Customs, Excise and Gold Tribunal - Delhi
Nizam Sugar Factory vs Collector Of Central Excise on 4 October, 1999
Equivalent citations: 2003(89)ECC873, 1999(114)ELT429(TRI-DEL)
JUDGMENT A.C.C. Unni, Member (J)
1. This is a matter which has been referred to this Larger Bench constituted by the President by order dated 21.6.1999 pursuant to Miscellaneous Order No. 54/98-C passed by one of the Benches of this Tribunal. The question referred relates to the interpretation of Section 11 A(1) of the Central Excise Act, 1944 and its proviso in particular. The Miscellaneous Order No. 54/98-C, proposing reference of the question to the Larger Bench had observed as under:
"We find that there are conflicting views on the point as to whether the date of knowledge by the Department is relevant according to the provisions of Section 11A and whether the notice issued beyond the period of six months from the date of knowledge, should be held to be barred by the limitation."
2. Before proceeding further, it will be useful to refer to the said section which reads as follows:
Section 11A. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. -- (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded a Central Excise Officer may, within six months from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if, for the words "six months", the words "five years" were substituted.
Explanation. -- Where the service of the notice is stayed by an order of a court, the period of such stay shall be excluded in computing the aforesaid period of six months or five years, as the case may be.
(2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under Sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.
(3) For the purposes of this section, --
(i) "refund" includes......
(ii) "relevant date" means, --
(a) in the case of excisable goods on which duty of excise has not been levied or paid or has been short-levied or short-paid --
(A) Where under the rules made under this Act a periodical return, showing particulars of the duty paid on the excisable goods removed during the period to which the said return relates, is to be filed by a manufacturer or a producer or a licensee of a warehouse, as the case may be, the date on which such return is so filed;
(B) Where no periodical return as aforesaid is filed, the last date on which such return is to be filed under the said rules;
(C) In any other case, the date on which the duty is to be paid under this Act or the rules made thereunder;
(b) in a case where duty of excise is provisionally assessed under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof;
(c) In the case of excisable goods on which duty of excise has been erroneously refunded, the date of such refund."
3. Some of the decisions favouring the Revenue held as under: In the case of Pure Drinks (P) Ltd. v. CCE, New Delhi, 1996 (17) RLT 375 (T), the Tribunal took the view that the time limit of five years will run from the date of the alleged removal and the period is not to be curtailed to a shorter period on the basis of the date of knowledge on the part of the Department about the alleged removal without payment of duty since no such date is envisaged by Section 11A as one of the relevant dates for the purpose of computing limitation. To the same effect was the decision of the Calcutta Bench of the Tribunal in the case of Indian Oxygen Ltd. v. CCE, Bhubaneswar, 1996 (16) RLT 867 (CEGAT-EB)] wherein the invoking of the extended period of limitation was held to be valid and proper even though the Show Cause Notice was issued after a period of six months from the date of knowledge of the assessess' activities. In the case of Needle Industries India Ltd. v. CCE, 1996(16) RLT 903, the Tribunal held that the SCN is issue to cover the period prior to the Department acquiring knowledge about assessees' activities is not barred by limitation even though the notice is issued beyond a period of six months from the date of such knowledge.
The common line of approach in the aforesaid orders was that the date of acquisition of knowledge about alleged suppressed activities of the assessee is not a relevant date within the meaning of Section 11A and even though SCN is issued beyond the period of six months from the date of such knowledge, they would not be vitiated as long as it is issued within the period of five years from the relevant date as defined under the provisions of Section 11A(3)(ii)(a).
4. There were also contrary decisions of the Tribunal on the question. For example, in the case of Varanasi Bottling Co. Pvt. Ltd. v. CCE, 1997 (19) RLT 668 it was held that the SCN is required to be issued within a period of six months from the date of knowledge on the part of the Department of any suppression of production etc. The Miscellaneous Order (54/98-C) referring the matter to this Larger Bench also noted that the issue as to whether the date of knowledge on the part of the Department of the alleged suppressed activities of assessee is the relevant date under the provisions of Section 11A has been referred to the Hon'ble Orissa High Court by the Tribunal in the case of Oriclean Pvt. Ltd. v. CCE, 1998 (25) RLT 70.
5. We had the benefit of hearing S/Shri J.V. Suryanarayana, and J. Venkaiah, Ld. advocates for M/s. Nizam Sugar Factory. We had also heard S/Shri V Lakshmikumaran, G. Shiv Das, M.P. Devnath, Shekhar Vyas, P.K. Sahu and A.K. Jain, advocates as Interveners. We have also heard Shri Sanjeev Srivastava, Ld. JDR representing the Department.
6. Ld. Counsel Shri J.V. Suryanarayana stated that the Department had issued a SCN to M/s. Nizam Sugar Factory on 28.2.1984 demanding duty for the period February 1978 to September 1982 on the production of impure Carbondioxide emanating as a by-product during the process of fermentation of molasses in the appellants' factory. It was further alleged that the assessee had cleared the said carbondioxide without payment of duty to another unit in contravention of Rule 9(1) of the Central Excise Rules and without obtaining licence for manufacture of carbondioxide in their factory and without filing Classification/Price List and without maintaining accounts. The assessee had replied to the SCN on 19.3.1984 contending that impure carbondioxide was not excisable to duty relying on some earlier decision. Though personal hearing was held on 16.4.1984, according to the Ld. Counsel, the assessee had not heard anything in the matter thereafter. However, the assessees were issued another SCN by the Collector on 16.7.1987 alleging that the assessee was supplying carbondioxide to another unit as per agreement dated 19.3.1983 and that they had not taken necessary licence and had not followed the procedure prescribed under the rules and had not discharged duty liability. The said notice covered the period of assessment years 1982-83 to 1986-87. During the adjudication proceedings the assessee inter alia took the plea that the SCN under consideration was practically a repetition of the allegations contained in the SCN dated 28.2.1984 and for the period April 1982 to September 1982 the Department had raised demands under two different SCNs. The assessee had further pointed out that carbondioxide in the impure form was not marketable as it also contained carbonmonoxide in lethal proportions. The assessee was also contended that they were under bona fide belief that since such impure carbondioxide was not excisable, they were also not required to file Classification List or Price list or to take out licence. Assessee therefore submitted that resorting to extended period of limitation under Section 11A(1) was not justified in the circumstances of the case.
7. The adjudicating authority however, did not accept the assessee contention and the demands raised in the SCN were confirmed by the impugned order. Ld. Counsel contends before us that the extended period of limitation was not invocable against them by way of the second SCN when the assessee had been contesting the demand raised even for the earlier period. He contended that in a case where the Department issues a Show Cause Notice on the basis of a certain set of facts to an assessee it cannot allege in another SCN issued subsequently for a later period, suppression on the part of the assessee when it was fully aware of all the facts even at the time of issuing the first SCN. Extended period of limitation could not therefore be invoked. He relied on the following case law in support of his contention viz.,
(a) Hindustan Development Corporation Ltd. v. CCE, 1990 (50) ELT 165 (T)
(b) Khatao Makanji Spg. & Wvg. Co. v. CCE, Bombay, 1999 (108) ELT 378 (T)
(c) Sonarome Chemicals Pvt. Ltd. v. CCE, Bangalore, 1998 (101) ELT 328 (T) Reliance was also placed on the following further case law in support of the contention that when two SCNs are issued on identical set of facts, extended period cannot be invoked:
(i) Mettur Chemical & Indus. Corporation Ltd. v. CCE, Coimbatore, 1996 (87) ELT 114 (T).
(ii) Wipro Information Technology v. CCE, Bangalore, 1999 (107) ELT 467 (T).
(iii) Nicholas Piramal India Ltd. v. CCE, Mumbai-II, 1998 (101) ELT 314 (T) In other words, when the Department was in full knowledge of the facts of the case at the stage of the first SCN, it was not permissible to issue a further SCN to the same assessee levelling the very same allegations as contained in the earlier SCN and still allege suppression of facts on the part of the assessee. Invoking of the extended period of limitation in the second SCN on the ground of suppression was therefore untenable when the Department had full knowledge of the facts even at the time of issuing the first SCN. He submitted that in such cases, the extended period of five years as provided in the proviso to Section 11A (1) was not available to the Department. He submitted that on the basis of the case law cited the Larger Bench may be pleased to dispose of the reference in favour of the assessees
8. Ld. Advocate Shri. V. Lakshmikumaran, submitted that date of knowledge on the part of the Department was a very relevant fact or for construing the scope of the proviso to Section 11A(1) of the C.E. Act. He contended that the said proviso was an exceptional provision which is attracted where non-levy, short-levy or erroneous refund on the part of the Department had occurred or where non-payment or short-payment by assessee had taken place by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any provisions of the Act or Rules with intent to evade payment of duty. In such cases SCN could be issued within a period of five years instead of six months. He referred to Tribunal decision in Mopeds India Ltd. v. CCE, 1991 (56) ELT 241 (T), in which a three Member Bench of the Tribunal had held that though suppression was manifested in the facts of the case as evident from non-disclosure of material particulars in the Price Lists submitted by the assessee, since the Department had become aware of the malpractice even on 23.10.1975, the SCN issued on 5.1.1977 was not permissible for recovery of differential duty for the period 1.3.1974 to 23.10.1975. He also drew attention to the report appearing in 1991 (52) ELT A102 stating that the Hon'ble Supreme Court on 14.1.1991 had dismissed an appeal filed by C.C.E., Hyderabad against the Tribunal decision in Mopeds India Ltd. case (supra). In Neyveli Lignites Corporation Ltd. v.CCE, 1992 (58) ELT 76 (T), the Tribunal had held that the extended period of limitation would not be applicable when demand for subsequent period is raised under normal limitation period and the demand for the earlier, period is raised subsequently. In the case of CCE v. Debikay Electronics [Final Order No. 3554/96-A, dated 5.11.1996] the Tribunal had held on the basis of the decisions in Mopeds India case and Neyveli Lignites Corporation cases (supra) that the longer period of limitation as such would not be available to the Department where the duty evasion or malpractice was known to the Department sufficiently early and there was long delay in issuing the SCN. Reliance was also placed by the Ld. Advocate on the Tribunal decision in Atlas Capco India Ltd. v. C.C.E. Final Order Nos. 223-234/97-A, dated 7.2.1997, in which, following the Neyveli Lignites Corporation case (supra) it was held that failure on the part of the Department to issue SCN within a reasonable period from the date of knowledge would be fatal. Reliance was also placed on the decision in Varanasi Bottling Co. (P) Ltd. v. CCE, 1997 (19) RLT 668 (T) where the Tribunal held that even though the SCN alleged suppression of facts by the assessee, in view of the fact that the Department had also issued notice to get clarification and since information relating to production was very much within the knowledge of the Department, the Department should have issued the SCN within a period of six months from the date of knowledge and not within the extended period of five years. Similar view was taken by the Tribunal in JSL Industries Ltd. v. CCE, 1998 (25) RLT 779 (T), and it was held that extended time limit would not be invocable when SCN is not issued within six months from the date of knowledge of the Department.
9. Ld. Counsel Shri G. Shiv Das referred to and relied on the following case law in support of the contention that the SCN has to be issued within six months of the Department acquiring knowledge of fraud, collusion etc. referred to in the proviso to Section 11A(1).
(a) Nitson Laboratories v. CCE, 1998 (26) RLT 359 (T).
(b) Pratibha Industries v. CCE, Final Order Nos. 380-381/97-D dated 8.5.1997.
(c) Kathiravan Pipes Ltd. v. CCE, 1998 (61) ECC 627 (T) : 1998 (27) RLT 820 (T)
(d) Crescent Castings India v. CCE, 1998 (27) RLT 861 (T)
(e) Kamal Plywood & Allied Industries (P) ltd. v. CCE, 1996 (82) ELT 323 (T)
(f) M.P. Vegetable Fruit Products v. CCE, 1995 (76) ELT 393 (T)
(g) Cosmic Dyechemical v. CCE, 1994 (48) ECC 55 (SC) : 1995 (75) ELT 721 (SC)
(h) Lubri-Chem Industries Ltd. v. CCE, 1996 (53) ECC 92 (SC) : 1994 (73) ELT 257 (SC)
(i) Rajshi Foam, Therm & Pack v. CCE, 1997 (20) RLT 161 (T) (j) Carponics Pvt. Ltd. v. CCE, 1998 (29) RLT 697 (T)
10. Shri P.K. Sahu, Ld. Counsel submitted that date of knowledge was a relevant factor for issuing SCN under the proviso to Section 11A and the proviso cannot be invoked for justifying the extended period of five years when the Department had knowledge and the SCN has to be issued within a reasonable period i.e. six months from the date of knowledge. He submitted that if the literary interpretation of a statutory provision results in an absurd situation the court can adopt a reasonable interoperation (CIT v. J.H. Gotla, 156 ITR 323 (S.C)),
11. Shri A.K. Jain, Ld. Advocate submitted that there is no provision in the Act or in the Rules for constituting a Larger Bench of the Tribunal to hear issues which have already been decided by regular Bench of the Tribunal. Further in the instant reference the very same issue has been referred by another Bench of the Tribunal to the Hon'ble Orissa High Court in Oriclean Pvt. Ltd. v. CCE, 1998 (104) ELT 750 (Tribunal) = 1998 (25) RLT 70. Moreover a decision of a Bench of the Tribunal on a point ignoring an earlier decision of another Bench on the same point would be per incuriam and therefore not binding. He referred to the Kerala High Court judgment reported in 1993(66) ELT351 in this connection.
Reference was also made by the Ld. Counsel to the Madras High Court decision is S. Mohan Raj v. Director of Enforcement, 1995 (75) ELT 251 in which the Hon'ble High Court had held that the Enforcement Directorate should complete its investigation within a reasonable period under the Foreign Exchange Regulation Act and any proceeding initiated after a lapse of reasonable period would be illegal and liable to be quashed. Reference was also made to the new Section 11AB of C.E. Act which provides for demanding interest from the assessee from the date on which duty liability has arisen. Ld. Counsel submitted that allowing the extended period of limitation without any reference to the date of acquisition of knowledge by the Department of the grounds mentioned in the proviso to Section 11A(1) would make the duty demand unjust and unreasonable and therefore the period of six months should be taken as a reasonable period within which the Department has to issue the SCN under Section 11A(1) proviso. .
12. Opposing the submissions made by the Ld. Counsel for the appellants: and the Intetrveners, Shri Sanjeev Srivastava, Ld. JDR submitted that Section 11A(1) and its proviso does not make any reference to any date of knowledge on the part of the Central Excise Officer for issuing a SCN. He submitted that if the Legislature had intended to put a condition that the SCN should be issued within a period of six months from the date of knowledge on the part of the Central Excise Officer, they would have clearly provided such a condition as in the case of Section 17 of the Limitation Act, 1963. He submitted that the only difference between the opening portion of Section 11A(1) and its proviso was that where non-levy/non-payment of duty, or short-levy/short -payment/erroneous refund had occurred by reason of fraud/collusion/wilful misstatement/suppression of facts/contravention of the provisions of the Act or Rules with intent to evade payment of duty, the SCN can be issued within five years from the relevant date instead of six months in contradiction to instances where the conditions specified in the proviso did not exist. There was therefore no scope for importing any new concept like date of knowledge on the part of the Department into the proviso to Section 11A(1). He referred to Crafords "Construction of Statutes", at pages 240-245 and 266....... In support of his contention that there was no scope for importing any new concept into a statutory provision when its meaning is clear and unambiguous. Ld. JDR also drew attention to the fact that Mopeds India case (supra) relied on in some of the decisions of the Tribunal and cited by the Ld. Advocates for the Interveners did not in fact interpret the provisions of Section 11A(1) or its proviso. That case arose in the context of the provisions of Rule 10 of the C.E. Rules, 1944 as it stood at the relevant time at that time under which the time prescribed was three months. It was Rule 10A of Central Excise Rules at that time, which provided a limitation period of one year irrespective of the date of knowledge of the malpractice by the Department. In that case, the demand which was raised for the period from 1.3.1974 to 23.10.1975 by SCN dated 5.1.1977 was in any case beyond 3 months or the extended period of one year provided under Rule 10A of the C.E. Rules as it stood at the relevant time Ld. JDR submitted that the various decisions subsequently passed by the Tribunal citing the Mopeds case had thus mis-construed the ratio of the said decision. He further submitted that some of the decisions relied on by the Ld. Counsel for the Interveners such as the decision in Atlas Capco India Ltd. v. CCE (supra) does not support the assessees' contention relating to date of knowledge for issuing SCN since in that decision, the Tribunal had struck down the SCN on the basis of allegation about suppression itself not being substantiated to be and not because the period of limitation had been exceeded. Similarly, the Tribunal decision in Varanasi Bottling Co. Pvt. (supra) also did not relate to the issue involved in the present reference.
13. Ld. JDR further submitted that on a proper construction of the proviso to Section 11A(1), the date of knowledge on the part of the Central Excise Officer issuing the SCN can be related only to the date of issue of SCN and not to any other date. The date of receipt of any information about suppression or mis-statement of facts, etc. cannot automatically be considered to be the date on which the Central Excise Officer issuing the SCN had acquired 'knowledge' of the alleged suppression, mis-statement etc. In many cases further investigations will require to be carried out before taking even a prima facie view about the credibility and sufficiency of such information for initiating a SCN. The mere date of receipt some information, irrespective of its relevance or sufficiency cannot be considered to be a date of 'knowledge' on the part of the Officer clothed with the power to issue the notice. The 'relevant date' mentioned in Section 11A(3) is for the purpose of serving notice. As per the definition of 'relevant date' in Sub-section 3(ii)(a) of Section 11A, it is the date on which the duty has become payable and not the elate of detection of fraud, collusion etc. Further, even in terms of the proviso, there is no bar as such for issuing a SCN even after a period beyond five years from the relevant date. In terms of Section 11A proviso, in a case where the subsisting duty liability had arisen on account of fraud, collusion etc. extended beyond a period of five years, the period for which such demand could be legally raised had only been restricted to five years. In a case where the duty liability on account of short-levy etc. has arisen in the normal course, i.e., not on account of suppression etc., the demand can be extended only to six months.
14. Ld. JDR further submitted that though there was no direct decision in support of his contention that date of knowledge is the date of issue of SCN, there are observations in many decisions of the Tribunal which supports the proposition that date of knowledge can be attributed only to the date on which the SCN is issued. He referred to the following decisions in this connection:
(a) AIMS Oxygen Pvt. Ltd. Baroda v. CCE, Baroda 1988 (36) ELT 151 (T)
(b) CCE v. Metal Box India Ltd., 1989 (19) ECC 91 (T) : 1989 (39) ELT 79 (T)
(d) Jaishree Engineering Co. (P) Ltd. v. CCE, 1989 (20) ECC 12 (T) : 1989 (39) ELT 449(T).
15. Further, the Tribunal orders in Metal Box India Ltd. case and Jaishree Engg. Co. case referred to above have also been upheld by the Supreme Court. In the light of the above submissions, Ld. JDR would submit that the various decisions holding that SCNs issued after a period of six months from the so-called date of knowledge by the Department did not represent the correct view of the law and therefore not sustainable. The rationale of the said decisions relying on the concept of 'date of knowledge' and the requirement of issuing SCN within a reasonable period (six months) from such date of knowledge were alien to and incompatible with the clear and unambiguous language of Section 11A(1) and its proviso.
16. We have considered the submissions and the case law.
17. During the course of the submissions, Ld. Counsel Shri V. Lakshmi Kumaran and Shri G. Shiv Das had stated that the Department's Appeal against the Tribunal decision in Mopeds India Ltd. (supra) had been dismissed by the Apex Court and they were making efforts to obtain a certified copy of the said order and the same may be allowed to be filed with the Registry. This request was allowed by the Bench. A photocopy of the certified copy of the said Order dated 14th January 1991 in Civil Appeal No. 2150(NM) of 1987 of the Hon'ble Supreme Court has since been filed by Advocate Shri M.P. Devnath on 15th July 1999.
18. We have perused the Order. The full text of the order reads: "The Civil Appeal is dismissed". No doubt the Order is thus not a speaking order and no ratio as such can. be derived from it. Nevertheless, having regard to the fact that the Order has arisen from the Appeal filed by the Revenue against the Tribunal Order in M/s. Mopeds (India) Ltd., the resulting legal position would be that the Tribunal Order in Mopeds India Ltd. has been upheld by the Apex Court and the view taken by the Tribunal in the said case has the approval of the Apex Court. It is true that the Ld. JDR had urged that the Mopeds India Ltd. case dealt with the limitation period in Rules 10 and 10A of the C.E. Rules, as they stood at the relevant time and not the provisions of Section 11A(1) and its proviso. However, we note that the tribunal had in that decision in Para 13 considered the issue relating to time bar and observed as follows:
"The learned counsel for the appellants argued that the demand is barred by time. The lower authorities have adverted to Rule 9(2) and Rule 10(1) of the Central Excise Rules, 1994. The decision of the Tribunal in 1983 (14) ELT 1927 (Shriram Pistons & Rings Ltd. Ghaziabad v. Collector of Central Excise, Meerut) considers the effect of these provisions in juxtaposition. It was held therein that no period of limitation is prescribed for the levy of a penalty either in terms of Rule 9(2) or Rule 173Q; just as the limitation prescribed in Section 468 of the Cr. P.C. is inapplicable to a prosecution under Section 9 of the Act. The department has claimed that there was a suppression of fact. Shri A.K. Jain stated that no time-limit has been prescribed under Rule 9 and hence the demand is not time barred. But it must be pointed out that Rule 9(2) of the Central Excise Rules, 1944, at the relevant period read as follows:
"(2) If any excisable goods are, in contravention of Sub-rule (1), deposited in or removed from, any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made (within the period specified in Rule 10) by the proper officer, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which may extend to two thousand rupees, and such goods shall be liable to confiscation." So there must be a written demand made within the period specified in Rule 10. Rule 10 at the relevant time prescribed the limit of 3 months and Rule 10A read with Rule 173] provided a period of one year. In this case the suppression is manifest because the appellants have not disclosed the material particulars in the price lists. Nevertheless we must observe that the department became aware of the malpractices even on 23.10.1975 but the show cause notice was issued on 5.1.1977, Hence in that view, the department will not be entitled to recover the differential duty from 1,3.1974 to 23.10.1975."
19. It is observed from the last portion of Para 13 reproduced above that the Tribunal had taken a definite view in the issue relating to issue of SCN after the date of its becoming 'aware' of the malpractice. The Department had become aware of the malpractice even on 23.10.1975 but the SCN was issued only on 5.1.1977. For that reason it was held that the Department was not entitled to recover differential duty from 1.3.1974 to 23.10.1975 as raised in the SCN. It is no doubt true that the provision relating to limitation (Rules 10 and 10A as they stood at the relevant time) was different from Section 11A which is the provision presently under consideration.
20. Since the Apex Court has, by dismissing the Revenue Appeal against the Tribunal decision in Mopeds case and thereby confirmed the Tribunal's view, the said decision has to be taken as having been endorsed by the Apex Court thereby settling the legal position.
21. Accordingly, we answer the reference extracted in Paragraph 1 above in the affirmative and hold that notice issued beyond the period of six months from the date of knowledge by the Department of suppression, fraud etc. would be barred by limitation under proviso to Section 11A(1).
Per: V.K. Agrawal, Member (T) for self and on behalf of S/Shri Lajja Ram, Member (T) and S.S. Kang, Member (J).
22. I have the opportunity of going through the order as recorded by my learned brother Shri A.C.C. Unni, Member (J). With due respect, I beg to differ from him for the following reasons:
23.1 On account of proviso to Sub-section (1) to Section 11A of the Act, the sub-section provides that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, by such person or his agent, a Central Excise Officer may, within five years from the relevant date, serve notice on the person chargeable with the duty, requiring him to show cause why he should not pay the amount specified in the notice. It is thus apparent that in case of any of the specified reasons mentioned in the proviso, if any Central Excise duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded, a show cause notice may be issued within five years from the relevant date. Relevant date has been defined in Sub-section (3) to Section 11A and nowhere this sub-section provides that the relevant date means the date of acquiring the knowledge by the Department. As such acquiring the knowledge by the Department does not take away the period of five years provided by the law Makers in the Act itself. We must not lose sight of the fact that extended period of limitation has been provided by the Law Makers with the clear intention that if a person has not paid the duty, which is due to the Government under law, on account of fraud, suppression, wilful mis-statement or contravention of Act or rules with an intent to evade payment of duty, the Department can deprive him of his illegal benefit and/or demand the duty due to the Government within a period of five years from the relevant date. This period of five years is not curtailed merely because the Department has come to know about the fraud, suppression, etc., committed by the assessee. 'Casus/Omisus' is well-settled rule of interpretation. Certain matters have to be left to the wisdom of Legislature. The matter which should have been but has not been provided for in a statute, cannot be supplied by Courts. The Supreme Court in P.K. Unni v. Nirmala Industries, AIR 1990 SC 33 has quoted with approval the following observations of the Privy Council in the case of Crawford v. Spooner, (1846) 6 Moor (PC) 1, 8, 9;
"We cannot aid the Legislature's defective phrasing of an Act, we cannot add and mend, and by construction, make up deficiencies which are left there."
23.2 In Seaford Court Estates Ltd. v. Asher (1949) 2 All ER 155(CA), Lord Denning observed: "A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases." In the present matters there are no creases to be ironed out as the legislative intent is clear that in case of suppression etc. the show cause notice may be issued within 5 years from the relevant date. Accordingly, a new meaning to relevant date of introducing 5 years from the date of acquiring knowledge cannot be provided in Sub-section (3) to Section 11A(1) of the Act by the Tribunal. It has also been held by the Apex Court in many cases [Miles India Ltd. v. Assistant Collector of Customs, 1987 (30) ELT 641 (SC) and C.C.E. v. Doaba Coop. Sugar Milts, 1988 (18) ECC 157 (SC) : 1988(37) ELT 478 (SC)] that the officers exercising powers under the provisions of the Act cannot ignore the provisions of the Act and the Rules. They are the creatures of the statute. They are bound by the provisions of the statute,"...... an assessee is bound within the four corners of the Statute and the period of limitation prescribed in the Central Excise Act and Rules framed thereunder must be adhered to. If the proceedings are taken under the Act by the Department, the provisions of limitation prescribed in the Act will prevail." The Apex Court, further, in the case of U.O.I. v. Kirloskar Pneumatic Co., 1996 (15) RLT 1 (SC) directed that the High Court cannot order the authorities to act country to law. The Supreme Court held that "yet the question is whether it is permissible for the High Court to direct the authorities under the Act to act contrary to the aforesaid statutory provision. We do not think it is, even while acting under Article 226 of the Constitution... In particular, the Customs authorities, who are the creatures of the Customs Act, cannot be directed to ignore or act contrary to Section 27..."
24. The learned Counsel for the Intervener has relied, upon the decision in the case of Mopeds India Ltd. v. CCE, 1991 (56) ELT 241 (T) wherein the show cause notice issued on 5.1.1977 was held to be beyond the time limit for recovery of differential duty for the period from 1.3.1974 to 23.10.1975. In this case it was also observed that the Department had become aware of the malpractice on 23.10.1975. He has also emphasised that the Supreme Court had dismissed the appeal filed by the Department as reported in 1991 (52) ELT A102. On the other hand, the learned DR, arguing on behalf of the Revenue, has submitted that Mopeds India's case arose in the context of the provisions of Rule 10 of the Central Excise Rules which provided a time limit of 3 months at the relevant time. Further, even Rule 10A of the Central Excise Rules provided an extended period of one year only and as such the show cause notice issued on 5.1.1977 was beyond even the extended period of limitation. I find substantial force in the submissions of the learned DR that the notice issued in Mopeds India's case on 5.1.1977 was beyond the period of not only general limitation but even extended period as was provided under Rules 10 and 10A of the Central Excise Rules. This contention has not been controverted by the Advocates appearing on behalf of the assessee involved or on behalf of the Interveners. Once the show cause notice was beyond the extended period of limitation, any reference to date of acquiring the knowledge thus has no relevance. No inference need be drawn from the fact that the department became aware of the malpractices on 23.10.1975. The law has been clearly enunciated by the Tribunal in the case of Pure Drinks (P) Ltd., 1996 (17) RLT 375 wherein it was held:
"There is nothing in the language of Section 11A(1) proviso or the definition of the term "relevant date" under Sub-section (3) of Section 11A to take the date of the department's knowledge of the alleged irregularity as the starting point of limitation... The limit of five years will run from the date of alleged removal and this cannot be curtailed by the intervening development of the officers detecting the offense and coming to know of the non-payment of duty".
I am, therefore, of the view that any show cause notice issued beyond the period of six months from the date of acquiring knowledge, will not be barred by limitation, if the duty has not been levied or not-paid or short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of Act or Rules with intent to evade payment of duty and the show cause notice has been issued within 5 years from the relevant date as defined in Sub-section (3) of Section 11A of the Central Excise Act.
Per: G.A. Brahma Deva
25. I have gone through the orders written by my learned brothers Shri A.C.C. Unni, Member (Judicial) and Shri V.K. Agrawal, Member (Technical) respectively. On going through the respective orders, I concur with the conclusion arrived at by my learned brother Shri A.C.C. Unni, for the reason that the words "Knowledge" and "Suppression" are exactly opposite terms.
Knowledge means knowing, familiarity; fact of knowing: range of information or understanding.
Suppression means to keep secret, not to reveal or in other words concealment of fact that ought to be made known.
Although, the word "Knowledge" as such is not mere in the Section 11A(i) and its proviso nevertheless, we find that exact opposite word "Suppression" therein. According to proviso to "Section 11A(i) where no levy/non-payment of duty, or short-levy/short-payment/occurred by reason of fraud, collusion/wilful mis-statement suppression of fact/contravention of any of the provision of this Act or of the rules with intent to evade payment of duty the department can issue notice within five years from the relevant date instead of six months. In other words department can raise demand by issuing a notice for a period of five years if there was suppression of facts. On the other hand if there is no suppression of facts or if it was within the knowledge of the Department there was no justification to raise demand invoking the larger period. There was no necessity to insert knowledge on the part of the department into the proviso to Section 11A since the term "Suppression" was already there. There is lot of force in the arguments advanced on behalf of the assessees that date of knowledge was relevant factor for issuing of a show cause notice under the proviso to Section 11A(1) and the proviso cannot be invoked for justifying the extended period of five years when the department had knowledge and the show cause notice has to be issued within a reasonable period i.e. six months from the date of knowledge. Provisions of charging section particularly in the Taxing statute has to be interpreted in a reasonable manner and in fact Supreme Court in the case of Commissioner of Income Tax v. J.H. Gotla, 156 AIR 323 (SO held that if the literary interpretation of a statutory provision results in an absurd situation the Court can adopt a reasonable interpretation. What is knowledge and whether department had sufficient knowledge may depend upon the facts on the each case with which we are not concerned and nor we are supposed to answer that hypothetical question in this reference.
Further, in the case of Moped (India) Ltd., 1991 (56) ELT 241 the Tribunal had taken a view that department was not right in invoking the larger period since the activity of the assesses was within the knowledge of the department. The view taken by the tribunal in that case was upheld by the Apex Court by dismissing the appeal filed by the department. Since the Tribunal Order in Moped India case has been upheld by the Apex Court and the view taken by the Tribunal in the said case has the approval of the Apex Court, the order of the Tribunal is as that of an order of the Apex Court and is binding on the lower court and this position has been properly analysed by my learned brother Shri A.C.C. Unni in Para 18 of the order and the view expressed by him is concurred with. In the case of Sarwan Singh Lamba and Ors. v. Union of India and Ors., AIR 195 (sic) (S.C.) 1729 the Supreme Court held that normally even an obiter dictum is expected to be obeyed and followed. With this view that question referred to the Larger Bench is to be answered in the affirmative manner and accordingly, notice issued beyond the period of six months from the date of knowledge by the department of suppression fraud etc. will be barred by limitation under proviso to Section 11A(1) of the Act.
FINAL ORDER
26. By majority it is held that the date of knowledge by the department is not relevant according to the provisions of Section 11A and the notice issued beyond the period of six months from the date of knowledge will not be barred by limitation.