v. Cotspun Ltd. [1999 (113) E.L.T. 353 (S.C.) = 1999 (7) SCC 633], had been retrospectively invalidated in terms of the explanations to Clauses 105 and 106 of the Finance Bill, 2000, no act or omission on the part of any person shall be punishable as an offence, which would not have been so punishable if the Section had not come into force. The said clauses had sought to amend Section 11A of the Act and under Clause 106, all actions taken under Section 11A, even in case of any approval or acceptance of assessments, were validated. While the clauses gave retrospective effect to actions already taken under Section 11A, by way of explanation it was categorically clarified that no penalty could be imposed due to the retrospective amendment. In spite of the fact that the above contentions had been raised before the first respondent-Tribunal it did not consider the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The non-submission of the relevant information and the wrong description given to the product by the assessee had led the department to classify the product under 3907.50. However, when the investigation was in progress the assessee had classified the product under 3208.40 and started paying the duty at the rate applicable to the heading 3208.40 of the Central Excise Tariff Act, 1985. Since the wrong classification of the product by the assessee had resulted in short-payment, which is liable to be demanded, under the proviso to Section 11A of the Central Excises and Salt Act, 1944, which envisages payment of duty short-paid for an extended period of five years, the show cause notice, dated 24-11-93, issued to the petitioner, relating to the duty demand and the penalty under the Central Excise Act and the Rules framed thereunder, for the period 1-6-88 to 28-2-93, is valid, as it has been issued in accordance with law. 20. It was further stated that the first respondent-Tribunal had passed the final order, dated 18-4-2000, taking into account all the relevant aspects, based on the written submissions of the assessee. Since the grounds urged before the first respondent-Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal, Mumbai. Even otherwise, the writ petition was maintainable in the Bombay High Court within whose jurisdiction the appellate authority is based. Part of the cause of action having arisen in Mumbai, the Bombay High Court had the jurisdiction to entertain the writ petition in view of Article 226(2) of the Constitution. 12. In the light of decided cases, it is clear that the territorial jurisdiction of the Court and the cause of action' are interlined. To decide the question of territorial jurisdiction, it is necessary to finding out the place where the cause of action' arose. It is not disputed that in the present case, the order impugned was issued by the Tribunal at Chennai. The appellant is aggrieved by the order, which has been passed in Chennai. The grievance of the appellant arose at Chennai, and as such Principal Bench has the jurisdiction to deal with the matter." 22. The learned counsel for the petitioner had also relied on the following decisions of the Supreme Court in support of his contentions : 22.1 In Union of India and others v. Madhumilan Syntex Pvt. Ltd. [1988 (35) E.L.T. 349 (S.C.)], it has been held as follows : "Section 11A of the Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as follows : "Order of Assistant Collector approving classification list not a mere cursory reasoning but a detailed investigation into facts and conclusion reached on basis of those facts - Assistant Collector may be wrong in approving classification of product, but it cannot be said that he did not consider relevant material or that there was any suppression of fact." 22.4 In Continental Foundation Jt. Venture v. Commr. of C. Ex., Chandigarh-I [2007 (216) E.L.T. 177(S.C.)], it has been held in Paragraphs 10, 11 and 12 as follows : "10. The expression "suppression" has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or "collusion" and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as within five years impliedly holding that the purported action was under the proviso to Section 11A of the Act. There is no dispute that the show cause notice cannot be sustained under sub-section (1) of Section 11A unless the proviso is attracted. Admittedly, it is beyond the period of limitation of six months prescribed under Section 11A(1) but it is within the extended period of 5 years under the proviso to that sub-section. Now in order to attract the proviso it must be shown that the excise duty escaped payment by reason of fraud, collusion or wilful mis-statement or suppression of fact or contravention of any provision of the Act or of the Rules thereunder with intent to evade payment of duty. In that case the period of six months would stand extended to 5 years as provided by the said proviso. Therefore, in order to attract the proviso to Section 11A(1) it must be alleged in the show cause notice that the duty of excise had not been levied or paid by reason of fraud, collusion or wilful mis-statement or suppression of fact on the part of the assessee or by reason of contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had failed to make a declaration in regard to waste or by-product) an intention to evade the payment of duty. The Additional Collector did not specifically deal with this contention of the assessee but merely drew the inference that since the classification list did not make any mention in regard to this waste product it could be inferred that the assessee had apparently tried to evade the payment of excise duty. 3. For the above reason, we see no merit in this appeal and dismiss the same with no order as to costs." 23.2 In Additional Collector of C. Ex., Bombay-II v. Mahindra Mahindra Ltd., [2000 (120) E.L.T. 290 (S.C.)], it has been held as follows : "Extended period of five years invoked by Department despite goods having been cleared on the basis of approved Price List - As per S.C. decision in Cotspun's case [1999 (113) E.L.T. 353 (S.C.)], differential duty not demandable until correctness of such approval is questioned by issue of Show Cause Notice hence duty demandable only from the date of Show Cause Notice." 23.3 In Rashtriya Ispat Nigam Ltd. v. Commissioner of C. Ex., Visakhapatnam [2003 (161) E.L.T. 285 (Tri.-Bang.)], it has been held as follows : "Duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication is required to be submitted has been prescribed as the C.L.I. Form. The Form requires "a full description of each item of the goods produced, manufactured with warehouse together with the description as would appear from the invoice". Admittedly, the description of the goods given in the C.L.I. Form by the appellant for the period in question did not tally with the description in the invoices for the same period. The content of the C.L.I. Form has been excerpted in the Tribunal's order and it is clear therefrom that no attempt was made to describe the goods at all, let alone fully or truly. The requirement for disclosure was clear, unambiguous and categoric. There was no scope for misunderstanding or misinterpretation. The respondent's reliance on diverse decisions of this court in which it was held that there could be said to be no suppression or wilful misstatement related to cases where it was necessary to interpret a particular provision of law. Where the assessee had proceeded on a misinterpretation of a legal provision, this Court appears to have held that the bona fides could not be called into question. Those decisions are distinguishable since in this case there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and intent to evade duty proved and therefore, the extended period of limitation was applicable in accordance with Proviso to Section 11A(1) of the Central Excises and Salt Act, 1944. 27.3 In Utkal Galvanizers Pvt. Ltd. v. Collector of Central Excise, BBSR [1999 (107) E.L.T. 70 (Tribunal)], it was held that the extended period of limitation, invocable under Section 11A of the Central Excise Act, 1944, would apply when there is suppression of relevant facts by the non-inclusion of cost of raw materials and that the determination of assessable value is made only by taking into account the job charges. 27.4 In Synthetics Polymer Industries v. Collector of C. Ex., Ahmedabad [1998 (104) E.L.T. 659 (Tribunal)], it has been held as follows : "We are unable to accept these arguments - the appellants who are the manufacturers of the product cannot disclaim knowledge that their product is a chemically modified phenol formaldehyde. They have not furnished any basis for their belief that the disputed product was chemically and commercially as the same phenol formaldehyde. In these circumstances, the charge of misclassification is sustainable. It is not mere inaction on the part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar that the preliminary objection raised on behalf of the second respondent is devoid of merits. When the order impugned has been passed by the first respondent-Tribunal, which is located at Chennai, it cannot be said that this court would not have the jurisdiction to decide the writ petition pending on the file of this Court, as held by the Supreme Court in Kusum Ingots and Alloy Limited v. Union of India [2004 (168) E.L.T. 3 (S.C.)]. 30. In view of the fact that it has been stated that the first respondent-Tribunal had not considered all the issues arising for its decision, especially, the applicability of the first proviso to Section 11A of the Central Excise Act, 1944, to the petitioner, in the light of the decision of Collector of Central Excise, Baroda v. Cotspun Ltd. 1999 (113) E.L.T. 353 (S.C.) = [1999 (7) SCC 633], decided by the Supreme Court and the effect of the amendments brought about by the Finance Act, 2000, which was in the form of a Bill in the Finance Bill, 2000, at the time when the final order was passed by the first respondent-Tribunal, and in view of the limited prayer of the learned counsel appearing on behalf of the petitioner and considering the fact tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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