Customs, Excise and Gold Tribunal - Mumbai
Danke Electricals Ltd. vs Commissioner Of Central Excise & ... on 14 February, 2003
Equivalent citations: 2003(160)ELT414(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. The appeal is taken up for disposal after waiving deposit.
2. Danke Electrical Ltd entered into a contract with Asea Brown Boveri Ltd for supply of electrical transformers. The transformers were intended to be supplied to the Maharashtra State Electricity Board in pursuance of a contract between that body and Asea Brown Boveri Ltd, for use of in a project which was financed by the Japan Bank for International Co- operation. In its letter of 20.9.2000 Asea Brown Boveri Ltd told the appellant that the goods were to be supplied to a project of the Maharashtra State Electricity board and enclosed a copy of the certificate issued by the empowered officer of the project in the electricity board certifying that the project in which the goods were intended to be used being financed by the Japan Bank of International Co-operation explaining that the certificate in question was issued in terms of notification 108/95 and the goods covered by excise duty exemption. The appellant accordingly did not pay any duty on these goods.
3. On 20.12.2000 the appellant wrote to the jurisdiction Deputy Commissioner of Central Excise informing its intention to supply the goods and enclosed a copy of the classification list. The classification declaration indicated the goods to the exempted from duty in terms of notification 108/95. The appellant thereafter cleared the goods in question during the period February, March and May, 2001.
4. The Director General of Central Excise Intelligence Unit, who examined the matter, came to the conclusion that the goods were not entitled to the benefit of the exemption contained in notification 108/95. The reason that he advanced for this tentative conclusion was that the exemption was available only to goods supplied to the United Nation or an international organisation for their official use or supplied to the projects financed by the United Nations or the intentional organisation approved from the Government of India. He noted that the notification defined an "international organisation" to mean an international organisation to which the Central Government had declared, in pursuance of Section 3 of the United Nations (Privileges and Immunities) Act, 1947 that the provisions of the schedule to that Act shall apply and that since the relevant official of the Government of India clarified that the Japan Bank of International Co- operation had not been so notified, was not an international organisation. The notice, which was dated 18.3.2002 invoked the extended period of limitation alleging that the appellant had suppressed from the department the fact that the Japan Bank of International Co-operation was not an international organisation within the meaning of the notification. The notice also proposed penalty on the appellant and on Rajendra Lalchandani, its Excise Manager.
5. The appellant replied to the notice contending that it had been entirely guided by the empowered official of the Maharashtra State Electricity Board under the bona fide belief that it was entitled to the benefit of the exemption.
6. The Commissioner, who adjudicated the matter, did not accept this contention. He concluded that the benefit of the exemption was not available, since the bank which funded the project has not been recognised under the notification. He further concluded that the appellant, without verifying that it was a bank and not an international organisation for the purpose of notification, filing the certificate issued by the Maharashtra State Electricity Board stating to the contrary before the department in order to mislead it suppressing the true fact. He further held the extended period of limitation invocable, confirmed the demand for duty and imposed penalty under Section 11AC of the Acton the assessee and demanded interest under Section 11AB and imposed penalty on Danke Electricals Ltd. Hence this appeal.
7. The representative of the appellant accepts that Japan Bank of International Co-operation not having been notified under the provisions of Section 3 of the United Nations (Privileges and Immunities) Act, 1947, the supplies made to the project by it will not be entitled to the exemption contained in that notification and therefore does not dispute the liability to duty for the clearances which were made for March and May being within the normal period of one year. He strongly contends the finding that the appellant misled the department. He points out that the appellant did not issue the certificate or ask for its issue and it was made available to it by Asea Brown Boveri Ltd, the principal contractor with the Maharashtra State Electricity Board. It was only by letter dated 15.11.2000 of the Asea Brown Boveri Ltd, that the appellant was informed that the benefit of exemption contained in that notification would be available. Therefore, he says that provisions of Sections 11AB and AC will not apply. Therefore, the extended period contained in the proviso under Sub-section (1) of Section 11A will not be available. He however offers to pay the duty for the period which is beyond the normal period of one year as a gesture of good faith.
8. The departmental representative contends that it was expected of the appellant that it should have clarified that it was not entitled to the benefit of the exemption.
9. We agree that the appellant has not exercised the degree of care that it ought to have in not verifying that the project which supplied the goods was in fact financed by an international organisation as defined in that notification. However, we note that the appellant had been guided, in coming to this conclusion, by the certificate issued by the officer of the Superintending Engineer, Maharashtra State Electricity Board and passed on to it by the Asea Brown Boveri Ltd. The initiative for claming the benefit of the exemption therefore came not from the appellant but from Asea Brown Boveri Ltd. Further, the appellant had in the letter of 20.12.2002, (that we have referred to above) to the Deputy Commissioner clearly indicated its intention to avail of the exemption, the facts from which the department could conclude that the appellant was not entitled to exemption were therefore clearly before it. The department at various stage could take recourse to more than one method of remedies in case it was of the tentative view that the benefit of the exemption was not available and required further clarification from the Central Government. it ought to have ordered provisional assessment of the goods or it could have issued demands within the normal period of one year. Having done neither of these, and being fully aware of the necessity to decide whether the exemption was available or not, it is not open to the department to blame the appellant on the ground that it ought to have verified whether the Japan Bank of International Co-operation was in fact an international body or not. After all the same reason would apply to the department.
10. We therefore do not find that there was any suppression or misstatement by the appellant and therefore the extended period of limitation will not apply. The provisions of Sections 11AB and 11AC relating to penalty and interest also will not apply. As for the normal period, in our view, the appellant had not acted without any intention to deceive the department. In view of this, noting the undertaking of the representative of the appellant for payment of duty which is clearly beyond the normal period of limitation, we do not fine a case for imposition of penalty under Rule 173Q.
11. In the result therefore we set aside the penalty imposed and demand for interest and confirm the liability to duty for clearances made in the normal period of limitation.