Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, Haldia ... vs M/S.Ganga Electrocast Ltd. (Steel ... on 30 December, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Appeal No.E/540/2010
(Arising out of Order-in-Appeal No.34/HAL/2010 dated 06.04.2010 passed by the Commissioner(Appeal-I) of Central Excise, Kolkata.)
FOR APPROVAL AND SIGNATURE
HONBLE SHRI S.S. KANG, VICE PRESIDENT
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 should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
Commissioner of Central Excise, Haldia Commissionerate
Applicant (s)/Appellant (s)
Vs.
M/s.Ganga Electrocast Ltd. (Steel Division)
Respondent (s)
Appearance:
Shri A.K.Sharma, Authorized Representative (JDR) for the Appellant (s) Shri Shyamal Kr. Mukherjee, Commercial Manager for the Respondent(s) CORAM:
Honble Shri S.S.Kang, Vice President Date of Hearing/Decision :- 30.12.2010 Date of Pronouncement :- 30.12.2010 ORDER NO.
Per Shri S.S.Kang.
1. Heard both sides.
2. Revenue filed this Appeal against the impugned order whereby Commissioner(Appeals) set aside the demand of credit along with interest and penalties on the ground of time bar.
3. Briefly stated the facts of the case are that Respondents are working under CENVAT Scheme. During the period in dispute Respondents availed credit in respect of Customs Duty as well as Special Additional Duty on the basis of bills of entry. The case of the Revenue is that as per the provisions of CENVAT Credit Rules no credit is permissible in respect of basic Customs Duty and Special Additional Duty. The credit was availed during the period June 2003 to March 2004 and Show Cause Notice was issued on 04.06.2008 demanding duty after denying credit and for imposition of penalty alleging suppression with intent to evade payment of duty. The adjudicating authority confirmed the demand along with interest and also imposed a penalty under Section 11AC of the Act. The Commissioner(Appeals) on appeal filed by the Respondents after taking into consideration the Audit Notes issued on 05.04.2006 to 10.04.2006 whereby it has been pointed out by the Audit that Respondent had availed wrong credit held that the Show Cause Notice dated 04.06.2008 is time barred as Revenue was aware of the fact that Respondents had availed the credit when the Audit Notes were issued.
4. The contention of Revenue is that the findings of the Commissioner(Appeals) regarding time bar is not sustainable in view of the decision of the Honble Gujarat High Court in the case of CCE, Surat-I v. Neminath Fabrics Pvt.Ltd. 2010 (256) E.L.T. 369 (Guj.). The contention of Revenue is that Honble High Court held that suppression not obliterated merely because department acquired knowledge of irregularities.
5. The contention of respondents is that when the Audit Notes were issued in the year 2006 Revenue was aware of the fact regarding irregularities therefore thereafter it cannot be held that Respondents suppressed the material facts with intent to evade payment of duty. Hence the impugned order is rightly passed. The Respondent relied upon the decision of Honble Supreme Court in the case of Nizam Sugar Factory v. CCE, A.P. 2004 (04) LCX 0021. The decision of the Tribunal in the case of Neminath Fabrics Pvt. Ltd. v. CCE, Surat-I 2008 (07) LCX 0549. The Respondent also relied upon the decision of the Tribunal in the case of Commissioner of Central Excise, Kolkata-II v. Giriraj Industries 2007 (11) LCX 0180 against which the Revenue filed Appeal and the same was dismissed by the Honble Calcutta High Court.
6. I find that in the present case the Respondent availed credit in respect of Customs Duty as well as Special Additional Duty paid on the imported goods. As per the CENVAT Credit Rules the credit of such duties were not available. The Respondent has no dispute on this issue. The only issue raised by the Respondent is that demand is time barred as held by the Commissioner(Appeals) on the ground that Audit memos were issued in the year 2006 and therefore after 2006 there is no suppression on the part of the Respondent. The Respondent relied upon the decision of Honble Supreme Court in the case of Nizam Sugar Factory. I find that in the Nizam Sugar Factory issue Honble Supreme Court held that when the first Show Cause Notice was issued all the relevant facts were under the knowledge of the authorities therefore in the subsequent Show Cause Notices allegation of suppression is not sustainable. The Respondent relied upon the decision of the Tribunal in the case of Neminath Fabrics which is over-ruled by Honble Gujarat High Court reported in 2010 (256) E.L.T. 369 (Guj.). The other decisions relied upon by the Respondent there is no ratio of law laid down whereby the demand was simply set aside on the ground of inaction on the part of Revenue authorities and Appeal against this decision was rejected by the Honble High Court as no specific question of law was involved. On the other hand I find that Honble Gurajat High Court in the case of CCE, Surat-I v. Neminath Fabrics Pvt.Ltd. (supra) dealt with the situation where the Revenue was aware of the irregularities and Show Cause Notice was subsequently issued with the allegation of suppression with intent to evade payment of duty. Honble High Court held as under :-
14. Thus the scheme that unfolds is that in case of non levy where there is no fraud, collusion, etc., it is open to the Central Excise Officer to issue a Show Cause Notice for recovery of duty of excise which has not been levied, etc. The show cause notice for recovery has to be served within one year from the relevant date. However, where fraud, collusion, etc., stands established the period within which the show cause notice has to be served stands enlarged by substitution of the words one year by the words five years. In other words the show cause notice for recovery of such duty of excise not levied etc., can be served within five years from the relevant date.
15. To put it differently, the proviso merely provides for a situation whereunder the provisions of sub-section (1) are recast by the legislature itself extending the period within which the show cause notice for recovery of duty of excise not levied etc. gets enlarged. This position becomes clear when one reads of Explanation in the said sub-section which only says that the period stated as to service of notice shall be excluded in computing the aforesaid period of one year or five years as the case may be.
16. The termini from which the period of one year or five years has to be computed is the relevant date which has been defined in sub-section (3)(ii) of Section 11A of the Act. A plain reading of the said definition shows that the concept of knowledge by the departmental authority is entirely absent. Hence, if one imports such concept in sub-section (1) of Section 11A of the Act or the proviso thereunder it would be tantamount to rewriting the statutory provision and no canon of interpretation permits such an exercise by any Court. If it is not open to the superior court to either add or substitute words in a statute such right cannot be available to a statutory Tribunal.
17. The proviso cannot be read to mean that because there is knowledge the suppression which stands established disappears. Similarly the concept of reasonable period of limitation which is sought to be read into the provision by some of the orders of the Tribunal also cannot be permitted in law when the statute itself has provided for a fixed period of limitation. It is equally well settled that it is not open to the Court while reading a provision to either re-write the period of limitation or curtail the prescribed period of limitation.
18. The proviso comes into play only when suppression etc. is established or stands admitted. It would differ from a case where fraud, etc. are merely alleged and are disputed by an assessee. Hence, by no stretch of imagination the concept of Knowledge can be read into the provisions because that would tantamount to rendering the defined term relevant date nugatory and such an interpretation is not permissible.
19. The language employed in the provisions to sub-section (1) of Section 11A, is, clear and unambiguous and makes it abundantly clear that moment there is non-levy or short levy etc. of central excise duty with intention to evade payment of duty for any of the reasons specified thereunder, the proviso would come into operation and the period of limitation would stand extended from one year to five years. This is the only requirement of the provision. Once it is found that the ingredients of the proviso are satisfied, all that has to be seen as to what is the relevant date and as to whether the show cause notice has been served within a period of five years therefrom.
20. Thus, what has been prescribed under the statute is that upon the reasons stipulated under the proviso being satisfied, the period of limitation for service of show cause notice under sub-section (1) of Section 11A, stands extended to five years from the relevant cate. The period cannot by reason of any decision of a Court or even by subordinate legislation be either curtailed or enhanced. In the present case as well as in the decisions on which reliance has been placed by the learned advocate for the respondent, the Tribunal has introduced a novel concept of date of knowledge and has imported into the proviso a new period of limitation of six months from the date of knowledge. The reasoning appears to be that once knowledge has been acquired by the department there is no suppression and as such the ordinary statutory period of limitation prescribed under sub-section (1) of Section 11A would applicable. However such reasoning appears to be fallacious inasmuch as once the suppression is admitted, merely because the department acquires knowledge of the irregularities the suppression would not be obliterated.
21. It may be noticed that where the statute does not prescribe a period of limitation, the Apex Court as well as this Court have imported the concept of reasonable period and have held that where the statute does not provide for a period of limitation, action has to be taken within a reasonable time. However, in a case like the present one, where the statute itself prescribes a period of limitation the question of importing the concept of reasonable period does not arise at all as that would mean that the Court is substituting the period of limitation prescribed by the legislature, which is not permissible in law.
22. The Apex Court in the case of Rajasthan Spinning and Weaving Mills (supra) has held thus :
From sub-section (1) read with its proviso it is clear that in case the short payment, not payment, erroneous refund of duty is unintended and not attributable to fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of the Act or of the rules made under it with intent to evade payment of duty then the Revenue can give notice for recovery of the duty to the person in default within one year from the relevant date [defined in sub-section (3)]. In other words, in the absence of any element of deception or malpractice the recovery of duty can only be for a period not exceeding one year. But in case the non-payment etc. of duty is intentional and by adopting any means as indicated in the proviso then the period of notice and a priory the period for which duty can be demanded gets extended to five years.
23. This decision would be applicable on all fours to the facts of the present case, viz. when non-payment etc. of duty is intentional and by adopting any of the means indicated in the proviso, then the period of notice gets extended to five years.
24. The decision of the Apex Court in the case of Nizam Sugar Factory (supra) on which reliance has been placed upon by learned advocate for the respondent was rendered in totally different set of facts wherein when the first show cause notice was issued all the relevant facts were in the knowledge of the authorities. The Court has held that later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as those facts were already in the knowledge of the authorities. Thus, it was in these circumstances, that the Apex Court had held that there was no suppression of facts on the part of the assessee and set aside the order impugned before it on the question of limitation only. The ratio of the said judgment cannot be deduced to mean that concept of knowledge is applicable even in a case of first show cause notice. Thus, once the Court had come to the conclusion that there was no suppression, it is but natural that the proviso would not come into play and the ordinary the period of limitation would be applicable.
25. The decision of this Court in the case of Commissioner of Central Excise and Customs v. Kwality Tube Industries (supra) also does not carry the case of the respondent any further inasmuch as in the facts of the said case the Court had inter alia found that in absence of weighment slips the alleged shortage itself was doubtful and the finding to that effect arrived at by the Tribunal was neither unreasonable nor unjustified. Thus, as discussed above, when fraud, suppression etc., are not established the matter stands on a different footing.
26. In the facts of the present case the record indicates that the Director of the respondent has admitted shortage of Grey fabrics as well as illicit clearance thereof without issuance of central excise invoices or any other duty paying documents, without payment of central excise duty and without entering in the Daily Stock Account Register and Lot Register during the months May-2002 and June 2002. The merchant manufacturers from whom the short found Grey fabrics were received and resultant processed fabrics cleared illicitly without cover of central excise invoices and without payment of central excise duty had also been summoned by the Central Excise Officer. Statements of those merchant manufacturers who appeared indicate that they had agreed that they had sent the grey fabrics to the respondent and received the resultant processed fabrics, without cover of central excise invoices and without payment of central excise duty leviable thereon during the relevant period. Thus, in the facts of the present case suppression stands admitted by the respondent assessee and established by evidence on record and as a natural corollary, the proviso to sub-section (1) of Section 11A would stand attracted. In the circumstances, the impugned order of the Tribunal whereby it has been held that the show cause notice issued beyond the period of six months from the date of knowledge is barred by limitation is clearly contrary to the provisions of Section 11A of the Act and as such cannot be sustained.
7. The ratio of the above decision of the Honble High Court is fully applicable to the facts of the present case and in view of that above decision I find no merit in the contention of the Respondents that the Revenue was aware of the irregularities in the year 2006 when Audit memos were issued hence the allegation of suppression is not sustainable. The impugned order is set aside and Appeal filed by the Revenue is allowed and order passed by the adjudicating authority is restored.
(Pronounced and dictated in the open court.) Sd/ (S.S.KANG) VICE PRESIDENT sm 9 Appeal No.E/540/2010