Custom, Excise & Service Tax Tribunal
Ms Precision Pipes And Profiles Co Ltd vs Noida on 19 February, 2019
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
REGIONAL BENCH : ALLAHABAD
E/3014/2007-EX[DB]
(Arising out of Order-in-Appeal No.108-CE/NOIDA/2007 dated 20.09.2007
passed by Commissioner(Appeals), Customs & Central Excise, NOIDA.)
M/s. Precision Pipes And Profiles Ltd.
...APPELLANT(S)
VERSUS
Commissioner of Customs, Central Excise & Service Tax, Noida
RESPONDENT (S)
APPEARANCE Shri R.Santhanam (Advocate) for the Appellant (s) Shri Mohd. Altaf (Asstt.Commr.) (A.R.) for the Revenue CORAM:
MRS. ARCHANA WADHWA, HON'BLE MEMBER(JUDICIAL) SHRI ANIL G. SHAKKARWAR, HON'BLE MEMBER(TECHNICAL) DATE OF HEARING : 10.01.2019 DATE OF PRONOUNCEMENT : 19.02.2019 FINAL ORDER NO.70310/2019 Per Mrs.Archana Wadhwa :
The present appeal is being disposed of in terms of the order dated 07.01.2014 passed by Hon'ble High Court of Allahabad in Central Excise Appeal No.8/2014 vide which the Tribunal's earlier order allowing the assessee's appeal on the point of time bar was set aside, and the matter stand remanded for fresh decision, in the light of the directions contained therein. Accordingly we have heard Shri R.Santhanam, learned Advocate for the appellant and Shri Mohd. Altaf, learned Assistant Commissioner (A.R.) for the Revenue.
2. As per facts on record, the appellant is engaged in the manufacture of automobile parts classifiable under chapter heading 2 E/3014/2007-EX[DB] 3916.90 of the schedule to the Central Excise Tariff Act. The appellant was also engaged in import of various items. During the period 2003 to July 2014, the appellant imported goods under 11 Bills of entries and cleared the same on payment of additional Customs Duty. The said additional Customs Duty was not paid by the appellant in cash, but the same was adjusted against Duty Entitlement Pass Book (hereinafter referred to as DEPB). The appellant availed the Cenvat credit of Rs.42,10,670/- of the said additional Customs Duty paid by them vide DEPB scrips.
3. Revenue entertained a view that the benefit of the additional Customs Duty is available as credit to the appellant only when the same is paid in cash. Inasmuch as the said duty was discharged on DEPB scrips, the appellant was not entitled to the benefit of Cenvat credit of the same. Accordingly proceedings were initiated against them by way of issuance of a show cause notice dated 09.12.2005 invoking the longer period of limitation under the proviso to section 11-A(1) of the Central Excise Act, 1944. The appellants assailed the demand on merits as also on limitation.
4. However, the Additional Commissioner of Central Excise, Noida did not find favour with the appellant's pleas and confirmed the demand along with imposition of penalty of identical amount under section 11AC. The order of Additional Commissioner was put to challenge before Commissioner(Appeals), who upheld the same and rejected the appeal. On further appeal before Tribunal, the Tribunal vide its Final Order No.56708/2013 dated 22.03.2013 also took note of the Hon'ble 3 E/3014/2007-EX[DB] Punjab & Haryana High Court's decision in the case of Commissioner of Central Excise, Ludhiana v. Nilkanth Rubber Mills reported as 2010 (254) E.L.T. 203 (P & H) wherein the disputed legal issue was settled in favour of the assessee. However Tribunal by referring to Hon'ble Supreme Court decision in the case of CCE Vs. Sunwin Technosolution Pvt.Ltd. [2011 (21) S.T.R. 94 (S.C.)] rejected the appeal on merits.
However, the Tribunal took into consideration the assessee's plea that demand was raised by invoking the longer period of limitation and by referring to the earlier decisions held that as there was confusion in the field on the disputed legal issue and by referring to the earlier decision of the Tribunal in the case of LNM Auto Industries Pvt.Ltd., the benefit of limitation was extended to the assessee.
5. Revenue being aggrieved with the said order of the Tribunal filed an appeal thereagainst before the Hon'ble Allahabad High Court, which stand disposed of by the Hon'ble High Court vide its order dated 07.01.2014, setting aside the order of the Tribunal and remanding the matter for fresh decision in the light of the observations and directions contained in the said order.
6. The Hon'ble High Court has taken into consideration the findings of the original adjudicating authority as also of Commissioner(Appeals) vide which the assessee's plea of limitation was rejected. The Hon'ble High Court while remanding the matter has directed the Tribunal to examine the findings of Additional Commissioner and Commissioner(Appeals) on the point on limitation, inasmuch as the Tribunal while disposing the case on limitation has given no 4 E/3014/2007-EX[DB] consideration either to the reasons indicated in the order of the Additional Commissioner while confirming the duty demand or to those contained in the order of Commissioner(Appeals). The Hon'ble High Court also directed the Tribunal to have due regard to the judgements of the Supreme Court on the invocation of extended period of limitation including those in the case Tamil Nadu State Transport Corpn. Ltd. v. Collector of C.Ex., Madurai [2004 (166) E.L.T. 433 (S.C.)] and Nicholas Piramal India Ltd. vs. Commissioner of C.Ex., Mumbai [2010 (260) E.L.T. 338 (S.C.)]. Accordingly, we proceed to decide the issue as to whether the demand was barred by limitation or not.
7. Admittedly the show cause notice for the demand in question stands issued on 09.12.02.2005 for the period October 2003 to August 2004 i.e. by invoking the extended period of limitation in terms of the proviso to section 11A of the Central Excise Act. The said proviso provides that in case duty has not been paid on account of fraud, collusion, willful misstatement, suppression of facts or contravention of any of the provisions of the act or the rules made thereunder with intent to evade payment of duty, the period of five years is available to the Revenue to serve notice on such person for such short paid duty. The said expression appearing in section 11A has been the subject matter of various decisions of the Supreme Court. Reference can be made to the Hon'ble Supreme Court decision in the case of Collector of Central Excise vs. Chemphar Drugs reported as 1989 (40) E.L.T. 276(S.C.). It stands held that extended period of five years is applicable only when something positive other than mere inaction or 5 E/3014/2007-EX[DB] failure on the part of manufacture is proved. Similarly in the case of Pushpam Pharmaceuticals Company vs. Collector of C.Ex, Bombay [1995 (78) E.L.T. 4(S.C.) it was observed that the expression "suppression of facts" appearing in section 11A, proviso has to be interpreted strictly because it has been used in the company of strong words as fraud, collusion or willful default. Mere omission to disclose the correct information is not suppression of facts unless it was deliberate to escape from payment of duty. In the background of the above declaration of law by the Hon'ble Apex Court, we proceed to decide the point of limitation.
8. The Additional Commissioner while justifying the invocation of longer period of limitation has observed as under:-
"I find that Cenvat Credit was taken on the strength of the Bills of Entry under discussion in the months of 12/03 to 07/04. The ER-1 Returns and Cenvat Credit returns submitted by the party for these months do not reflect that the Additional Customs Duty (CVD) was paid through DEPB adjustments nor these returns show that Bills of Entry were submitted to the department. The self assessment memorandum Sl.No.7(a) of the aforesaid ER-1 returns submitted by the party declares that the information given in the return is true, correct and complete in every respect whereas material information relating to taking of Cenvat Credit on the strength of Bills of Entry on which additional duty of Customs (CVD) has been paid through DEPB adjustment has not been incorporated in either of the aforesaid returns. The party had also not submitted the aforementioned Bills of entries to the department so that the department could have knowledge to material information contained therein. Thus material information relevant for scrutiny of above returns were suppressed and concealed from the department. The party had deliberately concealed the facts with the department with intent to evade the central excise duty by 6 E/3014/2007-EX[DB] debiting the duty through DEPB scheme. Accordingly, the party suppressed the fact by not following the procedure as prescribed and availed/utilized the Cenvat Credit wrongly. Hence extended period under Section 11(A) of Central Excise Act, 1944 is invokable in the instant case for recovery of admissible credit availed by them."
Further while upholding the above findings of the Additional Commissioner, Commissioner(Appeals) has held as under:-
"But the fact is that on being pointed out by audit, the fact of payment of CVD through adjustment in DEPB, recovery processings were initiated against the appellants. Had the duty paying documents been submitted along with ER-1 returns/Cenvat credit Returns, non payment of duty in cash would have been detected at that very stage and the credit in question would have been disallowed. In this way it is evident that the fact of payment of CVD through DEPB was not in the knowledge of the department ever before, until it was pointed out by the audit. In view of this it can safely be inferred that the appellant suppressed the fact of not paying duty in cash and availing credit thereof wrongly. As such I do not find that the extended period has wrongly been invoked in this case."
9. We have gone through the reasoning adopted by the lower authorities for invocation of longer period of limitation, which is primarily on the ground that the appellant did not file the duty-paying documents along with ER-1 returns and did not stated in the said returns that the CVD was paid through DEPB. We note that there is no reference to any column or clause in the said ER-1 which requires an assessee to disclose the above information. In the absence of any requirement to disclose in the said returns, the factum of payment of CVD through DEPB, we are of the view that non-disclosure, by itself 7 E/3014/2007-EX[DB] cannot be made the ground for invocation of extended period. The Hon'ble Supreme Court in the above-referred matters have clearly observed that a mere failure of the assessee to disclose the information, by itself cannot be held to be a ground for invocation of extended period unless such non-disclosure was on account of any mala fide. In the present case there was no legal obligation on the assessee to disclose the requisite information in the ER-1 returns, in the absence of any clause or requirement in the said reports. As such the mere fact that the appellant had not stated in the ER-1 returns as regards payment of duty through DEPB cannot be adopted a valid ground to justifiably invoke the extended period of limitation.
10. In any case and in any view of the matter we note that during the relevant period there were decisions in favour of the assessee laying down that the CVD paid thorugh DEPB scrips is available as a credit to the importer. This was so held by the Tribunal in the case of Sesha Sayee Paper and Boards Ltd. v. C.C.E. [2007 (217) E.L.T. 562 as also in another case reported as 2008 (223) E.L.T. 616 (Tri.-Chennai). The said availability of credit was also upheld by the Hon'ble Punjab & Haryana High Court in the case of C.C.E. v. Nilkanth Rubber Mills [2010 (254) E.L.T. 203 (P & H)] as also in the case of Madras High Court in Tanfac Industries Ltd. v. Asstt.Commissioner [2009 (240) E.L.T. 341 (Mad.) as also in Gujarat Ambuja Exports Ltd. v. GOI [2013 (289) E.L.T. 273].
It is only subsequently that the Larger Bench of the Tribunal in the case of Essar Steels Ltd. v. C.C.E. [2004 (173) E.L.T. 239 (LB)] 8 E/3014/2007-EX[DB] took a view adverse to the assessee and held that Cenvat credit was not available in case the duty has not been paid in cash. As such it is seen that during the relevant period there were decisions in favour of the assessee and no mala fide can be attributed to the assessee for availing such credit. Reference can be made to the Hon'ble Supreme Court's decision in the case of Continental Foundations Joint Venture vs. Commr. [2004 (216) E.L.T. 177 (SC)]. laying down that if there are varying different views holding the field during the relevant period and the issue is finally decided by the larger Bench, the assesee cannot be held guilty for any mala fide or mis-statement with intent to evade payment of duty.
11. As we have already observed that there were decisions laying down in favour of the assessee, in view of the said decision of the Hon'ble Supreme Court, he cannot be held guilty of any mis-statement or suppression with intent to evade payment of duty.
12. Further in terms of the direction of the Hon'ble High Court, we have also examined the applicability of the Supreme Court's decisions in the case of Nicholas Piramal India Ltd. v. Commissioner of C.Ex., Mumbai [2010 (260) E.L.T. 338 (S.C.)] as also in the case of Tamil Nadu State Transport Corpn. Ltd. v. Collector of C.Ex., Madurai [2004 (166) E.L.T. 433 (S.C.)]. In the case of Nicholas Piramal India Ltd. the Hon'ble Supreme Court has upheld the Tribunal's decision in the holding one of the show cause nowices as barred by limitation. In the case of Tamil Nadu State Transport Corpn. Ltd., we note that the benefit of limitation was not extended to the assessee on the ground that they 9 E/3014/2007-EX[DB] have not disclosed the fact of manufacture of aluminium paint to the department nor have maintained any accounts etc.. The ratio of the said decision is not applicable to the facts of the present case inasmuch as we have already observed that during the relevant period, there were decisions in favour of the assessee and in the light of the Hon'ble Supreme Court's decision in the case of Continental Foundations Joint Venture, appellants cannot be held guilty of any mala fide in following the said favourable decisions.
13. In view of our foregoing discussions we hold that the demands having been raised beyond the normal period of limitation are barred. Accordingly the impugned order is set aside and appeal is allowed with consequential relief.
(Pronounced in the open Court on 19.02.2019.)
SD/ SD/
(ANIL G. SHAKKARWAR) (ARCHANA WADHWA)
MEMBER(TECHNICAL) MEMBER (JUDICIAL)
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