Customs, Excise and Gold Tribunal - Delhi
Bharat Carbon And Ribbon Mfg. Co. Ltd. vs Cce on 24 December, 2004
Equivalent citations: 2005(99)ECC595, 2005(186)ELT491(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in this appeal, filed by M/s. Bharat Carbon & Ribbon Mfg. Co. is whether the extended period of limitation is invocable for demanding Central Excise duty.
2. Shri B.L. Barasimhan, learned Advocate, submitted that the appellants manufacture, inter alia, carbon paper, which was classified by them under Tariff Item 68 of the old Central Excise Tariff; that they were periodically filing the classification lists under Rule 173 B of the Central Excise Rules, 1944 with the Department and these classification lists were duly approved by the proper officer; that a show cause notice dated 8.2.1980 was issued to them for classifying the impugned product under Tariff Item 17(2) and another show cause notice dated 11.3.80 was issued proposing to withdraw the classification approved by the Excise Department; that, subsequently, a letter dated 21.4.80 was issued to them for demanding differential duty for the period from 16.3.76 to 31.12.1979; that the Commissioner, under the impugned Order, has confirmed the demand of duty under Rule 10 (1) of the Central Excise Rules, 1944 besides imposing a penalty of Rs. 20 lakh. The learned Advocate, further, submitted that the time limit provided for issuance of show cause notice under Rule 10 was six months from the relevant date; that as the appellants were filing the classification lists claiming the classification of the impugned product under Tariff Item 68, there was no fraud, suppression or collusion, etc. on the part of the appellants and as such the extended period of limitation cannot be invoked; that it has been held by the Supreme Court in the case of CCE v. H.M.M. Ltd., 2002 (80) ECC 6 (SC) : 1995 (78) ELT 401 that suppression does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done, does not render it suppression.
3. He, finally, submitted that as the classification lists filed by them have been approved by the Department, show cause notice cannot be issued for the past period of six months also for demanding the duty as held by the Supreme Court in the case of CCE, Baroda v. Cotspun Ltd., 2000 (69) ECC 451 (SC) : 1999 (113) ELT 353 (SC); that Section 110 of the Finance Act, 2000 which validates the action taken under Section 11A of the Central Excise Act has been given retrospective effect only for the period commencing from 17.11.1980 when Section 11A of the Central Excise Act came into effect; that Section 110 of the Finance Act does not validate the action taken under Rule 10 of the Central Excise Rules, 1944; that as in the present matter demand has been raised under Rule 10 after approval of the classification lists, the same is not sustainable.
4. Countering the arguments, Shri S.M. Tata, learned SDR, reiterated the findings as contained in the impugned order and emphasised that the Supreme Court in the case of ITW Signode India Ltd. v. CCE, 2003 (90) ECC 757 (SC) : 2003 (158) ELT 403 (SC) has upheld the validity of Section 110 of the Finance Act, 2000 and the duty can be demanded retrospectively even when the classification lists have been approved by the Department.
5. We have considered the submissions of both the sides. It has not been disputed by the Revenue that the appellants had filed classification lists claiming the classification of the impugned product under Tariff Item 68 of the old Central Excise Tariff. It has also not been disputed by the Revenue that those classification lists have been approved by the proper officer. At the relevant time, Rule 10 of the Central Excise Rules, 1944 provided that where any duty has been levied or paid or has been short-levied, the proper officer may, within six months from the relevant date, serve notice on the person chargeable to duty. Proviso to Rule 10 provided that where any duty has not been levied or short levied, etc., by reason of fraud, commission or wilful misstatement or suppression of facts, the show cause notice can be issued within five years from the relevant date. We agree with the submissions made by the learned Advocate that in view of the fact that they have filed the classification lists and the same have been approved by the Department, it cannot be alleged that they have suppressed or made any wilful misstatement in this regard. The Department was made aware of the classification claimed by the appellants and it was open to the Department to change the same if the product, in question, was rightly classifiable under Tariff Item 17 of the Tariff. It has also been recently held by the Supreme Court in the case of Sarabhai M. Chemicals v. CCE, Vadodara, 2004 (97) ECC 729 (SC) that there was no wilful suppression of facts on the part of the appellants as they had filed classification lists which were duly approved by the Department. Accordingly, in the present matter, the extended period of limitation is not invocable and the demand beyond the normal period of limitation is barred by time limit provided under Rule 10 of the Central Excise Rules, 1944. Further, ratio of the decision in the case of Cotspun Ltd. (supra) is also applicable to the facts of the present matter. It has been held by the Supreme Court therein that "the levy of excise duty on the basis of an approved classification list, is the correct levy, at least until such time as to the correctness of the approval is questioned by the issuance to the assessee of a show cause notice. It is only when the correctness of the approval is challenged that an approved classification list ceases to be such. The levy of excise duty on the basis of the approved classification list is not a short levy. The differential duty cannot be recovered on the ground of short levy. Rule 10 has then no application. The learned Advocate has rightly submitted that the amendment in Section 11A of the Central Excise Act and the provisions of Section 110 of the Finance Act, 2000 which validate the action taken by the Department for realisation of the duty short levied has been given retrospective effect only from the date of Section 11A of the Central Excise Act came into force on 17.11.80, does not validate the action taken under Rule 10 of the Central Excise Rules, 1944. Thus, following the ratio of the Supreme Court decision in the case of Cotspun Ltd. (supra), the demand for normal period of six months can also not be raised against the appellants. Accordingly, we set aside the demand and allow the appeal.