Custom, Excise & Service Tax Tribunal
M/S Jammu & Kashmir Cements Ltd vs Cce, Jallandhar on 21 November, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 21/11/2013. DATE OF DECISION : 21/11/2013. Excise Appeal No. 976 of 2005 with Misc. Application No. 363 of 2005 [Arising out of the Order-in-Appeal No. 15/CE/13/commr.Adj./ Jal/04/337 dated 23/12/2004 passed by The Commissioner of Central Excise (Appeals), Jallandhar.] For Approval and signature : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) 1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? M/s Jammu & Kashmir Cements Ltd. Appellant Versus CCE, Jallandhar Respondent
Appearance Shri Akhil Gupta, C.A. for the appellant.
Shri V.P. Batra, Authorized Representative (DR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Member (Technical) Final Order No. 58637/2013 Dated : 21/11/2013 Per. Rakesh Kumar :-
The facts leading to this appeal are, in brief, as under.
1.1 The appellant is a company engaged in manufacture of cement and is owned by the State of Jammu & Kashmir. The appellant in their factory manufacture Grey Portland Cement by using rotary shaft kiln technology and their installed capacity is not exceeding 600 tons per day or 1,98,000 M.T. per annum. As per Notification No. 5/1998-CE dated 02/6/98 and 5/1999-CE dated 28/2/99 concessional rate of duty of Rs. 200/- per M.T. was applicable for cement manufactured in a factory using rotary kiln with installed capacity not exceeding 600 tons per day or 1,98,000 per annum and total clearances of cement produced by the factory in a financial year did not exceed 2,20,000 M.T. As per the provisions of Notification No. 6/2000-CE dated 01/3/2000, 3/2001-CE dated 01/3/2001 and 6/2002-CE dated 01/3/2002 the concessional rate of duty was applicable for cement manufactured in a factory using rotary kiln with installed capacity not exceeding 900 per M.T. per day or 2,97,000 per annum and the total value of clearances of cement in a financial year did not exceed 3,00,000 M.T. The period of dispute in this case is 1998-1999, 2000-2001 and 2001-2002. During each of these years, the appellants unit was availing of the duty exemption under Notification No. 5/1998-CE dated 02/6/98 and its successor notifications, as mentioned above. However, it was found that during 1998-1999, 2000-2001 and 2001-2002, the unit had cleared 13,260.4 M.T., 14,027.9 M.T. and 36,413.809 M.T. of cements respectively in excess of the exemption limit on payment of duty @ Rs. 200/- M.T. instead of Rs. 350/- M.T. resulting in short payment of duty of Rs. 95,55,323/-. On this basis, a show cause notice dated 23/1/04 was issued to the appellant under proviso to Section 11A (1) of the Central Excise Act, 1944 for recovery of above-mentioned short paid duty alongwith interest under Section 11AB and also for imposition of penalty on them under Section 11AC ibid. This show cause notice was adjudicated by the Commissioner vide order-in-original dated 23/12/04 by which the Commissioner invoking extended period under proviso to Section 11A (1) confirmed the above-mentioned duty demand alongwith interest thereon under Section 11AB and imposed penalty of equal amount on the appellant company under Section 11AC. Against this order of the Commissioner, this appeal has been filed. The miscellaneous application No. E/M/363 of 2005 has been filed to take note of change of address of the respondent as the unit now comes under the Jurisdiction of Commissioner of Customs and Central Excise, Jammu.
2. Heard both the sides.
3. Shri Akhil Gupta, C.A., the learned Counsel for the appellant, while not disputing the duty demand on merits and also the fact that the quantity of cement on which this duty has been demanded was not eligible for concessional rate of duty under Notification No. 5/1998-CE and its successor notifications, contested this demand on limitation only pleading that while the duty demand is for 1998-1999, 2000-2001 and 2001-2002, the show cause notice has been issued only on 23/1/04 by invoking extended period which is not applicable in view of the facts and circumstances of the case. It was pleaded by Shri Akhil Gupta that throughout during the period of dispute not only the appellant were filing ER-1 returns, wherein the quantity and value of the cement cleared by availing concessional rate of duty under Notification No. 5/1998-CE and its successor notification was being mentioned, they were also filing monthly statement giving the details of the quantity of the cement cleared during the month, its value, duty paid through PLA and duty paid through Cenvat Credit, that from the ER-1 returns and also the separate communications for each month intimating the value and quantity of the cement cleared alongwith the duty paid, it was possible for the Jurisdictional Central Excise Authorities to ascertain the total quantity of cement cleared during the financial year up to the month and whether or not the appellant have crossed the threshold limit for exemption, that though during the period of dispute there was system of self-assessment and the assessee after paying the duty self-assessed by him was required to file the return, in terms of a series of instructions issued by the Central Board of Excise and Customs (CBEC), these returns were required to be scrutinized by the Jurisdictional Range Officers and the Assistant Commissioner, that in terms of Boards Circular No. 249/83/96-CX dated 11/10/96 about the self-assessment, the monthly RT-12/ER-1 returns filed by the assessee were required to be scrutinized within three months after receipt and a certificate in this regard was required to be sent to the Assistant Commissioner, that this Circular also provides that the Range Officer during scrutiny of the returns should also check the correctness of the rate of duty applied to the goods cleared as indicated in the return and that the returns of the units paying duty of Rupees One crore or above are also to be checked by Assistant/Deputy/ Additional Commissioners, that when not only the ER-1 returns but also separate letters every month were also being sent to the Department, wherein the details of the quantity and value of the cement cleared during the month and the duty paid was being intimated, the appellant cannot be accused of suppressing the relevant information from the Department or deliberately contravening the provisions of Central Excise Rules with intent to evade the payment of duty, that the Department vide letter dated 03/1/03 addressed to the appellant had directed them to pay full rate of duty @ Rs. 350/- per M.T. when the unit crosses the clearances limit of 99,000 M.T. and similarly vide letter dated 19/2/03 had informed the appellant that they would be required to pay duty @ Rs. 350/- per M.T. after exceeding the clearances of 99,000 M.T., that this shows that the Department was aware of the fact that the appellant were availing of the exemption under Notification No. 5/1998-CE and its successor notifications and this exemption was not available beyond a particular threshold limit, that when the appellant were filing the ER-1 returns and also by separate communication each month were giving the complete information about the quantity and value of the cement cleared during the month, it cannot be said that the appellant had suppressed the fact of wrong availment of exemption from the Department with intent to evade the payment of duty. He, therefore, pleaded that the extended period under Section 11A (1) is not available to the Department and as such the demand is time barred.
4. Shri V.P. Batra, the learned DR, defended the impugned order by reiterating the findings of the Commissioner and pleaded that when the appellant accept that concessional rate of duty of Rs. 200/- per M.T. was not applicable in respect of clearances beyond 99,000 M.T. in a financial year and when admittedly they continued to clear the cement in excess of 99,000 M.T. in a financial year at a concessional rate of Rs. 200/- per M.T., it is clear that this wrong availment of exemption was intentional with intent to evade the payment of duty, that under self-assessment system, when the Range Officer is not required to assess the ER-1 return, the Act of the appellant amounts to suppression the relevant information and deliberate contravention of Rules with intent to evade the duty. He, therefore, pleaded that there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. It is not in dispute that the concessional rate of duty under Notification No. 5/1998-CE and its successor notifications was not available to the appellant company in respect of clearances in a financial year beyond 99,000 M.T. and while in respect of clearances beyond 99,000 M.T. in a financial year, they were required to pay the duty @ Rs. 350/- per M.T., they had discharged the duty liability @ Rs. 200/- M.T. and, as such, there is short payment of duty to the tune of Rs. 95,55,323/-. However, this short payment took place during 1998-1999, 2000-2001 and 2001-2002 period while the show cause notice has been issued on 23/1/04 and this show cause notice would survive only if the extended period under proviso to Section 11A (1) is invokable. The proviso to Section 11A (1) is invokable for recovery of duty which has not been levied or not paid or short levied or short paid or erroneously refunded, if such short payment, non-payment or erroneous refund is attributable to fraud, wilful suppression of facts, mis-statement or contravention of any provisions of Central Excise Act or the Rules made thereunder with intent to evade the payment of duty. The Apex court in a series of judgments
(i) Padmini Products vs. CCE reported in 1989 (43) E.L.T. 195 (S.C.) ;
(ii) Pushpam Pharmaceuticals Company vs. CCE reported in 1995 (78) E.L.T. 401 (S.C.) ;
(iii) CCE vs. Chemphar Drugs & Liniments reported in 1989 (40) E.L.T. 276 (S.C.) ;
(iv) Cosmic Dye Chemicals vs. CCE, Bombay reported in 1995 (75) E.L.T. 721 (S.C.) ;
(v) Anand Nishikaw Co. Ltd. vs. CCE, Meerut reported in 2005 (188) E.L.T. 149 (S.C.) ; and
(vi) Continental Foundation Jt. Venture vs. CCE, Chandigarh reported in 2007 (216) E.L.T. 177 (S.C.) has held that for invoking extended period something positive other than mere inaction or failure on the part of the manufacturer or conscious or deliberate withholding of information when the manufacture knew otherwise, is required to be established. In the case of Pushpam Pharmaceuticals Company vs. CCE (supra), the Apex Court held that since the expression suppression of fact has been used in the company of such strong words as fraud, collusion or wilful misstatement, it has to be construed strictly and it would not mean any omission, that the Act must be deliberate, that when the facts are known to both the sides, the omission by one to do what he might have done and not that he must have done would not render it suppression. In this case, it is not disputed that every month during the period of dispute, the appellant were filing ER-1 returns, wherein not only the complete information about manufacture and clearance of cement was being furnished, the availment of Notification No. 5/1998-CE and its successor notifications had also been disclosed. Record also show that besides this, the appellant every month were also addressing a letter to the Department mentioning the quantity and value of the cement cleared during the month and also the particulars of the duty paid through PLA and through Cenvat credit from which it was possible to calculate the quantity of cement cleared upto the month during the financial year. Though during the period of dispute, there was system of self-assessment, from the Boards Circular No. 249/83-96-CX dated 11/10/96 it is clear that even after the introduction of self-assessment system, the ER-1 returns filed by the assessee were required to be subjected to scrutiny by the Range Officer within three months after receipt and during scrutiny, in addition to checking arithmetical accuracy, duty payable and paid, the correctness rate of duty applied to the goods was also required to be checked. When in each ER-1 return, the information regarding quantity and value of the cement cleared during the month and information about availment of exemption notification was being given and beside this, there was also separate communication during each month (Revenue figure statement) giving the information regarding the quantity of the cement cleared during the month and the duty paid, it was very much possible for the Jurisdictional Central Excise Authorities to monitor the aggregate quantity of cement cleared up to the month during the financial year and check as to whether the correct rate of duty had been applied or not. When all the information enabling the Jurisdictional Range Officers to check the accuracy of the duty self-assessed had been given by the appellant and when the Jurisdictional Central Excise officers in terms of a series of instructions issued by the Board were required to scrutinize the ER-1 returns within three months of their receipt and during such scrutiny they were also required to check the correctness of the rate of duty, the appellant cannot be accused of suppression of any relevant fact or deliberate contravention of the provision of the Central Excise Act, 1944 or their Rules made thereunder with intent to evade the payment of duty. In other words, in this case, the short payment is attributable to lack of due diligence on the part of Jurisdictional Central Excise authorities and not on account of wilful default on the part of the assessee. Therefore, in our view, this is not the case where the extended limitation period under proviso to Section 11A (1) can be applied and, as such, the duty demand is time barred.
7. In view of the above discussion, the impugned order is not sustainable. The same is set aside. The appeal is allowed. The miscellaneous application also stands disposed of.
(Operative part of the order pronounced in the open court) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) PK ??
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