Custom, Excise & Service Tax Tribunal
Toyota Material Handling India Private ... vs Principal Commissioner, Customs ... on 9 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Customs Appeal No.50948 of 2020
(Arising out of Order-in-Original No. 19/2020/U.G./Principal Commissioner dated
29.05.2020 passed by the Principal Commissioner of Customs (Import), New Delhi)
Toyota Material Handling India Private ...Appellant
Limited
#43 Mile Stone, NH-8,
Delhi - Jaipur Highway,
Gurugram, Haryana-122 004
VERSUS
Principal Commissioner of Customs ...Respondent
(Import)
New Customs House
New Delhi
With
Customs Appeal No. 50949 of 2020
(Arising out of Order-in-Original No. 19/2020/U.G./Principal Commissioner dated
29.05.2020 passed by the Principal Commissioner of Customs (Import), New Delhi)
Sunil Kumar Sharma ...Appellant
Senior Manager- Finance And Accounts
Toyota Material Handling India Private Limited
#43 Mile Stone, NH-8,
Delhi - Jaipur Highway,
Gurugram, Haryana-122 004
VERSUS
Principal Commissioner of Customs ...Respondent
(Import)
New Customs House
New Delhi
And
Customs Appeal No. 51136 of 2020
(Arising out of Order-in-Original No. 19/2020/U.G./Principal Commissioner dated
29.05.2020 passed by the Principal Commissioner of Customs (Import), New Delhi)
Principal Commissioner of Customs ...Appellant
(Import)
New Customs House
New Delhi
VERSUS
Toyota Material Handling India Private ...Respondent
Limited
2 C/50948-50949, 51136/2020
#43 Mile Stone, NH-8,
Delhi - Jaipur Highway,
Gurugram, Haryana-122 004
APPEARANCE:
Shri B.L. Narasimhan, Mr. Ashwani Bhatia and Ms. Srishty Bajaj,
Advocatefor the Assessee
Shri Nikhil Mohan Goyal, Authorized Representative of the Department
CORAM :
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)
Date of Hearing/Decision: 09.09.2025
FINAL ORDER NO's. 51320-51322/2025
JUSTICE DILIP GUPTA
Customs Appeal No. 50948 of 2020 has been filed by Toyota
Material Handling India Private Limited1 to assail that portion of the
order dated 29.05.2020 passed by the Principal Commissioner of
Customs, ACC (Imports), New Delhi2 that confirms the demand of Rs.
1,67,30,426/- for the period from 01.02.2014 to 13.05.2015 under
section 28(4) of the Customs Act, 19623 with interest and penalty.
2. Customs Appeal No. 50949 of 2020 has been filed by Sunil
Kumar Sharma, Senior Manager- Finance and Accounts of Toyota
India against that portion of the order dated 29.05.2020 passed by
the Principal Commissioner that imposes penalty of Rs. 16,73,042/-
upon him under section 112 of the Customs Act and a penalty of Rs.
10 lakhs under section 114AA of the Customs Act.
3. Customs Appeal No. 51136 of 2020 has been filed by the
department to assail that portion of the order dated 29.05.2020
1 Toyota India
2 the Principal Commissioner
3 the Customs Act
3 C/50948-50949, 51136/2020
passed by the Principal Commissioner that drops the demand of Rs.
3,25,17,290/- for the period from 14.05.2015 to 20.03.2017.
4. Toyota India is a subsidiary of Toyota Industrial Corporation,
Japan and is primarily engaged in the business of importing and
distributing forklifts and trucks in India. In addition to the above, it
also engages in supply of after sales and/or maintenance services in
relation to the forklift supplied to its customers. Toyota India imported
parts, components and accessories of forklifts during the period
01.02.2014 to 20.3.2017 through various Bills of Entry to supply the
same to Maruti Udyog Limited, MCC PTA India Cop., Hindustan Coca
Cola, Ashok Leyland, Bosch Limited, Wipro Ltd, Honda Cars, New
Holland, Sansera Engineering Pvt. Ltd., CRI Pumps, Brakes India,
Schneider Electric, Toyota Kirloskar and Tata Motors, Sundaram Auto.
It is stated that the goods imported by Toyota India were not
distributed or sold to customers at large through distribution channels,
but only to the existing customers for their own consumption.
5. At the time of import, Toyota India paid the Countervailing
Duty4 on the transaction value of the goods. On 22.03.2017, the
officials of Directorate of Revenue Intelligence started investigation
and formed a view that CVD on the goods imported by Toyota India
was liable to be assessed on Maximum Retail Price5 basis.
6. Accordingly, a show cause notice dated 30.01.2019 was issued
to Toyota India to show cause notice why CVD should not be charged
under MRP basis. Penalty was also proposed on Sunil Kumar Sharma
4 CVD
5 MRP
4 C/50948-50949, 51136/2020
under sections 112 and 114AA of the Customs Act. The relevant
portion of the show cause notice is as follows:
"Specific information received by the officers
of Directorate of Revenue Intelligence, Zonal
Unit, Bangalore (herein after referred to as
'DRI') indicated that M/s TMHIPL have
evaded payment of duty on the goods
imported by them by not declaring the Retail
Sales Price/Maximum Retail Price (RSP/MRP
for short) of the imported goods and not
paying applicable Additional Duty
representing porting of Excise duty under
the Customs Tariff Act, 1975 (CVD for short)
on the RSP/MRP of these imported goods. It
was also informed that the parts of forklifts
imported by them has to be assessed on the basis
of their MRP/RSP as per various provisions of the
Customs Act, 1962, the Central Excise Act, 1944
and Legal and Metrological Act, 2011, as
amended, and under the Rules made under these
Acts. Since they had not declared the
RSP/MRPs of the imported parts of forklifts
and had not paid applicable CVD on their
RSP/MRPs, it appeared that they had evaded
payment of appropriate duty on the said
imported goods.
xxxxxxxx
7.1. M/s TMHIPL were registered IEC holders and
were importing forklifts falling under CTH 8427,
and various parts of these forklifts from their
overseas suppliers, for the purpose of trading to
Indian Customers. They have an SVB order No.
SVB/CUS/29/2014 dated 21.11.2017, as per
which the declared invoice values are to be
accepted. They were paying applicable Basic
Customs Duty under the on the declared invoice
values under Section 14 of the Customs Act,
1962. In terms of notification no. 49/2018-
CE (NT) dated 24-12-2018 as amended by
notification no. 19/2010 CE (NT) dated 29-4-
2010, as detailed in above para, all parts,
components and assemblies of goods falling
under CTH 8427 are liable to payment of CVD
on their MRP/RSPs with applicable
abatement rate of 30%. Since the forklifts
imported by them are classifiable under CTH
8427, as correctly done by them, it appears
evident that the parts imported by them for
these forklifts are liable for CVD on the basis
of their MRP/RSPS.
5 C/50948-50949, 51136/2020
7.2. However, on verification of the import
documents of M/s. TMHIPL, it appears that
they have not paid applicable CVD on the
basis of the MRP/RSPs of their imported
parts of forklifts, as per the above
mentioned legal provisions, and instead,
they have paid CVD on the transactions
values declared by them. They are liable to
declare the MRP/RSPs of these parts correctly at
the time of import, and pay appropriate duty on
these goods."
(emphasis supplied)
7. The show cause notice also invoked the extended period of
limitation under section 28(4) of the Customs Act and the relevant
portion is reproduced below:
"7.14 During investigation, it was also observed
that in respect of the imports of the said parts of
forklifts through ACC, Bangalore and ICD,
Bangalore, they have declared MRP/RSPs of the
said goods on their most of Bills of Entry and paid
CVD on these prices. However, they have not
adopted the same method of declaration and
payment of CVD in respect of their imports
through Dadri CGML, Delhi Air Cargo, Chennai
Sea, Chennai Air Cargo, Customs Patparganj,
Mumbai Air Cargo and Ahmadabad Air Cargo.
From this, it appears evident thatM/s. TMHIPL
were well aware of the fact that they are liable to
pay CVD on the MRP/RSPs of the said parts of
forklifts, but they suppressed these facts in all the
above mentioned ports other than Bangalore. It is
also seen that they have submitted a letter dated
29th July, 2015 (Sl. No.29 of RUDs) and stopped
payment of CVD on MRP/RSP basis from 5/2015
onwards for their imports through Bangalore.
7.15It appears that they have also willfully mis-
stated that these imported parts of forklifts were
for captive consumption/actual use etc., during
the period prior to May 2015 and after the said
period, they started declaring that the goods were
meant for industrial/institutional consumers even
though at the time of sale by M/s. TMHIPL the
goods did not carry the declaration "not for retail
sale". M/s. TMHIPL appear to have suppressed
facts from the Department with a clear intent to
evade payment of CVD on the basis of RSP/MRPs
of these imported forklift parts. Their differential
duty liability is quantified for the period from
6 C/50948-50949, 51136/2020
2/2014 to 20-3-2017 as detailed in the
succeeding paras. The same is liable to be
recovered from them under section 28(4) of the
Customs Act, 1962."
8. The Principal Commissioner passed the impugned order
confirming the demand of Rs. 1,67,30,426/- for the period upto
13.05.2015 but dropped the demand of Rs. 3,25,17,290/- for the
subsequent period from 14.05.2015.
9. This date 14.05.2015 assumes importance because on this date
an amendment was carried out in rule 2(bb) of the Legal Metrology
(Packaged Commodities) Rules, 20116 in the definition of „industrial
consumer‟.
10. Prior to 14.05.2015, the definition of „industrial consumer‟ was
as follows:
"2 (bb) "industrial consumer" means the
consumer who buys packaged commodities
directly from the manufacturer for use by that
industry;"
11. After the amendment, definition of „industrial consumer‟ is as
follows:
"2 (bb) "industrial consumer" means the
consumer who buys packaged commodities
directly from the manufacturer or from an
importer or from wholesale dealer for use by
that industry and the package shall have
declaration „not for retail sale‟;"
12. The main finding given by the Principal Commissioner for
confirming the demand for the period prior to 14.05.2015 is that a
transaction of sale can fall under the exclusion category provided
under rule 3 of the 2011 Metrology Rules only when the goods are
procured by an institutional/industrial consumer directly from a
6 the 2011 Metrology Rules
7 C/50948-50949, 51136/2020
manufacturer, while in the present case the appellant was an importer
and not a manufacturer. The order holds that though in general
parlance "manufacturer" and an "importer" may be treated at par but
they cannot be treated at par for the purpose of rule 3 of the 2011
Metrology Rules. It, therefore, concluded that MRP basis assessment
was mandatory during the disputed period. However, the Principal
Commissioner dropped the demand for period from and after
14.05.2015 in view of the amendment made in rule 2(bb) in the
definition of „industrial consumer‟ holding that the goods had been sold
to industrial consumers and not for retail sale and non mentioning of
„not for retail sale‟ does not deprive the buyer of their status as
„industrial consumers‟.
13. Toyota India has, therefore, filed this appeal to assail that
portion of the order of the Principal Commissioner that confirms the
demand for the period up to 13.05.2015, while the department has
filed an appeal for setting aside the dropping of the demand for the
subsequent period.
14. Shri B.L. Narasimhan, learned counsel for the appellant assisted
by Mr. Ashwani Bhatia and Ms. Srishty Bajaj made many submissions
to assail the order on merits and contended that Toyota India was
justified in making CVD payment on the basis of the transaction value
but also submitted that in the facts and circumstances of the case, the
extended period of limitation contemplated under section 28(4) of the
Customs Act could not have been invoked. Learned counsel pointed
out that the entire period for which the demand has been confirmed
8 C/50948-50949, 51136/2020
from 01.02.2015 to 13.05.2015 falls in the extended period of
limitation as the normal period of limitation is only two years.
15. Shri Nikhil Mohan Goyal, learned authorised representative
appearing for the department, however, submitted that the extended
period of limitation was correctly invoked in the facts and
circumstances of the case. Learned authorised representative also
submitted that there is no error in the order passed by the Principal
Commissioner confirming the demand for the period prior to
14.5.2015.
16. It would be necessary to first examine the contention raised by
the learned counsel for the appellant that the extended period of
limitation contemplated under section 28(4) of the Customs Act could
not have been invoked because if this issue is decided in favour of
Toyota India, it would not be necessary to examine the issue on
merits.
17. For invoking the extended period of limitation, the show cause
notice alleges that though Toyota India was aware that it was liable to
pay CVD on MRP basis but it suppressed this fact and therefore,
willfully mis-stated facts with a clear intent to evade payment of CVD
on the basis of MRP.
18. The Principal Commissioner has recorded the following findings
with regard to the invocation of the extended period of limitation:
"29.1 1 find that the SCN has sought to invoke
extended period, however, M/s Toyota Material
Handling India Limited has 8illful8ed that they
have not indulged in any activity such as
collusion, 8illful-misstatement or suppression
of facts and argued that extended period of
limitation is not invokable and the demand is
time barred in this case. I do not find any
merits in this contention of the importer
9 C/50948-50949, 51136/2020
because of the fact that the investigation
carried out has clearly established that
prior to 14.05.2015, despite being merely
an importer and not a manufacturer, kept
on clearing their goods without following
the provisions of the Legal Metrology Act
and intentionally contravened the
provisions of Section 4A of the Central
Excise Act, 1944 to avoid assessing their
duty on the MRP/RSP based valuation.
They also did not pay any heed to the
official correspondence vide which they
were advised to clear their goods under
MRP/RSP assessment. This act on their
part show their mala-fide intention in
deliberate contravention of relevant legal
provisions and intentional non-compliance
of mandatory stipulations such as
mentioning the RSP /MRP on their
packaged commodities in order to escape
the correct assessment of the impugned
goods under MRP based valuation. The said
legal provisions otherwise clearly establish that
they paid duty at a lower value whereas higher
value was warranted. Hence, by these acts of
omission they have avoided correct levy of
CVD. This act on their part amounts to
willful and deliberate suppression of facts
leading to evasion of customs duty and
hence the extended period has correctly
been invoked in this case."
(emphasis supplied)
19. As noticed above, the demand that has been confirmed is for the
period 01.01.2014 to 13.05.2015. Under section 28(4) of the Customs
Act, notice can be issued within two years but it was actually issued on
30.01.2019 after a period of more than four and a half years.
20. Sub sections (1) and (4) of section 28 of the Customs Act, as
they stood at the relevant time, are reproduced:
"28. Recovery of duties not levied or not
paid or short-levied or short-paid or
erroneously refunded
(1) Where any duty has not been levied or
not paid or short-levied or short-paid or
erroneously refunded, or any interest payable
10 C/50948-50949, 51136/2020
has not been paid, part-paid or erroneously
refunded, for any reason other than the reasons
of collusion or any willful mis-statement or
suppression of facts,-
(a) the proper officer shall, within two years
from the relevant date, serve notice on
the person chargeable with the duty or
interest which has not been so 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;
**********
(4) Where any duty has not been levied or not paid or has been short-levied or short-paid or erroneously refunded, or interest payable has not been paid, part-paid or erroneously refunded, by reason of,-
(a) collusion; or
(b) any wilful mis-statement; or
(c) suppression of facts, by the importer or the exporter or the agent or employee of the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty or interest which has not been so levied or not paid or which has been so 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."
21. It would be seen from a perusal of sub-section (1) of section 28 of the Customs Act that where any duty has not been levied or paid, for any reason, other than the reason of fraud or collusion or any willful mis-statement or suppression of facts , the proper officer, shall within two years from the relevant date, serve notice on the person 11 C/50948-50949, 51136/2020 chargeable to the duty which has not been paid. However, sub-section (4) of section 28 of the Customs Act provides that where any duty has not been levied or not paid by reason of collusion or suppression of facts, the proper Officer, shall within five years from the relevant date, serve notice on the person to show cause why he should not pay the amount specified in the notice.
22. It has to be remembered that mere suppression of facts is not enough. There has to be a deliberate attempt to evade payment of customs duty. The show cause notice must specifically deal with this aspect and the adjudicating authority is also obliged to examine this aspect in the light of the facts stated by the assessee in reply to the show cause notice.
23. Learned counsel for the appellant has pointed out that the appellant was under a bonafide belief that the goods were not pre- packaged goods and not for retail sale. As a matter of caution, the appellant consulted experts who also gave an opinion that the goods were not laible for MRP based assessment. Pursuant to the said legal advice, the appellant approached the office of the Deputy Commissioner of Customs, Air Cargo Complex, Bengaluru to seek permission to discharge CVD on transaction value and also submitted a letter dated 04.03.2014 followed by reminders dated 23.04.2014, 21.10.2014, 08.01.2015, 16.06.2015 and 17.06.2015 but no communication was received from the department. Learned counsel also pointed out that the Delhi Customs also raised a query regarding the valuation in respect of Bill of Entry dated 23.06.2015. In response to the query, the appellant submitted a detailed reply dated 12 C/50948-50949, 51136/2020 30.03.2015, which was accepted and the goods were allowed to be cleared after payment of CVD on transaction value on 09.04.2015.
24. It is also pointed out by the learned counsel for the appellant that in the Bill of Entry, the appellant had mentioned that the goods are "not for retail sale" and, hence, the fact that the goods were „not for retail sale‟ was always in the knowledge of the department. Such being the position, the department cannot allege that facts were suppressed. Learned counsel for the appellant also pointed out that so far as the 2011 Metrology Rules are concerned "manufacturer" and "importer" are treated at par and, therefore, the appellant was justified in believing that it is not liable for MRP based assessment. The interpretation of the appellant in a particular manner would not mean that there is a mis-statement or suppression of facts. Learned counsel also pointed out that when the issue related to interpretation of the 2011 Metrology Rules, the invocation of the extended period of limitation will not arise.
25. It is not disputed that the appellant had, on the basis of legal opinion, informed the Deputy Commissioner of Customs, Air Cargo Complex, Bengaluru and also sought permission to discharge CVD on transaction value. The Delhi Customs Authority also cleared payment of goods on payment of CVD on the transaction value on 09.04.2015 after finding the reply to the query to be satisfactory. Thus, in 2014/2015 the department was well aware that the appellant was paying CVD on the transaction value and not on MRP basis
26. The show cause notice was, however, issued on 30.01.2019 invoking the extended period of limitation by alleging suppression of 13 C/50948-50949, 51136/2020 facts. The Principal Commissioner had observed that the Toyota India did not pay heed to the correspondence sent by the department advising them to clear the goods under MRP assessment. There is nothing on record to indicate that such a letter was ever sent by the department. On the other hand, letters were sent by Toyota India to inform the department that it would be paying CVD on the transaction value in view of the legal advice tendered to it. The Customs Authorities at Delhi had also cleared the goods after raising the query that CVD should paid on MRP basis and not on transaction value.
27. It cannot, therefore, be said the department was not aware that Toyota India was discharging payment of CVD on the basis of transaction value. There is, therefore, no question of suppression of facts, much less with an intent to evade payment of duty.
28. In Easland Combines, Coimbatore vs. Collector of Central Excise, Coimbatore7 the Supreme Court observed that for invoking the extended period of limitation, duty should not have been paid because of fraud, collusion, wilful statement, suppression of fact or contravention of any provision. These ingredients postulate a positive act and, therefore, mere failure to pay duty which is not due to fraud, collusion or wilful misstatement or suppression of facts is not sufficient to attract the extended period of limitation.
29. In Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur8, the Supreme Court observed:
"12. We have heard both sides, Mr. R.P. Batt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta,
7. (2003) 3 SCC 410
8. 2013 (288) E.L.T. 161 (S.C.) 14 C/50948-50949, 51136/2020 learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts is, in our opinion, untenable. If that were to be true, we fail to understand which form of nonpayment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. In our opinion, the main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or wilful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso."
(emphasis supplied)
30. The Supreme Court in Continental Foundation Joint Venture vs. Commissioner of Central Excise, Chandigarh9 also observed in connection with section 11A of the Central Excise Act, that suppression means failure to disclose full information with intention to evade payment of duty and the observations are as follows:
"10. The expression "suppression"
has been used in the proviso to Section 11A of the Act accompanied by very strong words as "fraud‟ or "collusion"
and, therefore, has to be construed strictly. Mere omission to give correct information is not suppression of facts 9 . 2007 (216) E.L.T. 177 (S.C.) 15 C/50948-50949, 51136/2020 unless it was deliberate to stop the payment of duty. Suppression means failure to disclose full information with the intent to evade payment of duty. When the facts are known to both the parties, omission by one party to do what he might have done would not render it suppression. When the Revenue invokes the extended period of limitation under Section 11A the burden is cast upon it to prove suppression of fact. An incorrect statement cannot be equated with a wilful misstatement. The latter implies making of an incorrect statement with knowledge that the statement was not correct."
(emphasis supplied)
31. The Delhi High Court in Bharat Hotels Limited vs. Commissioner of Central Excise (Adjudication)10 also examined the issue relating to the extended period of limitation under the proviso to section 73 (1) of the Finance Act, 199411 and held as follows:
"27. Therefore, it is evident that failure to pay tax is not a justification for imposition of penalty. Also, the word "suppression" in the proviso to Section 11A(1) of the Excise Act has to be read in the context of other words in the proviso, i.e. "fraud, collusion, wilful misstatement". As explained in Uniworth (supra), "misstatement or suppression of facts" does not mean any omission. It must be deliberate. In other words, there must be deliberate suppression of information for the purpose of evading of payment of duty. It connotes a positive act of the assessee to avoid excise duty.
10. 2018 (12) GSTL 368 (Del.)
11. the Finance Act 16 C/50948-50949, 51136/2020 ***** Thus, invocation of the extended limitation period under the proviso to Section 73(1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention."
***** The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief."
(emphasis supplied)
32. It would also be appropriate to refer the decision of the Delhi High Court in Mahanagar Telephone Nigam Ltd. vs. Union of India and others12. The Delhi High Court observed that merely because MTNL had not declared the receipt of compensation as payment for taxable service, does not establish that it had wilfully suppressed any material fact. The Delhi High Court further observed that the contention of MTNL that receipt was not taxable under the Act is a substantial one and no intent to evade tax can be inferred by non- disclosure of the receipt in the service tax return. The relevant portion of the observations are:
"28. In terms of the proviso to Section 73(1) of the Act, the extended period of limitation is applicable only in cases where service tax has not been levied or paid or has been short-levied or short-paid or 12 . W.P. (C) 7542 of 2018 decided on 06.04.2023 17 C/50948-50949, 51136/2020 erroneously refunded by reason of fraud, or collusion, or wilful misstatement, or suppression of facts, or contravention of any provisions of the Act or the Rules made thereunder with an intent to evade payment of service tax. However, the impugned show cause notice does not contain any allegation of fraud, collusion, or wilful misstatement on the part of MTNL. The impugned show cause notice alleges that the extended period of limitation is applicable as MTNL had suppressed the material facts and had contravened the provisions of the Act with an intent to evade service tax. Thus, the main question to be addressed is whether the allegation that MTNL had suppressed material facts for evading its tax liability, is sustainable.
*****
41. In the facts of this case, the impugned show cause notice does not disclose any material that could suggest that MTNL had knowingly and with a deliberate intent to evade the service tax, which it was aware would be leviable, suppressed the fact of receipt of consideration for rendering any taxable service. On the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1) of the Act is not applicable. The facts of the present case indicate that MTNL had made the receipt of compensation public 18 C/50948-50949, 51136/2020 by reflecting it in its final accounts as income.
As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL‟s contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return."
(emphasis supplied)
33. It is, therefore, clear from the aforesaid discussion that the extended period of limitation could not have been invoked only if there was suppression of facts with intent to evade payment of service tax.
34. The contention of the learned counsel for the appellant that the extended period could not have been invoked as the appellant bona fide believed that it was liable to pay duty on transaction value and not on MRP basis also deserves to be accepted in view of the judgment of the Supreme Court in Commissioner of C. Ex. & Customs vs. Reliance Industries Ltd.13. The Supreme Court held that if an assessee bona fide believes that it was correctly discharging duty, then merely because the belief is ultimately found to be wrong by a judgment would not render such a belief of the assessee to be mala fide. If a dispute relates to interpretation of legal provisions, the department would be totally unjustified in invoking the extended period of limitation. The Supreme Court further held that in any scheme of self-assessment, it is the responsibility of the assessee to determine the liability correctly and this determination is required to
13. 2023 (385) E.L.T. 481 (S.C.) 19 C/50948-50949, 51136/2020 be made on the basis of his own judgment and in a bona fide manner. The relevant portion of the judgment is reproduced below:
"23. We are in full agreement with the finding of the Tribunal that during the period in dispute it was holding a bona fide belief that it was correctly discharging its duty liability. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a mala fide belief particularly when such a belief was emanating from the view taken by a Division Bench of Tribunal. We note that the issue of valuation involved in this particular matter is indeed one were two plausible views could co-exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee's view to be lacking bona fides. In any scheme of self-assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bona fide manner.
24. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. *****. On the question of disclosure of facts, as we have already noticed above the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, as we noticed earlier there was no separate column for disclosing details of the deemed export clearances. Separate
20 C/50948-50949, 51136/2020 disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was therefore nothing wrong with the assessee's action of including the value of deemed exports within the value of domestic clearances."
(emphasis supplied)
35. Therefore, for the reasons stated above, the demand confirmed for the period from 01.02.2014 to 13.05.2015, has to be set aside as the extended period of limitation could not have been invoked. .
36. It will, therefore, not be necessary to examine the contentions raised by the learned counsel for the appellant for setting aside the confirmation of demand on merits.
37. It would now be appropriate to examine the appeal filed by the department. The department has filed this appeal to assail that part of the order passed by the Principal Commissioner that drops the demand for the period commencing from 14.05.2015. This demand has been dropped, basis the amendment in the definition of „industrial consumer‟ in rule 2(bb) of the 2011 Metrology Rules with effect from 14.05.2015.
38. The relevant portion of the order passed by the Principal Commissioner on the issue is reproduced below:
"28.5 1. however, find that post amendment i.e with effect from 14.05.2015, there are following three conditions which are required by the buyer to be satisfied to qualify as an industrial consumer (1) The consumer should buy the packaged commodities from a manufacturer or from an importer or from a wholesale dealer;
21 C/50948-50949, 51136/2020 (2) Such goods should be used by the industrial consumer its own use i.e., not sold further, and (3) The package shall have a declaration 'not for retail sale'.
28.6 So far as condition No. (1) & (2) above are concerned, the same have been satisfied because noticee's status as genuine importer remains undisputed and the definition of 'industrial consumer was amended to expressly include 'importers' thereunder. Further, nowhere in the SCN it has been alleged that the industrial consumers (ie the buyers from the importer) have not used the said goods on their own and have sold the same further. Merely, because they have not specifically mentioned the words 'not for further sale' on their sale invoices will not deprive the buyers of their status as industrial consumers. 28.7 However, with regard to condition No. 3 above, it has been mentioned in para 7.1 of the SCN that on the date of the visit i.e. on 22.03.2017, the goods were found to be carrying the marking "Not For Retail Sale" but because the goods were not sold in their original import packages, therefore it seems that the said marking is not made on the repackaging. The importer, on the other hand, submitted that since the goods cleared by them were admittedly complying with the above conditions and therefore they were out of the purview of the said rules.
28.8 The fact remains that declarations made on the packages and goods in physical form were available at the time of the visit of the officers I also find that in the present case the investigation has alleged that for the previous clearances, the declaration was not made merely on the basis of the fact that the goods were not being sold in their original import packaging and it appeared that re-packaging did not contain the said marking. It is difficult to fathom that if on a given date the said goods are carrying a particular marking on their packages, how can it be presumed that the despatches made a day before were not having the said marking specially when the importer has categorically denied the said allegation and has stated that the packages contained the said marking. The investigation has also not been able in bringing any evidence 22 C/50948-50949, 51136/2020 on record to prove that once the goods are repacked and are affixed with their own brand there was no mention of the words "Not For Retail Sale" on them, whereas, they were at liberty to visit the premises of the industrial consumers and got the specific queries replied by them in order to substantiate that the packages received by them were not carrying the stipulated marking. In the given situation, as the investigation has not been able to bring on record any clear material supporting evidence so as to deny the contention of the importer, the said allegation seems to be based on conjecture and therefore no credence can be paid to it.
28.9 In view of the discussions and findings as recorded hereinabove I am of the opinion that for the period from 14.05.2015 onwards, the goods imported by M/s Toyota Material Handling India Limited have been supplied to legitimate industrial consumers and said transactions fall beyond the purview of MRP based assessment. Therefore, the applicability of the Legal Metrology Act, 2009 or the rules framed thereunder cannot be sustained in this case for the period from 14.05.2015 onwards.
39. The Principal Commissioner placed emphasis on the amendment made to the definition of „industrial consumers‟ with effect from 14.5.2015 in rule 2(bb) of the 2011 Metrology Rules. The Principal Commissioner found that condition no‟s. (1) and (2) were satisfied and regarding condition no. 3, the Principal Commissioner found as a fact that when the officers visited the site on 22.03.2017 they found that the goods were carrying the marking „not for retail sale‟. Thus, as all the conditions specified in the definition of „industrial consumer‟ were satisfied, the applicability of the Legal Metrology (Packaged Commodities) Act, 2009 would not be applicable.
40. Learned authorised representative appearing for the department has not been able to point out any infirmity in the aforesaid findings 23 C/50948-50949, 51136/2020 recorded by the Principal Commissioner. The appeal filed by the department would, therefore, have to be dismissed.
41. Thus, as the demand cannot be confirmed for the entire period of dispute, penalty cannot be imposed upon Sunil Kumar Sharma. The imposition of penalty upon Sunil Kumar Sharma, therefore, deserves to be set aside.
42. As a result, Customs Appeal No. 50948 of 2020 filed by Toyota India and Customs Appeal No. 50949 of 2020 filed by Sunil Kumar Sharma deserve to be allowed and are allowed. Customs Appeal No. 51136 of 2020 filed by the department is dismissed.
(Dictated and pronounced in the open court) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Diksha