Gujarat High Court
Commissioner vs Baccarose on 21 January, 2010
Author: K.A.Puj
Bench: K.A.Puj
Gujarat High Court Case Information System
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TAXAP/1601/2007 15/ 15 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 1601 of 2007
=========================================================
COMMISSIONER
OF CUSTOMS - Appellant(s)
Versus
BACCAROSE
PERFUMES & BEAUTY PRODUCTS LTD. - Opponent(s)
=========================================================
Appearance
:
MS
AMEE YAJNIK for
Appellant(s) : 1,
MR PARESH M DAVE for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE RAJESH H.SHUKLA
Date
: 21/01/2010
ORAL ORDER
(Per :
HONOURABLE MR.JUSTICE K.A.PUJ) The Commissioner of Customs, Kandla has filed this Tax Appeal under Section-130 of the Customs Act, 1962 proposing to formulate certain substantial questions of law for determination and consideration of this Court. At the time of hearing of this Tax Appeal following questions are reframed by the Revenue as substantial questions of law;
(a) Whether in view of suppression or misdeclaration by the respondent in the Bill of Entry and invoices that at no point of time the goods cleared by them contained alcohol as an ingredient and alcohol was found as one of the ingredients for the product, the demand raised beyond the period of six months can be said to be barred by the law of limitation ?
(b) Whether or not in view of the suppression and misdeclaration on the part of the respondent, proviso to Section-28 of the Customs Act, 1962 would be applicable considering the facts of the case ?
(c) Whether in view of the suppression of facts and willful misstatement on the part of the respondent, Deputy Commissioner was justified in issuing notice after the period of six months and whether the benefit of extended period of limitation as per Section-28 of the Act would be available to the Department ?
(d) Whether in the facts and circumstance of the case, the Tribunal is justified in confirming the order of the adjudicating authority i.e. the Commissioner of Customs of dropping the demand of duty as being barred by law of limitation on the ground that the show cause notices were issued beyond the period of six months and therefore the extended period of five years was not invocable ?
(e) Whether or not in view of the fact that the goods were cleared in contravention of the Central Excise Rules and in contravention of the provisions of the Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945, the Tribunal was justified in not imposing upon the respondent penalty under section 11AC of the Central Excise Act, 1944 read with Rule-25 (earlier Rule 173Q) and Rule-26 (earlier Rule-209) of the Central Excise Rules, 2001 ?
(f) Whether the Tribunal in the facts and circumstances of the present case is justified in dismissing the appeal of the revenue without addressing itself to the issue raised and by deciding the matter on a non-issue and thereby has failed in exercising jurisdiction vested in law unto it?
(g) Whether in the facts and the circumstance of the case, the Tribunal is justified in placing reliance upon its earlier decision reported in 2006 (198) ELT page-462 wherein the issue of demand being barred by limitation was never arising ?
(h) Whether in the facts and circumstances of the present case, the Tribunal was justified in granting benefit of Notification No.02/95-CE to the respondent?
Heard Ms.Amee Yajnik, learned Standing Counsel for the revenue and Mr.Paresh M. Dave, learned counsel appearing for the respondent on notice being issued by this Court on 16.9.2008.
The brief facts giving rise to the present Tax Appeal are that the respondent is having its place of business at Kandla Free Trade Zone and it is engaged in manufacture of cosmetics and toilet preparations. The Ministry of Commerce has granted an industrial license on 18.12.1984 under the Industrial (Development and Regulation) Act, 1951 for manufacturing of cosmetics and toilet preparation like perfumes, EADU-D-Toilette, aftershave, talc powder, deodorants of the annual production capacity of 400 Mts. The respondent has been importing cosmetics and perfumes in bulk for manufacture of cosmetics and toilet preparations like perfumes, EADU-D-Toilette, aftershave, talc powder, deodorants in the finished form in consumer packs. The part of the goods manufactured in finished form in consumer packs was also removed to Domestic Tariff Area. The details of the said clearances effected in Domestic Tariff Area during the period from December, 1996 to September, 1999 are given in Annexure-A to the four show cause notices issued by the Revenue. The perfume and toiletries are classifiable under CTH 33.03 to 33.07. However, in the Central Excise Tariff by virtue of Chapter Note 1(d) of the Chapter-33 and toilet preparations containing alcohol or opium, Indian hemp or the other narcotics and for this purpose, these expressions have the meaning respectively assigned to them in Section-2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955) are excluded from the purview of Central Excise. According to the provisions of exemption Notification No.133/94-Cus dated 22.6.1994, notwithstanding anything contained in the said Notification such articles even if not exported out of India, are allowed to be cleared outside the zone under and in accordance with the provisions of Export-import Policy in force on payment of duty of excise leviable thereon under Section-3 of the Central Excise Act, 1944 or where such articles are not excisable on payment of an amount equal to customs duty leviable on such articles as if imported as such.
Four show causes notices were issued on the respondent alleging therein that the respondent had obtained necessary permission vide license No.GC/404 dated 16.10.1995 from the Food & Drug Control Authorities for manufacture of perfumes, toiletries, deodorants etc. by declaring that one of the ingredients for the products is 'alcohol'. However, on going through the bills of entry and the invoices filed by the respondent for import of such goods as well as while making clearance of the goods to Domestic Tariff Area, it was noticed that the respondent, at no point of time declared that the goods cleared by them contained alcohol as an ingredient and thereby suppressed the said fact by giving wrong and false description of the goods. These four show cause notices were issued to the respondent calling upon it to show cause as to why the short paid total duty amounting to Rs.2,26,26,426/- on DTA clearances should not be recovered alongwith interest at the rate of 24% from the date of clearances of the goods till the date of payment. Since the goods were cleared in contravention of Central Excise Rules and in contravention of the provisions of the Drugs & Cosmetics Act, 1940 and Drugs & Cosmetics Rules, 1945 why penalty should not be imposed upon them under Section-11AC of the Central Excise Act, 1944 read with Rule-25 (earlier Rule 173Q) and Rule 26 (earlier Rule 209) of the Central Excise Rules, 2001. The respondent gave its reply to the said show cause notices inter alia contending that the impugned show cause notices were misconceived, erroneous and unsustainable and that the Revenue was fully aware of the fact that some of the products like perfumes and deodorants contained alcohol and there was no suppression on the part of the respondent, hence the extended period was not available to the Revenue. The notices issued are, therefore, clearly barred by law of limitation. Even on merits also the said show cause notices were objected to by the respondent.
The four show show cause notices were adjudicated upon by the Commissioner on 28.8.2002 and the proceedings were dropped. Being aggrieved by the said order of the Commissioner, the Revenue filed an Appeal before CESTAT which Appeal came to be dismissed and order passed by the Commissioner was confirmed by the CESTAT. It is this order of the CESTAT dated 13.6.2007 which is under challenge in the present Tax Appeal.
Ms.Amee Yajnik, learned Standing Counsel appearing for the revenue has submitted that the issue before the Tribunal was as to whether the demand was barred by the limitation. However, the Tribunal misdirected itself on the basis of contentions urged by the respondent and has decided the matter absolutely on irrelevant and unsustainable ground. On the basis of earlier judgment of the Tribunal in the respondent's own case, wherein there was no issue with regard to limitation, appeal was dismissed. She has, therefore, submitted that the Tribunal has materially erred in law in dismissing the Appeal of the Revenue without addressing itself to the issue raised and by deciding the matter on non-issue and thereby failed to exercise jurisdiction vested in law unto it. She has further submitted that the order passed by the Tribunal is unsustainable in law and the questions of law reframed by the Revenue are the substantial questions of law and hence Appeal deserves to be admitted and allowed.
Mr.Paresh M. Dave, learned counsel appearing for the respondent, on the other hand, has relied on the order passed by the Commissioner as well as the Tribunal. He has submitted that the Commissioner has given the specific finding that the show cause notices issued are barred by limitation and only on that ground, the proceedings were dropped. When this order was challenged before the CESTAT the Tribunal has not only confirmed the order on this legal issue i.e. on the ground of limitation, but even on merits, after following its own decision in respondent's case, has dismissed the Appeal filed by the Revenue. He has, therefore, submitted that the questions framed by the Revenue are not substantial questions of law and the Appeal deserves to be dismissed at the threshold.
We have considered the submissions made by the learned counsels appearing for the parties and we have also gone through the order passed by the authorities below. As far as the issue regarding limitation is concerned, the Commissioner has at length discussed this aspect in his order. While referring to para-3(b) of the show cause notice, the Commissioner observed that it has been clearly stated that M/s. Baccarose Perfumes & Beauty Products Ltd., obtained necessary permission vide license No.DC/404 dated 16.10.1995 from the Food & Drug Control Authorities for manufacture of perfumes, toiletries, deodorants etc., by declaring that one of the ingredients for the the products is 'alcohol' . Based on this he observed that, the use of alcohol has been declared in the above license itself. Further, on scrutiny of the import invoices produced by the respondent-assessee during the course of personal hearing, it was observed that the characteristics of the imported ingredients clearly disclose alcohol content. This apart, as contended by the noticee, the entire processing is undertaken in the Customs Bonded Area under the supervision of officers of Customs. The Commissioner, therefore, took the view that the charge of suppression of alcohol content is not tenable. The Commissioner further found that at the time of importation, the noticee had filed the requisite bills of entry alongwith the relevant invoices and packing list which have been duly assessed. Thus, the information regarding the alcohol content in the products containing the same was available with the Department before the consignments were cleared. This position is confirmed on perusal of invoice Nos.970810 and 1970406 both dated 23.12.1997 covered vide Bill of Entry No.1364 dated 20.2.1998, which reveals that against the column volume total alcool pur , shows 545.981 and 1371.736 against volume total . Similar situation was there in respect of other invoices. Based on this evidence, the charge of suppression of facts as alleged in the impugned show cause notices, was not sustainable. The Commissioner, therefore, found sufficient force in the challenge of the respondent to the said show cause notices on the ground of limitation. He accordingly took the view that the show cause notices are barred by limitation as the same have been issued beyond the period of six months. When this order was challenged before the CESTAT by the Revenue, the CESTAT observed in its order that the Commissioner dropped the proceedings initiated in four show cause notices on the ground that extended time limit cannot be invoked in the said case. It was however observed by the CESTAT that the Commissioner has not decided issue on merits and while considering the issue on merits the CESTAT observed that the issue as to whether goods imported by the respondent in Free Trade Zone subjected to only certain process like repacking from bulk to consumer pack will be satisfying the condition of exemption Notification No.133/94-Cus dated 22.6.1994 and whether the process undertaken in this case on the imported products will amount to manufacture as per the Central Excise Act, 1944, have been considered by the CESTAT in the respondent's own case and it was decided in favour of the respondent. After reproducing the relevant extract from the earlier order the CESTAT dismissed the Tax Appeals filed by the Revenue. Even this Court has also dismissed the Appeal filed by the Revenue against the said order of CESTAT.
In the above view of the matter, we are of the view that no substantial questions of law arise out of the order of the CESTAT and hence the Appeal is summarily dismissed.
(K. A. PUJ, J.) (R. H. SHUKLA, J.) kks Top