Custom, Excise & Service Tax Tribunal
M/S. Terumo Penpol Ltd vs The Commissioner Of Central Excise, & ... on 1 November, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeals (s) Involved: E/22765/2014 [Arising out of Order-in-Appeal No.78/2014-CE dated 22.5.2014 passed by the Commissioner of Central Excise, Customs and Service Tax (Appeals), Cochin.] M/s. Terumo Penpol Ltd. Puliyarakonam P.O. Trivandrum 695 573. Kerala Appellant(s) Versus The Commissioner of Central Excise, & Customs Mysore ICE Bhavan Press Club Road Trivandrum 695 001. Respondent(s)
Appearance:
Mr. Manoj Pillai, Advocate For the Appellant Dr. J. Harish, AR For the Respondent Date of Hearing: 06.07.2017 Date of Decision: 01.11.2017 CORAM:
HON'BLE SHRI S.S. GARG, JUDICIAL MEMBER Final Order No. _22684__ / 2017 Per : S.S. GARG The present appeal is directed against the impugned order dated 22.5.2014 passed by the Commissioner (A) whereby the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the present case are the appellants are manufacturers of blood bags falling under CETH 9018 9032 availing CENVAT credit on input and cleared on payment of appropriate rate of Central Excise duty. During the course of manufacture of blood bags, waste is also generated and the appellants cleared it as PVC scrap under CETH 3915 3090 without payment of duty availing the exemption under Notification No.10/2003-CE dated 1.3.2003 as amended. On verification of the records of the appellant, it was noticed that the appellant had cleared PVC scrap amounting to Rs.2,54,36,596/- during the period 1.4.2003 to 31.12.2005 by availing exemption under Notification No.10/2003 but no separate account has been maintained for receipt, consumption and inventory of CENVAT credit used for the manufacture of dutiable final products and exempted final products as provided in Rule 6(2) of the CENVAT Credit Rules. As the appellant had not maintained separate accounts for dutiable final products as well as exempted final products they are liable to pay 8% of the value of exempted goods cleared up to 9.9.2004 and 10% from 10.9.2004 as provided in Rule 6(3)(b) of the CENVAT Credit Rules, 2004. AS the appellant had suppressed the fact of non-maintenance of separate account and non-payment of amount as per Rule 6(3)(b), the respondent issued show-cause notice No.3/2008 CX (JC) dated 25.3.2008 demanding an amount of Rs.18,39,912/- under Section 11A(1) of the Central Excise Act, 1944 read with Rule 14 of CENVAT Credit Rules. Interest under Section 11AB read with Rule 14 and penalty under Section 11AC read with Rules 15(1) of CENVAT Credit Rules, were also proposed in the notice. After following the due process, the original authority confirmed the demand with interest and imposed equal penalty under Section 11AC of the Central Excise Act. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (A), who also rejected the said appeal, hence the present apepal.
3. Heard both sides and perused the records.
4. Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without considering the facts and evidence on record. He further submitted that the appellant had not maintained separate account for inputs used for dutiable as well as exempted finished goods because they were not aware about the provisions regarding availment of CENVAT credit of duty paid on inputs in such situation. He further submitted that appellant have been regularly filing ER-1 returns to the Central Excise Department wherein the details of clearance of PVC pipes (on payment of duty) and PVC scrap (under nil rate of duty) and availment of CENVAT credit were clearly shown and the Central Excise officers at no point of time issued any instructions/directions to the appellant regarding alleged incorrect practice followed by the appellants. He further submitted that there is no suppression of fact with intent to evade payment of duty and therefore, the invocation of extended period of limitation is wrong and illegal.
4.1 In support of his submission, he relied upon the decision of Honble Supreme Court in the case of Chemphar Durgs & Liniments vs. Collector: 1989 (40) ELT 276 (SC) has held as under:
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 beyond the period of 6 months. 4.2 Similarly, in another case of Pushpam Pharmaceuticals vs. CCE: 1995 (78) ELT 401, the Honble Supreme Court has held as under:
Expression Suppression of Fact is to be interpreted strictly because it has been used in company of such strong words as fraud, collusion or wilful default. Extended period of five years is not applicable just for any omission of assessee unless it is deliberate to escape payment of duty.
4.3 Further, this Bench of the Tribunal in the case of GAC Shipping India Pvt. Ltd. vs. CCE: 2008 (9) STR 524 has held that when facts and all required details of receipts etc., are mentioned in the Books of Accounts, there is no legal or moral justification to allege the charge of wilful suppression of fact with intent to evade payment of tax.
4.4 Further, in the case of Bridgstone vs. CST: 2008 (11) STR 527, this Tribunal has held that with reference to intent to evade payment of tax, there has to be a specific finding and all the ingredients of suppression of facts have to be brought out lucidly and clearly.
5. On the other hand, the learned AR reiterated the findings of the impugned order and submitted that it is only on account of audit that lapse on the part of the appellant was detected and the appellant has not informed the department regarding the availment of exemption under Notification.
6. After considering the submissions of both sides and perusal of the material on record, I find that though the appellant is not maintaining the separate records with regard to clearance of PVC pipes on payment of duty and PVC scrap cleared at nil rate of duty but they have been clearly showing both type of clearances in their ER-1 returns which has been regularly filed with the Department. Further, I find that this fact has been admitted in the impugned order by the learned Commissioner (A) that the appellants have been filing periodical returns in which they have clearly declared the clearances of their dutiable and non-dutiable products. Further, I find that the only ground taken by the Revenue for invoking the extended period of limitation is that appellants have suppressed these facts and it was only detected by the audit team when they inspected the records. Further, I also find that in view of the various judgments relied upon by the appellant cited supra, the Department has not brought any positive act on the part of the appellant which shows suppression of material facts on his part. Therefore, by following the ratios of the above said decisions, I am of the view that invoking the extended period in the present case is not legally sustainable and the appellants are only liable to pay duty for the normal period. Therefore, I remand the case back to the original authority to find out whether the appellants have paid the duty for the normal period in accordance with law or not. The original authority before passing the de novo order will follow the principles of natural justice and will pass a reasoned order within a period of three months from the date of receipt of this order.
(Order was pronounced in open court on 01.11.2017.) S.S. GARG JUDICIAL MEMBER rv 7 1