Gujarat High Court
The Commissioner Of Customs ... vs Reliance Industries Ltd on 8 October, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/TAXAP/448/2013 ORDER DATED: 08/10/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 448 of 2013
With
R/TAX APPEAL NO. 449 of 2013
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THE COMMISSIONER OF CUSTOMS (PREVENTIVE)(Amended as per Oral
Order dated 20.3.2025 in CA 1/2025)
Versus
RELIANCE INDUSTRIES LTD
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Appearance:
MR UTKARSH R SHARMA(6157) for the Appellant(s) No. 1
MR MIHIR JOSHI, LD.SR.ADV FOR GANDHI LAW ASSOCIATES(12275) for
the Opponent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 08/10/2025
COMMON ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.Utkarsh Sharma for the appellant and learned Senior Advocate Mr.Mihir Joshi with learned advocate Mr.Nisarg Desai and learned advocate Mr.Pravalikha Batthini for Gandhi Law Associates for the respondent.
2. Both these Appeals are admitted for consideration of the following substantial Page 1 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined questions of law by order dated 18th July, 2013:
"2{a} Whether in the facts and
circumstances of the case as well as
material evidences on record, the
Tribunal has committed substantial error of law by applying Section 28 [2B] of the Customs Act, 1962 and Section 11A [2B] of the Central Excise Act, 1944 and holding that there was no need to issue any show cause notice to the respondent as duty liability and interest thereof is voluntarily discharged by him ?
2{b} Whether in the facts and
circumstances of the case as well as
material and evidences on record, the Tribunal has committed substantial error of law in holding that the extended period of limitation under section 28 of the Customs Act, 1962 and section 11A of Page 2 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined the Central Excise Act, 1944 has been invoked in the case on hand ?"
3. The brief facts of the case are as under:
3.1. The respondent-assessee being 100% Export Oriented Undertaking (EOU) during the period from 01.10.2007 to 23.10.2007 was having letter of permission from the Divisional Commissioner, Kandala Special Economic Zone for manufacture and other operations in bonded warehouse as per the provisions of the Customs Act, 1962.
3.2. The respondent-assessee was also registered with the Jurisdictional Central Excise Authorities and as per letter of permission, it was licensed to manufacture the Page 3 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Refined Petroleum Products, Liquids of Gaseous Fuels, Illuminating Oils or Grease or other products obtained from Crude Petroleum of the fractionation, production, liquefaction, petrochemical products and Polypropylene, Sulphur unrefined (by-products) and Petroleum Coke (residue).
3.3. In order to finance its Unit as EOU, the respondent-assessee executed various bonds as required under the Customs Act and procured raw materials required for manufacturing of final products as per the procurement Certificates issued by the competent authorities. Accordingly, various inputs were procured without payment of Customs Duty and Central Excise Duty as per the provisions of Page 4 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined the Notification No.52/2003-Cus dated 31.03.2003 and Notification No.22/2003-CE dated 01.03.2003 and also availed the benefit of full exemption under the Notification No.21/2002-Cus dated 01.03.2002 and Notification No.4/2006-CE dated 01.03.2006 for want of the final product i.e. Liquefied Petroleum Gas (Domestic) (for short 'the LPG').
3.4. However, the Adjudicating Authority was of the view that the respondent-assessee had cleared LPG in the Domestic Tariff Area (for short 'the DTA') without payment of duty after having availed the benefit of the aforesaid Notifications and therefore, it was liable to pay duties forgone for the inputs which were Page 5 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined used for manufacture of the such LPG. Show-
cause notices dated 08.04.2008 and 15.04.2008 were issued to the respondent-assessee to show cause as to why the amount paid as Customs Duty and Central Excise Duty should not be appropriated and penalty should not be imposed under the provisions of the Customs Act, 1962 as well as the Central Excise Act, 1944. 3.5. The respondent-assessee filed replies before the Adjudicating Authority raising objections on merits as well as on the limitation.
3.6. The Adjudicating Authority, however, passed the following order in respect of the show-cause notice dated 08.04.2008 : Page 6 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025
NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined "A. Show cause notice No. V.JMR/AR-IV/Commr/13/2008 dt. 08.4.08
(i) I confirm the demand for Customs duty of Rs.179,90,47,660/-(Rupees one hundred seventy nine crore ninety lakh forty seven thousand six hundred sixty only) against M/s. Reliance Industries Limited (100% EOU), Refinery Division, Meghpar/Padana, Dignvijaygram, District- Jamnagar, under Section 28 of Customs Act, 1962. Further I appropriate the amount of Custom duty of Rs.179,90,47,660/ - paid by the said M/s. Reliance Industries Limited vide TR-6 challan dated 15.10.2007.
(ii) I confirm the demand of interest as due and payable under Section 28AB of Customs Act, 1962 against the said M/s. Reliance Industries Limited, Jamnagar on the Custom duty confirmed Page 7 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined at SI. No.(i) above. Further I appropriate the interest amount of Rs.5,84,69,049/- paid by the said M/s.
Reliance Industries Limited vide TR. 6 challan dated 15.10.2007.
(iii) I impose penalty of Rs.179,90,47,660/- (Rupees one hundred seventy nine crore ninety lakh forty seven thousand six hundred sixty only) against the said M/s. reliance Industries Limited., Jamnagar, under Section 114A of Customs Act, 1962. However, in terms of the proviso to Section 114A of the Central Excise Act, 1944, if the duty as determined above and the interest payable thereon under Section 28AB is paid by the said M/s.
Reliance Industries Limited within
thirty days from the dated of
communication of this order, the amount of penalty liable to be paid under this Page 8 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Section shall be twenty five percent of the penalty so determined. In terms of the second proviso to Section 114A of the Customs Act, 1962, the benefit of such reduced penalty under the first proviso shall be available only if the amount of penalty is also paid by the said M/s. Reliance Industries Limited within the period of thirty days referred to above.
(iv) I confirm the demand of Central Excise duty of Rs.19,08,281/- (Rupees nineteen lakh eight thousand two hundred eighty one only) against the said M/s. Reliance Industries Limited, Jamnagar, under Section 11A of the Central Excise Act, 1944. Further, I appropriate the amount of Central Excise duty of Rs.19,08,281/- paid by the said M/s.Reliance Industries Limited vide TR. 6 challan dated Page 9 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined 15.10.2007.
(v) I confirm the demand for interest as due and payable under Section 11AB of Central Excise Act, 1944 against the said M/s. Reliance Industries Limited, Jamnagar on the Central Excise duty confirmed at SI. No.(iv) above. Further, I appropriate the interest amount of Rs.62,019/- paid by the said M/s. Reliance Industries Limited vide TR-6 challan dated 15.10.2007.
(vi) I impose penalty of Rs.19,08,281/- (Rupees nineteen lakh eight thousand two hundred eighty one only) against the said M/s.Reliance Industries Limited, Jamnagar, under Section 11AC of the Central Excise Act, 1944. However, in terms of the proviso to Section 11AC of Central Excise Act, 1944, if the duty as determined above Page 10 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined and the interest payable thereon under Section 11AB is paid by the said M/s.Reliance Industries Limited, within thirty days from the date of communication of this order, the amount of penalty liable to be paid under this Section shall be twenty five percent of the penalty so determined. In terms of the second proviso to Section 11AC of the Central Excise Act, 1944, the benefit of such reduced penalty under the first proviso shall be available only if the amount of penalty is also paid by the said M/s.Reliance Industries Limited, within the period of thirty days referred to above." 3.7. In respect of the show-cause notice dated 15.04.2008 also, the similar order was passed by demanding Customs Duty of Rs.21,69,67,274/- and Rs.3,00,02,805/- along with interest of Page 11 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Rs.7,70,648/- and penalty of Rs.24,69,70,079/- and the Central Excise Duty of Rs.3,43,909/- with penalty of equal amount.
3.8. Being aggrieved by the Order-in-Original passed by the Adjudicating Authority imposing penalty under Section 114A of the Customs Act, 1962 and Section 11AC of the Central Excise Act, 1944, the appellant preferred two Appeals being Appeal No.485 and 486 of 2011 before the Customs Excise & Service Tax Appellate Tribunal, West Zonal Bench, Ahmedabad (for short 'the CESTAT'). The CESTAT by impugned order dated 13th September, 2012 arrived at the following conclusion :
"12. All the above discussion will lead to the conclusion that appellant had Page 12 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined definitely not suppressed any material information from the department as regards the consumption of inputs procured, on which the duty liability was forgone by the Revenue and as also clearance of final products to DTA. This also is fortified from the fact that appellant without being informed, on their own paid the entire amount of duty forgone on the inputs along with interest and informed the department on 15.10.2007. In our view, the show cause notice dated 15.4.2008 invoking extended period of limitation for demand of Customs duty under Section 28 of the Customs Act, 1962, Central Excise duty under Section 11A of Central Excise Act, 1944, has not brought forth any situation, wherein it could be concluded that there was a suppression of facts with intention to evade duty on the part of appellant Page 13 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined herein. On perusal of the order of the adjudicating authority, we find that the adjudicating authority has confirmed the demands of duty liability of Customs or Central Excise as per the calculation given by the appellant and there was no addition to such duty liability, which would indicate that the calculation of duty as has been done by the appellant is correct and they had indeed invoked their right of paying duty as per the Section 28(2B) of Section 11A(2B), as the case may be, and they had correctly sought for non issuance of show cause notice to them.
13. Accordingly, in our considered view, the adjudicating authority has committed an error, in invoking the provisions of Section 114A of the Customs Act, 1962 and Section 11AC of the Central Excise Act, 1944 for Page 14 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined imposition equivalent amount of penalties as indicated in his order. We do not find any reason to sustain the same, as extended period cannot be invoked in this case and accordingly set-aside the penalties imposed by the adjudicating authority.
14. In view of the foregoing discussions, we find that appellants have made out a case for setting aside the penalties imposed on them. Appeals are allowed to the extent they challenge the imposition of various penalties under the Customs Act, 1962 and the Central Excise Act, 1944 on the appellants by the adjudicating authority, and impugned order to that extend is set-aside."
3.9. Being aggrieved, the Appellant-Revenue has preferred these Appeals, which are Page 15 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined admitted on the aforesaid substantial questions of law.
4.1. Learned advocate Mr.Utkarsh Sharma for the appellant submitted that the Judgment and Order of the Tribunal is contrary to the statutory provisions in as much as the Tribunal committed an error in arriving at a conclusion that the respondent did not suppress any material information from the Department with regard to the consumption of the inputs procured, on which the duty liability was forgone by the Revenue and with regard to clearance of final products to DTA and without being informed by the Revenue, the respondent, on its own, paid the entire amount of duty forgone along with interest on Page 16 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined 15.10.2007. It was therefore submitted that the Revenue was justified in invoking extended period of limitation for demand of Customs Duty under Section 28 of the Customs Act, 1962 and under Section 11A of the Central Excise Act, 1944.
4.2. It was further submitted that the Tribunal has further erred in recording the findings on the point of duty liability of the respondent, even though the respondent has conseeded to their legal obligation to make payment of duty and interest to the Department.
4.3. It was pointed out by learned advocate Mr.Utkarsh Sharma that the ratio of the Larger Page 17 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Bench in case of Paras Fab International Versus Commissioner of Central Excise, Kandla reported in 2010 (256) ELT 556 (Tri. LB) followed in the case of the respondent reported in 2011 (268) ELT 38 (Tri. Ahmd) to the effect that there would not be any duty liability on the inputs, would not be applicable in asmuch as it is not admitted by the respondent-assessee for duty liability and payment of duty and interest was made under Section 28 of the Customs Act, 1962. It was therefore submitted that the observations made by the Tribunal are out of context and without jurisdiction. It was submitted that the Revenue has not accepted the above decision relied upon by the respondent-assessee before Page 18 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined the Tribunal and Appeals filed by the Revenue are admitted by this Court.
4.4. Learned advocate Mr.Utkarsh Sharma submitted that there was a clear suppression of fact by the respondent-assessee and the Tribunal therefore has arrived at a conclusion without dealing with the findings recorded by the Adjudicating Authority in the Order-in- Original wherein, it is categorically stated that the respondent-assessee ought to have placed on record the documentary evidence to show that immediately after the clearance of the finished goods at NIL rate of duty from the time to time, the details regarding quantity of inputs used in manufacturing of the finished goods, calculation of duty Page 19 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined involved in such inputs etc. were provided to the Jurisdictional Central Excise Authority, however, there was no such evidence placed on record for providing such information which has resulted into deliberate suppression for non-levy of duty on the inputs at the relevant point of time. It was therefore submitted that mere indication of exemption Notification in the ER-2 return is not sufficient to extinguish the charge of suppression of facts with intent to evade payment of duty and when it was brought to the notice by issuance of show-cause notices, the respondent, on its own, has made the payment with interest which clearly shows that there was suppression of material fact at the relevant point of time Page 20 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined and the Tribunal has ignored the same. 4.5. Learned advocate Mr.Utkarsh Sharma invited the attention of the Court to the observations in paragraph No.21.3 of the Order-in-Original wherein, it is held that the respondent suppressed the material facts like the quantity of inputs used in manufacture of the finished goods cleared into DTA at NIL rate of duty and hence, at the time when the finished goods were cleared, the Revenue Department had no information about the quantity of inputs and the duty involved in such inputs which the respondent-assessee was required to pay as they had already availed the exemption from payment of duty on such inputs at the time of import or indigenous Page 21 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined procurement as the case may be. 4.6. Learned advocate Mr.Utkarsh Sharma submitted that the respondent-assessee was converted into EOU with effect from 16.04.2007 and relevant Certificates were obtained by it, however, after availing the various exemptions as per the Notification issued by the Board, there is no dispute that the respondent- assessee cleared the finished goods LPG (Domestic) at NIL rate of duty in DTA area and thereby, the inputs which were used in the manufacture of such finished goods were not eligible for the benefit of exemption on payment of Customs Duty and additional Customs Duty availed under the Notification No.52 of 2003 as well as exemption from payment of Page 22 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Central Excise Duty availed under the Notification No.22 of 2003 for the inputs that were locally procured.
4.7. It was therefore submitted that the Tribunal ought to have confirmed the order of penalty levied upon the respondent-assessee in view of the clear suppression of facts at the relevant point of time and merely because the amount of duty was paid with interest subsequently, would not absolve the respondent-assessee from the levy of penalty under Section 114A of the Act.
4.8. Learned advocate Mr.Utkarsh Sharma also invited the attention of the Court to the provisions of Section 114A of the Customs Act, Page 23 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined 1962 as well as the provisions of Section 11AC of the Central Excise Act, 1944 to submit that the Tribunal has committed a grave error by setting aside the duty amount which is already paid by the respondent-assessee along with the penalty on the ground that the Adjudicating Authority could not have invoked the extended period of limitation under Section 28 of the Customs Act, 1962 and Section 11A of the Central Excise Act, 1944.
4.9. Learned advocate Mr.Utkarsh Sharma submitted that the Tribunal has also committed an error by referring to the provisions of Sub-section 2B of Section 28 of the Customs Act, 1962 on the basis that no notice could have been issued by the Adjudicating Authority Page 24 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined in view of the payment of duty and interest paid by the respondent-assessee. 5.1. Per-contra, learned Senior Advocate Mr.Mihir Joshi for the respondent-assessee heavily replied upon the findings of fact recorded by the Tribunal and further submitted that the respondent-assessee availed the benefits of exemption Notifications on the various inputs which were imported for manufacture of the final product. It was submitted that under paragraph No.6.9(c) of the Foreign Trade Policy, the import of goods by the respondent-assessee availing the duty exemption were eligible for consideration of procurement of positive net foreign exchange (NFE) and as the import of the LPG for supply Page 25 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined under subsidy scheme was exempted from duty as per Notification No.21/2002-Cus and general exemption Notification No.4/2006-CE, supplies of LPG notified under the said subsidy schemes were eligible to be counted for NFE, however, such organisation did not have the status of deemed export under the Foreign Trade Policy and therefore, such supplies were considered to be supply under the DTA. The respondent- assessee therefore made a representation before the Government for examining the proposal to grant status of deemed export to supplies of LPG made to PSUs under subsidy scheme and said proposal did not materialise though there were express provisions in Foreign Trade Policy for counting such Page 26 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined clearance towards calculation of NFE. 5.2. It was further submitted that as imports were eligible for Customs Duty under Notification No.21/2002-Cus and LPG locally manufactured for supply under said subsidy scheme was also exempted from Central Excise Duty under Notification No.4/2006-CE, the respondent-assessee cleared the LPG into DTA under NIL rate of duty and duly filed the monthly returns in Form ERE-2 showing all the clearance at 'NIL' rate of duty. It was also pointed out that returns in Form ERE-1 filed during the relevant period and entries therein, clearly shows that the respondent- assessee clearly indicated that LPG was cleared from refinery to DTA under 'NIL' rate Page 27 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined of duty which is also taken note by the Tribunal.
5.3. It was submitted that as considering the LPG under subsidy scheme, was exempted from Customs Duty as well as Central Excise Duty, no exemption in respect of inputs utilised for the purpose of manufacture of such finished goods would be available to the respondent- assessee and therefore, the respondent- assessee took up the matter on its own for grant of status of deemed export with the authorities and therefore, by letter dated 15.10.2007 paid up the entire duty forgone by it either as input in form of Customs Duty or Central Excise Duty along with interest prior to the issuance of show-cause notices by the Page 28 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Adjudicating Authority.
5.4. It was submitted that in view of the payment of entire duty forgone by the respondent-assessee prior to the issuance of the show-cause notices as per provisions of Section 28(2B) of the Customs Act, 1962, the Adjudicating Authority could not have issued the show-cause notices. It was pointed out that provisions of Section 28(2B) of the Customs Act, 1962 is para-materia with provisions of Section 11A(2B) of the Central Excise Act, 1944 and therefore, the Tribunal has rightly deleted and set aside the penalty imposed upon the respondent-assessee. 5.5. It was submitted by learned Senior Page 29 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Advocate Mr.Mihir Joshi that the Adjudicating Authority was well aware of the situation as per the letter dated 15.10.2007 that there was no change in duty figures worked out by the respondent-assessee and the same amount of duty, which was reversed along with interest was confirmed in the Order-in-Original and the amount paid by the respondent-assessee was appropriated. It was therefor submitted that the Adjudicating Authority has passed the Order-in-Original contrary to the decision of the Larger Bench of the Tribunal in case of Paras Fab International (Supra). 5.6. It was further submitted that in view of the decision of the Larger Bench of the Tribunal in case of Paras Fab International Page 30 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined (Supra), the respondent-assessee was not required to pay any Customs Duty or CVD as the goods were not cleared by the ex-bond bill of entry and therefore, the respondent-assessee was also not required to discharge any duty liability on the goods which were imported and the duty has been forgone in light of the said decision. It was however, made clear that the respondent-assessee is not seeking any refund of the amount already paid by it as stated in the letter dated 15.10.2007.
5.7. Learned Senior Advocate Mr.Mihir Joshi further submitted that the Adjudicating Authority ought not to have invoked the extended period of limitation as per the provisions of Section 28 of the Customs Act, Page 31 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined 1962 as there is no suppression of facts as alleged by the Adjudicating Authority in the impugned show-cause notices which has culminated into the imposition of penalty. 5.8. It was therefore submitted that the Tribunal has rightly held that no show-cause notice could have been issued by invoking the extended period of limitation and the issuance of the show-cause notice by the Revenue Authority was incorrect.
5.9. In support of his submissions, reliance was also placed on the decision of this Court in case of Commissioner Versus Tejas Agency reported in 2014 (34) S.T.R. 803 (Gujarat) to submit that this Court in similar facts under Page 32 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined the Service Tax Act held that the provisions of Sections 73(3) and 73(4) of the Finance Act, 1994 could not have been invoked, more particularly, when the assessee in the said case had already paid the service tax prior to issuance of the show-cause notices. It was also submitted that this Court has held that it was not a case of non-payment of service tax with an intent to evade payment of the same and therefore, the question of applying Sub-section (4) of Section 73 of the Finance Act, 1994, which is equivalent to the provisions of Section 28 of the Customs Act, 1962 for invoking the extended period of limitation, would not be applicable in the facts of the present case also. Page 33 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025
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6. Having heard the learned advocates for the respective parties, considering the submissions made by them as well as on perusal of the impugned order passed by the CESTAT together with the material placed in the paperbook, it appears that it is not in dispute that the respondent during the period under consideration was registered as EOU. The respondent had also imported various inputs and raw-materials for consumption by foregoing the duty liability either of Customs or Excise by procuring CT-3 Certificates and the goods, which were imported/procured duty free were consumed in EOU which is duly recorded in statutory records as per the returns filed by the respondent regularly.
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7. The respondent had produced LPG and had intention to export the same, which could not materialise due to the absence of clearance from the Ministry of Petroleum and Natural Gas and therefore, the respondent had no option but to sale such LPG produced in the Domestic Tariff Area for public distribution to various Public Sector Undertakings and Oil Companies.
8. It is also not in dispute that the respondent had not discharged the duty liability on the LPG cleared to Domestic Tariff Area by availing the benefit of Notifications which exempted payment of duty on LPG.
9. It is also not in dispute that the Page 35 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined respondent has evade the duty liability and interest voluntarily before issuance of the show-cause notice on the inputs which were consumed for manufacturing of the LPG and cleared by availing the benefit of exemption Notification. The Tribunal was therefore required to consider as to whether the penalty imposed under the provisions of Section 114A of the Customs Act, 1962 or under Section 11AC of the Central Excise Act, 1944 invoking the extended period of limitation was valid or not.
10. In view of such undisputed facts, there were questions which are framed by this Court to the effect that whether the Tribunal has committed an error of law by applying Section Page 36 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined 28(2B) of the Customs Act, 1962 and Section 11A(2B) of the Central Excise Act, 1944 to hold that there was no need to issue any show- cause notice to the respondent as duty liability and interest thereof, were voluntarily discharged by the respondent and whether the Tribunal has committed an error in holding that the extended period of limitation under Section 28 of the Customs Act, 1962 and Section 11A of the Central Excise Act, 1944 could not have been invoked.
11. The Tribunal has taken note of the representation made by the respondent to the authorities i.e. Ministry of Petroleum and Natural Gas on 30th March, 2007 as regards anomaly in supply of the LPG made to the Page 37 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Domestic Tariff Area by consuming imported/locally procured materials on which duty has been foregone and the meeting which took place on 30th April, 2007 in the Ministry of Petroleum and Natural Gas to discuss the issue, however, no conclusion was reached and accordingly, the respondent by letter dated 15.10.2007, made the payment of duty along with interest on the input crude/cat-chem to the extent of LPG cleared in DTA upto 30th September, 2007.
12. The Tribunal has also taken note of the fact that the respondent computed the interest as per the provisions of Section 28(2B) of the Customs Act, 1962 which provides of discharge of duty and interest by the assessee on his Page 38 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined own calculation and intimate the authority, who on being informed could not issue show- cause notice and the only exception would be in case, where the duty liability arises due to misrepresentation or suppression of facts with intent to evade duty.
13. Provisions of Section 28(2B) of the Customs Act, 1962 which existed at the relevant time, reads as under :
"Section 28(2B) : - Where any duty has not been levied or has been short- levied or erroneously refunded, or any interest payable has not been paid, part paid or erroneously refunded, the person, chargeable with the duty or the interest, may pay the amount of duty or interest before service of notice on Page 39 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined him under sub-Section (1) in respect of the duty or the interest, as the case may be, and inform the proper officer of such payment in writing, who on receipt of the such information, shall not serve any notice under sub-Section (1) in respect of the duty or the interest so paid."
14. The Tribunal therefore, considering the fact that the respondent had discharged the duty foregone along with interest voluntarily without there being any intimation or letter from the Departmental Authority directing them to do so, observed as under :
"In our considered view, the action of the appellant in keeping informed the departmental authorities about the availment of exemption notification for Page 40 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined LPG, filing returns by the appellant who is an EOU, would mean that they had no intention to suppress material facts. This fact of filing returns indicating entire transactions of EOU is not disputed by Revenue authorities. In the case in hand, we find that there was no need to issue any show cause notice to appellant as the duty liability either Customs or Central Excise is the same as has been calculated by the appellant."
15. The Tribunal has also relied upon the decision of the High Court of Karnataka in case of Commissioner of Central Excise and Service Tax, LTU, Bangalore Versus Adecco Flexione Workforce Solutions Limited reported in 2012 (26) STR 3 (Kar.), wherein, the Karnataka High Court held in context of Page 41 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Section 76 of the Finance Act, 1994 that for levy of service tax, when the assessee has paid the service tax with interest for delayed payment, no show-cause notice was required to be issued by the authority. The Tribunal relying upon the said decision, held that in the facts of the case also no show-cause notice ought to have been issued. Similarly, the provisions of Section 11(2B) of the Central Excise Act, 1944 are also pari- material to the provisions of Section 28(2B) of the Customs Act, 1962 and in view of the decision of the Karnataka High Court, the Tribunal has rightly held that the penalty under Section 11AC of the Central Excise Act, 1944 could not have been levied. Page 42 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025
NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined
16. Considering the above situation, the Tribunal has arrived at findings of fact in the facts of the case as under :
"9.3. In our considered view the action of Revenue authorities in issuing of show cause notice on the appellant demanding duty is like looking into the mouth of gifted horse, as we have hereinabove held that the appellant need not have paid any duty on duty free inputs procured by them, as there is no dispute that inputs were consumed in EOU and issuance of show cause notice demanding duty interest and imposition of penalties, in our opinion, is a self-destructive action in the light of decision of Larger Bench of Tribunal in the case of Paras Fab International (supra.) Page 43 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined
10. We also find strong force in the contention raised by the learned counsel that they had filed monthly returns with the authorities for the month April to Sept.2007 and they had clearly indicated the clearance of LPG in the returns as being cleared to Domestic Tariff Area by claiming exemption under specific notification."
17. The issue of extended period of limitation for the impugned show-cause notice dated 15.04.2008 is concerned, there is a finding of fact arrived at by the Tribunal that the respondent had not suppressed any material information from the Department as regards the consumption of inputs procured, on which the duty liability was foregone by the Revenue and as also the clearance of the final products to Page 44 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined DTA which is fortified from the fact that the respondent without being informed, on their own paid the entire amount of duty forgone on the inputs along with interest and informed the same to the Department on 15.10.2007. The Tribunal therefore has rightly held in paragraph No.12 as under :
"In our view, the show cause notice dated 15.4.2008 invoking extended period of limitation for demand of Customs duty under Section 28 of the Customs Act, 1962, Central Excise duty under Section 11A of Central Excise Act, 1944, has not brought forth any situation, wherein it could be concluded that there was a suppression of facts with intention to evade duty on the part of appellant herein. On perusal of the order of the Page 45 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined adjudicating authority, we find that the adjudicating authority has confirmed the demands of duty liability of Customs or Central Excise as per the calculation given by the appellant and there was no addition to such duty liability, which would indicate that the calculation of duty as has been done by the appellant is correct and they had indeed invoked their right of paying duty as per the Section 28(2B) of Section 11A(2B), as the case may be, and they had correctly sought for non issuance of show cause notice to them."
18. Considering the submissions made by learned advocates for both the sides, we are in complete agreement with the findings of facts arrived at by the Tribunal to hold that no penalty under Section 114 of the Customs Page 46 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined Act, 1962 and Section 11AC of the Central Excise Act, 1944 could have been levied by invoking the extended period of limitation for issuance of the show-cause notice in absence of any suppression of any material information by the respondent from the Department and therefore, such order has been rightly set- aside by the Tribunal.
19. We therefore, answer both the questions in favour of the respondent-assessee and against the appellant-Revenue, as the Tribunal could not be said to have committed any error by applying Section 28(2B) of the Customs Act, 1962 and Section 11A(2B) of the Central Excise Act, 1944 to hold that there was no need to issue the show-cause notice as duty liability Page 47 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025 NEUTRAL CITATION C/TAXAP/448/2013 ORDER DATED: 08/10/2025 undefined and interest were voluntarily discharged by the respondent-assessee as well as the extended period of limitation could not have been invoked in the facts of the case when the respondent-assessee has discharged the payment of duty along with interest for delayed payment before issuance of any show-cause notice and by intimating the same to the Department by letter dated 15.10.2007.
20. The Appeals therefore, being devoid of any merit, are accordingly dismissed.
(BHARGAV D. KARIA, J) (PRANAV TRIVEDI,J) PALAK Page 48 of 48 Uploaded by PALAK BRAHMBHATT(HC01391) on Wed Oct 15 2025 Downloaded on : Wed Oct 15 21:36:31 IST 2025