Custom, Excise & Service Tax Tribunal
Hindustan Petroleum Corporation Ltd vs Cce Mumbai on 23 June, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/708/06 Mum
Arising out of Order-in-Original No. 07/M-I/2005 dated 30.11.2005 passed by the Commissioner of Central Excise, Mumbai I.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
Hindustan Petroleum Corporation Ltd.
:
Appellant
Versus
CCE Mumbai
Respondent
Appearance Shri M.H. Patil, Advocate for appellant Shri Y.K. Agarwal, SDR For Respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri P.R. Chandrasekharan, Member (Technical) Date of Hearing : 23.06.11 Date of Decision : 23.06.11 ORDER NO.
Per Ashok Jindal By this appeal the appellants are seeking waiver of penalty imposed on them under Section 11AC of the Central Excise Act, 1944.
2. Facts of the case are that M/s Hindustan Petroleum Corporation Ltd. (HPCL in short) are the manufacturer of lubricating oil, auto wax, polish, speciality oils etc. On the basis of intelligence received to the effect that the appellants are manufacturing petrol plus and diesel plus and have mis-classified them as lubricants under Chapter Heading 2710.90 instead of classifying them as additives under Chapter Heading 3811.00 and thereby had evaded the payment of Central Excise duty by fraudulently availing the benefit of notification No. 47/2001 (N.T.) dated 26.09.2011, the investigation was conducted. After investigation, show-cause notice was issued on 24.03.05 for the period August, 2000 to November, 2000 by invoking the extended period of limitation as the appellants have mis-declared the product. The show-cause notice was adjudicated, demands were confirmed along with interest and penalty under Section 11AC equal to the duty. Aggrieved by the order of imposing penalty, the appellants are in appeal before us.
2.1 Being a public sector undertaking, during the relevant period, the appellants were required to obtain clearance from Committee of Dispute to contest the matter before this Tribunal. Therefore, the appellants obtained the clearance from the Committee of Dispute by Notification No. COD/38/2009 dated 15th October, 2009. As per said notification, the appellant were allowed to contest the issue of penalty only. Therefore, the appellants have admitted their duty liability and paid duty along with interest. They are only contesting the penalty.
3. Shri M.H. Patil, learned Advocate for the appellant submitted that the appellants have filed their classification list on 23rd October, 2000 giving the facts that what are the inputs and what is the final product and as per their declaration, they have classified their product under Chapter Heading 2710.90. He further submitted that this fact is very well in the knowledge of the department and they were filing their returns regularly which were also in the knowledge of the department. Therefore, the allegation of fraud, collusion, willful mis-statement, suppression of facts or contravention of Central Excise Act/Rules, 1944 with intent to evade duty is not sustainable. He also submitted that although the appellants have paid the duty along with interest, it does not mean that they have admitted their liability for imposing penalty. He also submitted that this Tribunal as well as the Honble High Courts and the Honble Apex Court has held that where there is a dispute of classification the allegation of fraud, collusion, willful mis-statement, suppression of facts or mis-declaration with intent to evade duty are not sustainable. To support his contention, the learned Advocate placed reliance in the case of Markfed Refined Oil & Allied Indus. V. Commissioner of Central Excise, Jalandhar 2008 (229) ELT 557 (Tri. Del.) which was confirmed by the Punjab and Haryana High Court as reported in 2009 (243) ELT A-91 (P&H). He also relied on the decision of the Honble Supreme Court in the case of Densons Pultretaknik vs. CCE 2003 (155) ELT 211 (S.C.).
4. Shri Y.K. Agarwal, learned SDR appeared on behalf of the Revenue and submitted that as the appellants being a public sector undertaking has admitted their duty liability and paid duty along with interest, therefore they are liable to pay penalty also. To support his contention he placed reliance on Union of India vs Dharamendra Textile Processors - 2008 (231) ELT 3 (S.C.). He further submitted that during the investigation, the officers of the Company have admitted that they have mis-declared their goods. He also submitted that as the officers who have admitted in their statements about their mis-declaration are qualified officers and are known to these facts, therefore under Section 11AC the mandatory penalty is imposable.
5. Heard both the sides and considered their submissions.
6. After considering the submissions, we find that in this case the appellant Company have filed declaration on 23rd October, 2000 to classify their product under Sub-Heading 2710.90 which was very well in the knowledge of the departmental officers. If the department was of the view that their product is to be classified under sub-Heading 3811.00, the investigation would have been started immediately on filing the classification list which they have failed to do so. We also find that the investigation in this case has started in only November 2003 and show-cause notice has been issued in 2005. Therefore, the extended period of limitation is not invokable in this case. Although the appellants have paid duty along with interest and the appellant had not claimed refund of duty and interest paid as they are not contesting the same and only contesting the imposition of penalty. Therefore, it is to seen whether in those circumstances, the penalty under Section 11AC is imposable or not?
7. We have gone through the case laws cited by the learned Advocate wherein the case of Densons Pultretaknik (supra) the honble apex court has held that claiming wrong classification does not amount to suppression of facts. In the case of Markfed Refined Oil & Allied Indus (supra), the Honble High Court of Punjab and Haryana has confirmed the view and observed that once the assessee is a Government organization it is not easy to infer any evasion of duty much less its intention to do so. Therefore, we do not find any force in the contention of the learned SDR, same are turned down. Following the ratio laid down by the decision cited by the learned Advocate we find that the classification list was in the knowledge of the department in October, 2000, therefore allegation of suppression is not sustainable, hence, the extended period of limitation is not invokable in this case. Therefore, in the absence of necessary ingredients of Section 11AC of the Central Excise Act, 1944, penalty is not imposable on the appellants.
8. In sum, the penalty against the appellants is dropped. Appeal is disposed of in the above manner.
(Pronounced in open Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 2