Custom, Excise & Service Tax Tribunal
Krishna Polymers, vs C.C.E. Jaipur Ii on 1 November, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL,
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI-110066
BENCH-DB
COURT -II
Excise Appeal No. E/3544/2010-Ex [DB]
[Arising out of Order-in-Appeal No. 310/CB/CE/JPR-II/10 dated
12.08.2010 passed by the Commissioner (Appeals-II) Customs
& Central Excise-II Jaipur]
M/s. Krishna Polymers. ...Appellant
Vs.
C.C.E. & S.T., Raipur ... Respondents
Present for the Appellant : Mr. O.P. Aggarwal, (Advocate) Present for the Respondent : Mr. R.K. Mishra, D.R Coram: HON'BLE MR. C.L. MAHAR MEMBER (TECHNICAL) HON'BLE MR. AJAY SHARMA, MEMBER (JUDICIAL) Date of Hearing: 14.05.2018 Date of Decision: 01.11.2018 FINAL ORDER NO. 53228/2018 PER: AJAY SHARMA The instant appeal has been filed from the order-in-
appeal dated 28/07/2010.
2. The appellant is engaged in the manufacture of Printed Roll and Pouches. They have received additional consideration from their customers amounting to Rs. 3,60,420/- in the guise of advance security (deposited by the Customers with the appellant for Gravures Cylinders). The officers of the Department visited the factory premises of the Appellant on
2|Page E/3544/2010 -[DB] 26/02/2007 and during the course of scrutiny of the record of Appellant it has been observed that the Appellant has shown Rs. 5,07,282/- as miscellaneous income under the sub-heading of other income in their Manufacturing, Trading and Profit & Loss Account for the year ended on 31/03/2006. The appellant justified it and stated that they received advances from their customers to get manufacture of "Gravures Cylinders" as these "Gravures Cylinders" are required for printing of pouches/ rolls as per specification of the Customers. Since it appeared to the department that the Appellant has received additional considerations from their customers in the guise of advance security (Deposited by the Customers with the appellant for Gravures Cylinders) and has evaded Central Excise duty therefore a Show Cause Notice dated 21.10.2007 was issued to the Appellant by invoking extended period, as to why:
(i) CENTRAL EXCISE duty amounting to Rs. 57,667/-
(31,710/- + 25,957/-) and Edu. Cess amounting to Rs. 1,153/-(634/- + 519/-) total Rs. 58,820/- should not be recovered alongwith interest from the assessee under the provisions of Section 11 A and 11 AB of the Central Excise Act, 1944.
(ii) Penalty should not be imposed upon them under the provisions of Rule 25 of Central Excise Rules, 2002 read with provisions of Section 11 AC of the Central Excise Act, 1944 for contravention of the provisions of Rule 6 & 8 of Central Excise Rules, 2002.
3. The adjudicating authority vide order-in-original dated 17/12/2008 confirmed the demand along with interest and penalty and observed that since the appellant has suppressed the facts with intention to evade the duty on the security
3|Page E/3544/2010 -[DB] amount, hence the extended period has been rightly invoked in the matter. On appeal filed by the Appellant, the Commissioner, Central Excise (Appeals), Jaipur-II vide impugned order dated 28/07/2010 held that the extended period is rightly invoked since the appellant had suppressed the fact regarding forfeited security amount from the Department.
He also held that the demand ought to have been computed on come duty price as per the explanation to Section 4(1) of Central Excise Act, 1944. Being aggrieved, the Appellant has filed the instant appeal before this Tribunal.
4. We have heard ld. Advocate for the appellant and learned AR for the Department and perused the records.
5. The learned AR reiterated the findings recorded by the authorities below. He further submitted that the appellant has received advances during the period from 25/11/2003 to 15/05/2004 and made sales thereafter. But when the customers did not come back for getting the manufactured goods from the assessee, the assessee forfeited their advance deposit. The amount of advances which has been forfeited by the assessee, is not related to particular clearances of goods, therefore, the date of last clearances made to customers has been taken for the purpose of demanding central excise duty.
Therefore for determination of demand of Central Excise duty, year wise value of clearances is to be considered, which is as under:
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(a) Out of Rs. 5,07,282/- amount of Rs. 1,04,380/- is related from those customers who did not get manufactured any goods from the assessee or the, assessee did not sale any goods to those customers.
Therefore, it appears that this amount did not related to sale of goods,
(b) Out of Rs. 5,07,282/- Rs. 9,626/- related from those customers who had not got manufactured goods from the assessee after 17/03/04 or the assessee did not sale any goods after 17/03/04 to such customers. Thus the amount of Rs. 9,626/- is liable to be included in the value of clearances of the year 2003-04. During the year 2003-04, their value of clearances was Rs. 16,72,380/- (without any tax) and after inclusion of Rs. 9,626/- the value of clearances comes Rs. 16,82,006/-. The assessee availed benefit of notification - 08/2003- CE dated 01/03/2003 (SSI exemption). The value of clearances of the assessee during the year 2003-04 remains less than Rs. one crore, therefore, after inclusion of Rs. 9,626/-, the value of clearances for the year 2003-04 remains less than Rs. One crore. Thus, there is no duty liability during the year 2003-04.
(c) Out of Rs. 5,07,282/- an amount of Rs. 2,31,046/- related from those customers who had not got manufactured goods from the assessee after March, 2005 or the assessee did not sale any goods after March, 2005 to such customers. During the year 2004- 05, their value of clearances was Rs. 99,67,144/- (without any tax). Thus the amount of Rs. 2,31,046/- is liable to be included in the value of clearances of the year 2004-05. During the year 2004-05, their value of clearances was Rs. 99,67,144/- (without any tax) and after inclusion of Rs. 2,31,046/- the value of clearances comes Rs. 1,01,98,190/-. The assessee availed benefit of notification NO. 8/2003-CE dated 01/03/2003 (SSI exemption). After given benefit of nil duty up to value of clearance of Rs. One crore, value of clearances of Rs. 1,98,190/- is liable to levy of central excise duty @ 16% i.e. Rs. 31,710/- and Edu. Cess @ 2% of central excise duty i.e. Rs. 634/-
(d) During the year 2005-06 and 2006-07, their value of clearances was more than one Crore. M/s Raghunandan Enterprises and M/s Pasand Enterprises
5|Page E/3544/2010 -[DB] had included in list of customers whose „advances‟ was forfeited on 31/03/06, but both customers has came in the month of December 06 and January 07 and got manufactured goods and the assessee, has supplied goods on 23/12/06 to M/s Raghunandan Enterprises and to M/s Pasand Enterprises on 18/01/07. Thereafter, the assessee had not supplied any goods to both the above customers. Therefore, the amount of advances received from M/s Raghunandan Enterprises and M/s Pasand Enterprises was forfeited as on 31/03/2006, is liable to levy of central excise duty during the year 2005-06. Therefore an amount of Rs. 1,62,230/- (507282104380-9626-231046) is liable to be included in the value of clearances for the year 2005-06 and the same amount i.e. Rs. 1,62,230/- is liable to levy of central excise duty @ 16% i.e. Rs. 25,957/- and Edu. Cess @ 2% of CENTRAL EXCISE duty i.e. Rs. 519/-
6. In order to appreciate the issue involved in this matters it is appropriate to go through the relevant Sections of the Central Excise Act, 1944, which are extracted as under:-
xxx xxx xxx Section 11. Recovery of sums due to Government -- In respect of duty and any other sums of any kind payable to the Central Government under any of the provisions of this Act or of the rules made thereunder including the amount required to be paid to the credit of the Central Government under Section 11D, the officer empowered by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) to levy such duty or require the payment of such sums may deduct or require any other Central Excise Officer or a proper officer referred to in section 142 of the Customs Act, 1962 (52 of 1962) to deduct the amount so payable from any money owing to the person from whom such sums may be recoverable or due which may be in his hands or under his disposal or control or may be in the hands or under disposal or control of such other officer, or may recover the amount by attachment and sale of excisable goods belonging to such person; and if the amount payable is not so recovered, he may prepare a certificate signed by him specifying the amount due from the person liable to pay the same and send it to the Collector of the district in which such person resides or conducts his business
6|Page E/3544/2010 -[DB] and the said Collector, on receipt of such certificate, shall proceed to recover from the said person the amount specified therein as if it were an arrear of land revenue :
Provided that where the person (hereinafter referred to as predecessor) from whom the duty or any other sums of any kind, as specified in this section, is recoverable or due, transfers or otherwise disposes of his business or trade in whole or in part, or effects any change in the ownership thereof, in consequence of which he is succeeded in such business or trade by any other person, all excisable goods, materials, preparations, plants, machineries, vessels, utensils, implements and articles in the custody or possession of the person so succeeding may also be attached and sold by such officer empowered by the Central Board of Excise and Customs, after obtaining written approval from the Principal Commissioner of Central Excise or Commissioner of Central Excise, for the purposes of recovering such duty or other sums recoverable or due from such predecessor at the time of such transfer or otherwise disposal or change.
xxx xxx xxx Section 11AB interest on delayed payment of duty-
(1) Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person who is liable to pay duty as determined under sub-section (2), or has paid the duty under sub-section 2(B), of section 11A, shall, in addition to the duty, be liable to pay interest at such rate not below 3 ten per cent. and not exceeding thirty-six per cent. per annum, as is for the time being fixed by the Central Government, by notification in the Official Gazette, from the first date of the month succeeding the month in which the duty ought to have been paid under this Act, or from the date of such erroneous refund, as the case may be, but for the provisions contained in sub-section (2), or sub-section (2B), of section 11A till the date of payment of such duty: Provided that in such cases where the duty becomes payable consequent to issue of an order, instruction or direction by the Board under section 37B, and such amount of duty payable is voluntarily paid in full, without reserving any right to appeal against such payment at any subsequent stage, within forty-five days from the date of issue of such order, instruction or direction as the case may be, no interest shall be payable and in other cases the interest shall be payable on the whole of the amount, including the amount already paid.
(2) The provisions of sub-section (1) shall not apply to cases where the duty had become payable or ought to have been paid before the date on which the Finance Bill, 2001 receives the assent of the President.
Explanation 1.-- Where the duty determined to be payable is reduced by the Commissioner (Appeals), the Appellate Tribunal 5, National Tax Tribunal or, as the case may be, the Court, the interest shall be payable on such reduced amount of duty.
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Explanation 2.-Where the duty determined to be payable is increased or further increased by the Commissioner(Appeals), the Appellate Tribunal 5, National Tax Tribunal or, as the case may be, the Court, the interest shall be payable on such increased or further increased amount of duty.
SECTION 11AC. Penalty for short-levy or non-levy of duty in certain cases. -- (1) The amount of penalty for non-levy or short-levy or non-payment or short-payment or erroneous refund shall be as follows :-
(a) where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, for any reason other than the reason of fraud or 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, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay a penalty not exceeding ten per cent. of the duty so determined or rupees five thousand, whichever is higher :
Provided that where such duty and interest payable under section 11AA is paid either before the issue of show cause notice or within thirty days of issue of show cause notice, no penalty shall be payable by the person liable to pay duty or the person who has paid the duty and all proceedings in respect of said duty and interest shall be deemed to be concluded;
(b) where any duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA in respect of transactions referred to in clause (a) is paid within thirty days of the date of communication of the order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty-five per cent. of the penalty imposed, subject to the condition that such reduced penalty is also paid within the period so specified;
(c) 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 or 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, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay a penalty equal to the duty so determined :
Provided that in respect of the cases where the details relating to such transactions are recorded in the specified record for the period beginning with the 8th April, 2011 up to the date on which the Finance Bill, 2015 receives the assent of the President (both days inclusive), the penalty shall be fifty per cent. of the duty so determined;
(d) where any duty demanded in a show cause notice and the interest payable thereon under section 11AA, issued in respect of transactions referred to in clause (c), is paid within thirty days of the communication of show cause notice, the amount of penalty liable to be paid by such person shall be fifteen per cent. of the
8|Page E/3544/2010 -[DB] duty demanded, subject to the condition that such reduced penalty is also paid within the period so specified and all proceedings in respect of the said duty, interest and penalty shall be deemed to be concluded;
(e) where any duty as determined under sub-section (10) of section 11A and the interest payable thereon under section 11AA in respect of transactions referred to in clause (c) is paid within thirty days of the date of communication of the order of the Central Excise Officer who has determined such duty, the amount of penalty liable to be paid by such person shall be twenty-five per cent. of the duty so determined, subject to the condition that such reduced penalty is also paid within the period so specified.
(2) Where the appellate authority or tribunal or court modifies the amount of duty of excise determined by the Central Excise Officer under sub-section (10) of section 11A, then, the amount of penalty payable under clause (c) of sub-section (1) and the interest payable under section 11AA shall stand modified accordingly and after taking into account the amount of duty of excise so modified, the person who is liable to pay duty as determined under sub-section (10) of section 11A shall also be liable to pay such amount of penalty and interest so modified.
(3) Where the amount of duty or penalty is increased by the appellate authority or tribunal or court over the amount determined under sub-section (10) of section 11A by the Central Excise Officer, the time within which the interest and the reduced penalty is payable under clause (b) or clause (e) of sub-
section (1) in relation to such increased amount of duty shall be counted from the date of the order of the appellate authority or tribunal or court.
Explanation 1. -- For the removal of doubts, it is hereby declared that-
(i) any case of non-levy, short-levy, non-payment, short- payment or erroneous refund where no show cause notice has been issued before the date on which the Finance Bill, 2015 receives the assent of the President shall be governed by the provisions of section 11AC as amended by the Finance Act, 2015;
(ii) any case of non-levy, short-levy, non-payment, short- payment or erroneous refund where show cause notice has been issued but an order determining duty under sub-section (10) of section 11A has not been passed before the date on which the Finance Bill, 2015 receives the assent of the President, shall be eligible to closure of proceedings on payment of duty and interest under the proviso to clause (a) of sub-section (1) or on payment of duty, interest and penalty under clause (d) of sub- section (1), subject to the condition that the payment of duty, interest and penalty, as the case may be, is made within thirty days from the date on which the Finance Bill, 2015 receives the assent of the President;
(iii)any case of non-levy, short-levy, non-payment, short- payment or erroneous refund where an order determining duty
9|Page E/3544/2010 -[DB] under sub-section (10) of section 11A is passed after the date on which the Finance Bill, 2015 receives the assent of the President shall be eligible to payment of reduced penalty under clause (b) or clause (e) of sub-section (1), subject to the condition that the payment of duty, interest and penalty is made within thirty days of the communication of the order.
Explanation 2. - For the purposes of this section, the expression ―specified records‖ means records maintained by the person chargeable with the duty in accordance with any law for the time being in force and includes computerised records.‖
7. The main issue to be decide in this appeal is whether the extended period has been rightly invoked in the facts of the case. Because if the answer to the above mentioned issue is in negative then there is no need of going in further facts of the matter. But if the answer is in affirmative then we have to give the findings on the issue as to whether the appellant is liable to pay Central Excise duty or not. There is no doubt that in the present case, the case was made out on the basis of examination of balance sheet. The amount in question was duly reflected in the audited balance sheet and profit and loss account of the Appellant. It is not the allegation of the Department that the appellant were showing different amounts in the balance sheet, ledgers and books of accounts in order to avoid payment of tax. The demand for extended period can be issued and confirmed only in cases where the non-payment of tax is by reason of fraud/ collusion/ willful mis-statement/ suppression of fact/ contravention of any statutory provision with intention of evade tax. The department has to establish with supporting evidence, the existence of factors indicating willful mis-statement / suppression of facts. It should be positive act of the Appellant. The ld. Advocate for the appellant 10 | P a g e E/3544/2010 -[DB] submitted that particulars which form basis of demand, were all maintained and recorded in books of the Appellant. He further submitted, without admitting, that there can be short payment of duty, if any, but that was not by reason of any fraud, collusion or willful mis-statement or suppression of facts with intention to evade payment of duty. It was on account of bonafide belief of the Appellant that the duty was not payable on such value.
8. He further stated that the non-collection of duty from the customers also supported the bonafide belief. The entire dealings are on records and the payments they have made and received are through banking channel only. He further submitted that the clearance had taken place under cover of Central Excise invoices which were duly entered in the Central Excise records and therefore intention to evade payment of duty is not establish. The learned Advocate for the Appellant brought to our notice the decision of this Tribunal in the matter of Hindalco Industries Ltd. vs. Commissioner Of C. Ex., Allahabad reported in 2003 (161) E.L.T 346 (Tri.) in which it was held that balance sheet is a public document, therefore, for demand based on the basis of information appearing in the balance sheet, suppression of such information with an intent to evade duty cannot be alleged and that in such cases, demand is hit by limitation.
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9. The Hon‟ble Supreme Court also in the matter of Cosmic Dye Chemical vs. Collector of Central Excise, Bombay reported in 1995 (75) E.L.T. 721 (S.C.), held that intent to evade duty must be proved for invoking the proviso to Section 11 A(1) of the Central Excise and Salt Act, 1944 for extended period of limitation Act. The relevant extract of the said decision is as under:-
xxx xxx xxx
6. Now so far as fraud and collusion are
concerned, it is evident that the requisite
intent, i.e., intent to evade duty is built into these very words. So far as mis-statement or suppression of facts are concerned, they are clearly qualified by the word "wilful" preceding the words "mis-statement or suppression of facts" which means with intent to evade duty. The next set of words "contravention of any of the provisions of this Act or Rules" are again qualified by the immediately following words "with intent to evade payment of duty". It is, therefore, not correct to say that there can be a suppression or mis-statement of fact, which is not wilful and yet constitutes a permissible ground for the purpose of the proviso to Section 11A. Mis-statement or suppression of fact must be wilful.
10. It has been pointed out by the Advocate for the Appellant that the Show Cause Notice dated 21.10.2007 had only alleged "suppression of facts" and had nowhere alleged "intention to evade duty". In our opinion the demand for extended period is suitable only when the duty was not paid by reason of fraud or by reason of collusion or willful mis-statement or suppression of facts with intent to evade payment of duty, but the same is not 12 | P a g e E/3544/2010 -[DB] the case here. The entire dealing of the appellant are on records and all the payments, have been made through banking channels. The amount in question was duly reflected in the audited Balance Sheet and Profit & Loss Account of the Appellant. Since the balance sheet is a public document and the amount in question was duly reflected in the said document therefore, in our opinion there is no intention to evade duty on the part of the Appellant and the same is supported by the decision of the Hon‟ble Supreme Court in the matter of Cosmis Dye Chemical (supra) and also of this Tribunal in the matter of Hindalco Industries Ltd. (supra). As the demand is based on the basis of information appearing in the balance sheet, suppression of such information with an intention to evade duty cannot be alleged and therefore, the demand raised by the Department is hit by limitation and as a result of which the extended period cannot be invoked in the facts of the present case. Therefore our answer to the very issue, whether the extended period has been rightly invoked by the Revenue, is in negative.
11. In view of the above, the appeal filed by the appellant is allowed and the impugned order is set aside on the ground of limitation only without going into further merits of the matter.
(Pronounced in the open court on 01/11/2018.) (C.L. MAHAR) (Ajay Sharma) MEMBER (TECHNICAL) MEMBER (JUDICIAL) Sakshi