Custom, Excise & Service Tax Tribunal
C.C.E. Meerut-Ii vs M /S. Honda Seil Power Products Ltd on 22 April, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/545/2007-Ex[DB]
[Arising out of Order-In-Appeal No. 09-11/Commr/MRT-II/2006 dated: 31.01.2006 passed by Commissioner, Meerut-II]
For approval and signature:
Hon'ble Mr. S.K. Mohanty, Member (Judicial)
Honble Mr. R. K. Singh, 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 should 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 Departmental authorities?
C.C.E. Meerut-II ...Appellant
Vs.
M /s. Honda Seil Power Products Ltd. Respondent
Appearance:
Mr. R.K. Mishra DR for the Appellant Mr. Tarun Gulati (Advocate) for the Respondent CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Honble Mr. R. K. Singh, Member (Technical) Date of Hearing/ Decision.22.04.2016 Final Order No. /2016 Per R. K. Singh:
The Revenue is in appeal against the order-in-original dated 31.01.2006 in terms of which, inter alia, demand of Rs. 1,59,78,303/- raised vide SCN dated 24.09.2004 for the period September,1999 to February, 2002 was dropped on the ground of time bar holding that there was no willful misstatement/ suppression of facts and therefore the extended period was not invokable and the SCN was issued beyond the normal period of one year.
2. The Revenue has contended that the respondent did not disclose to Revenue that it was clearing the Mahendra pumps along with their IC Units while claiming it to be a pump set eligible for concessional rate of duty. It did not disclose this fact in the RT-12 Returns also and indulged in this activity deliberately. The Ld. DR referred to the Judgment in the case of Commissioner of Central Excise Vishakhapatnam vs Mehta & Co. [2011 (264) ELT 481 (SC)] to plead that the date when the department came to know is not relevant for the purpose of invocation of extended period and the same is invocable, if there is willful misstatement/ suppression of facts on the part of the assessee. He also cited the judgment of CESTAT in the case of Bhor Industries Ltd. vs CCE, Pune-III [2015(328) ELT 403 (Tri. Mum)] to contend that issuance of an earlier SCN for normal period does not affect the nature of suppression etc. for the earlier period and for that i.e. for the earlier period, SCN invoking the extended period can be issued.
4. Per contra, the Ld. Advocate for the respondent pleaded that there was absolutely no willful misstatement/ suppression of facts in this case inasmuch as the Respondent had clearly brought to the notice of Revenue vide its letters dated 20.07.1999 and 20.09.1999 intimating that it was bringing pump from outside and the same would be placed in single carton for assembly with Honda Engine at the dealers premises for ultimate use in the manufacture of pump sets under the provisions of interpretative Rule 2(a) of the Central Excise Tariff Act and the payment of duty applicable under Chapter 84.13 with the relvant notification. The SCN raising the imposed demand (which has been dropped by the Commissioner as time barred) was issued for the period September 1999 to February 2002, which makes it obvious that the demand pertains to the period which is after the Revenue was intimated about the practice to be followed by the respondent. The Ld. Advocate cited the judgment of Nizam Sugar Factory vs Collector of Central Excise, A.P. [2006 (197) E.L.T. 465 (S.C.)], Gujarat Ambuja Exports Ltd. vs UOI [2011 (269) E.L.T. 159 (Guj.)] and CESTAT judgment in the case of Celebrum Technologies Ltd. vs CCE, Chandigarh [2015 (40) S.T.R. 707 (Tri. Del)] to contend when an earlier SCN had been issued (even if for a subsequent period) extended period could not be invoked in the SCN dated 24.09.2004 covering the period September 1999 to February 2002. Ld. Advocate also cited the judgment of Supreme Court in the case of Continental Foundation Jt. Venture vs CCE, Chandigarh-I [2007 (216) ELT 177 (S.C.)] and pleaded that when there is ambiguity, extended period cannot be invoked and that the fact that there was an ambiguity is evident from the fact that CBEC issued a Circular No. 224/58/96 dated 26.06.1996 on the issue of classification and excisability of Power Driven Pump Sets.
5. We have considered the contentions of both sides and perused the records.
6. We find that the adjudicating authority dropped the impugned demand as time barred by observing as under in the impugned order:
As regards the claim of time bar in respect of demand of Rs. 1,59,78,303/-, it has been contended by M/s HSPPL that on similar issue SCN No. IV-CE(9)A.E./M-II/02/033993 dated 02.05.2003 was issued. M/s HSPPL has claimed that since the same issue was well within the knowledge of the department as early as on 02.05.2003, issuance of SCN on the same issue afresh on 29.09.2004 after a lapse of more than one year makes the matter time bar.
I find that facts as narrated above by M/s HSPPL above are correct as per available records. The partys contention, regarding time bar is therefore admitted with regards the said demand only. Accordingly, the SCN dated 29.09.2004 for the period September 1999 to February 2002 for sum of Rs. 1,59,78,303/- do not stand the test of time bar.
7. It is thus evident that the adjudicating authority has relied on the arguments that there was an earlier SCN issued on 2.5.2003 (which covered the period April 2002 to February 2003) and therefore, the whole issue was in the knowledge of the department on 02.05.2003, and therefore, in a subsequent SCN dated 24.09.2004, the extended period could not be invoked. The Ld. Advocate also cited various judgments mentioned earlier to the same effect. A careful scrutiny of those judgments would indicate them to be to the effect that the SCN raising demand for subsequent period cannot sustainably invoke extended period if a SCN had been issued earlier on the same issue for an earlier period. Indeed in the case of Bhor Industries Ltd. (supra) the Ld. Tribunal had an occasion to deal with this issue and essentially held that issuance of SCN for normal period is no ground for not invoking extended period of limitation while issuing subsequent Show cause notice for an earlier period if there was willful misstatement/ suppression of facts in relation to the earlier period. Issuance of earlier SCN for normal period does not change nature of suppression etc. Para 6 of the said judgment is this regard is reproduced below:
6. We find that in the product i.e. PVC coated and laminated fabric manufactured, the appellant use the base fabric cotton Hoseiry Cloth(Knitted cloth) falling under chapter 60 as base fabric. From the Tariff entry it is very clear that under chapter heading 5903 the coated fabric of base fabric of cotton of chapter 52 is classifiable under 5903.11 or 5903.19. Coated fabric made of base fabric by Chapter 54 or Chapter 55 are classifiable under chapter sub heading 5903.21 or 5903.25 and other coated fabric are classifiable under Chapter sub heading 5903.91 or 5903.99. In the present case since the coated fabric manufactured by the appellant is not made of base fabric of chapter 52, 54 or 55 therefore is not classifiable either under chapter sub heading 5903.19 or 5903.29. In view of this undisputed fact the product in question is correctly classifiable under chapter 5903.99 and therefore correctly extended the benefit of Notification No. 141/86 CE dated 1/3/1986. under Sr. No 10 of the table and Notification No. 63/86 dated 1/3/1987 under Sr. No. 5 of the table appended thereto. As regard the judgment of Natson Laminates(supra)., Asian Leather Cloth MFG. Co. (supra). and CCE Vs. Entremonde Polyecoaters Ltd(supra). It is observed that in all these judgment the issue involved was that if the base fabric falls under Chapter 60 whether exemption Notification No. 141/86 CE dated 1/3/1986. and Notification No. 63/86 dated 1/3/1987 can be allowed wherein under column of rate of duty, chapter heading of base fabric is mentioned as 52, 54 or 55. In the present case since in the remand matter this Tribunal has observed that on the basis of base fabric of Chapter 60 used the products correct classification is under 5903.99 and following the same the Ld. Commissioner has correctly come to the conclusion that exemption provided to the goods of Chapter 5903.99 is admissible therefore the judgments cited by the Ld. Counsel are distinguished on this ground. As regard the submission of the Ld. Counsel that the show cause notice issued for the period 1/3/86 to 31/1/89 is time barred as appellant had been filing their classification list from time to time and same were approved, hence, there was no suppression of facts and mis-declaration. We observed that in the classification list the appellant admittedly mentioned rate 6 per sq. mtr. plus the duty for the time being leviable on the base fabrics under Chapter 52, if not already paid. From this mention it is clear that department is under belief that base fabric used by the appellant is falling under chapter 52 whereas the appellant used the base fabric which is falling under Chapter 60, therefore this is a clear mis-declaration of the fact. As regard submission of Ld. Counsel that stock was verified physically by the departmental officer, we are of the view that though the stock of the goods was verified but from the stock verification officer cannot ascertain whether the base fabric used in the product is falling under Chapter 52 or Chapter 60. Therefore we do not agree with the submission of the Ld. Counsel on this count. We therefore of the view that there is clear suppression of facts and mis-declaration on the part of the appellant therefore extended period was rightly invoked. As regard submission of the Ld. Counsel that show cause notice issued is time barred also on the ground that show cause notice for the extended period i.e. 1/3/86 to 31/1/1989 was issued on 26/2/1991 subsequent to the show cause notice of normal period i.e. 18/7/1989. On this, We are of the view that during the period 1/3/86 to 31/1/89 the appellant has suppressed and mis-declared facts therefore show cause notice for the said period can be issued up to five years. Only because show cause notice for the extended period was issued subsequently, nature of suppression and misdeclaration does not get extinguished. We therefore do not agree with this submission of the Ld. Counsel. In view of our above discussion, we are of the considered view that impugned order passed by the Ld. Commissioner is sustainable. The appeal is dismissed. The respondent has also cited several judgments on this aspect. However, a detailed and thorough discussion on this point in the light of the judgments cited by the Ld. Advocate for respondent, even if arguably required, is not necessary for the purpose of the present case as would be evident from the following paras.
8. It is clearly brought out by Ld. Advocate that the impugned demand was raised vide SCN dated 24.09.2004 for the period September 1999 to February 2002 while the respondent had clearly unambiguously and categorically intimated to the department vide letter dated 20.07.1999 and 20.09.1999 about the clearance of the impugned goods by them by classifying them under 84.13 and paying duty as per the relevant notification. These two letters are reproduced below.
Both these letters have the initials to the effect of having been received by the addressee. Indeed, the receipt of these letters is not disputed by Revenue. There remains no doubt after the perusal of the aforesaid letters that there was absolutely no suppression/ willful misstatement on the part of the respondent in this case. Further, that there was ambiguity with regard to the classification of PD pump sets becomes evident when one peruses the CBEC Circular No. 224/58/96 dated 26.06.1996-Cx. which is reproduced below:
As may be observed from the above quoted Circular of the Board, the Board clarified as to how the classification of pump set would be dealt with and how they would be eligible for the benefit of the then Notification No. 56/1995 dated 16.03.1995. Supreme Court in the case of Continental Foundation (supra) has observed that when there was scope for entertaining a bonafide doubt the extended period of limitation was not available. At this juncture, it is pertinent to mention that the suppression of facts/ willful misstatement is a combined question of facts and law, and therefore, precedential value of various judgments on this issue has to be determined in the context of the facts of each case. In case of CCE Vs. Chemphar Drugs Liniments [2002-TIOL-266-SC-CX], the Supreme Court held that something positive other than mere inaction or failure on the assessees part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. In the light of the foregoing analysis, the allegation of willful misstatement/ suppression of facts is not sustainable against the respondent. Consequently, we hold that the Commissioner was justified in dropping the impugned demand as time barred. Revenues appeal is dismissed.
(Dictated and pronounced in the open court)
(R. K. Singh) (S. K. Mohanty)
Member(Technical) Member (Judicial)
Neha
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E/545/2007-Ex[DB]