Custom, Excise & Service Tax Tribunal
Indian Oil Corporation Ltd vs Commissioner Of Central Excise on 21 October, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. E/1738/05 (Arising out of Order-in-Original No. 5/2005 dated 16.02.2005 passed by Commissioner of Central Excise, Mumbai II) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, 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 : No 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?
Indian Oil Corporation Ltd. Appellant Vs. Commissioner of Central Excise Mumbai II Respondent Appearance:
Shri M.H. Patil, Advocate for appellant Shri Ashutosh Nath, Asst. Commr (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 21.10.2015 Date of Decision: 21.10.2015 ORDER NO Per: M.V. Ravindran This appeal is directed against Order-in-Original No. 5/2005 dated 16.02.2005.
2. Filtering out the unnecessary details, the facts that arise for consideration are that during the period January 1994 to March 1995, the appellant cleared some products manufactured by them by classifying the same under Chapter Heading number 27.01 while it is a case of the revenue that the said products are classifiable under Chapter Heading number 34.03. The classification claimed by the appellant entitles them the benefit of lower rate of duty while the revenue is seeking to classify the product under heading wherein the appellant is not eligible for lower rate of duty. The show cause notice dated 02/02/1999 was issued to the appellant alleging that they were misclassifying the products in order to evade duty, allegations of suppression were also levelled against the appellant. The appellant contested the show cause notice on merits as well as on limitation. The adjudicating authority after following the due process of law did not agree with the contentions raised and confirmed the demands with interest and imposed penalties.
3. Learned Counsel, at the outset, submits that though they have a good case on merits, he would essentially argue on the limitation aspect. He would draw our attention to the fact that the appellants during the material period had filed classification list to the lower authorities and the said classification lists were approved by the lower authorities, clearances were effected based upon such approved classification lists. He would submit that the lower authorities did not draw any samples for analysis nor the classification lists were provisionally approved. It is his submission that the entire case of the Revenue is based on the statements recorded of the personnel of appellant. It is his submission that the appellant had filed the clarification in accordance with the knowledge he had about the products, if the revenue had any doubts, they should have got the classification from the appellant immediately. He would submit that the judgement of the Supreme Court in the case of Densons Pultretaknik 2003 (155) ELT 211 (SC) is directly applicable in this case.
4. Learned Departmental Representative would support the order by stating that there was suppression of the fact, as the appellant had not informed the Department that the contents of the product do not confirm to the specifications of product falling under chapter heading number 27.01 it is his submission that this was ascertained by the Department after it was noticed from the quality control records. It is his submission that the batch reports indicate that the products are correctly classifiable under chapter heading number 34.03. He would then take us through the statements of persons working in the appellants factory/refinery.
5. We have considered the submissions made at length by both sides and perused the records.
6. On perusal of records, we find that the appeal could be disposed of on the ground of limitation only. It is noticed that for the period in question in this appeal, appellant had filed classification list, classifying the products under chapter heading number 27.01. The said classification lists were approved by the authorities as per the provisions of Rule 173B of Central Excise Rules 1944. We find strong force in the contentions raised by the learned Counsel that the entire demand is hit by limitation for more than one reason.
6.1 Firstly, on perusal of the approved classification list as produced by the learned Counsel, indicates that appellant had, presented to the Department the classification of the products under chapter 27.01. The said classification was done so by the appellants as per the knowledge they had about the product. Nothing was brought to our notice that Department entertained any doubt as to the correct classification of the product. In our considered view, if the Department had any doubts as to the classification of the said products, they should have informed the appellant to produce further documents in order to correctly classify the products. There being no correspondence from the Department, before the approval of the classification list, it has to be inferred that the classification done by the appellant is acceptable to the Department. The appellant having got the classification list approved, clear the said products as per the approved classification list discharging the duty as per the classification list, cannot be charged with the allegation of mis- statement or suppression of facts to evade payment of duty. Further, it is noticed that the revenue authorities, on receipt of classification list, did not direct the appellant to go for the drawal of the samples and get the same tested in order to ascertain the correct classification of the product, during the relevant period. Having not done so, revenue authorities now cannot turnaround and allege that there was suppression, mis-statement on the part of appellant.
6.2 Secondly, the revenue authorities relied upon the batch card purportedly maintained by the appellant in respect of the said products, indicate that the correct classification of the product is under chapter 34. On perusal of the said job cards, we find that the said job cards were for the year 1998 while the demand in the show cause notice is for the period January 1994 to March 1995. There is nothing on record to show that during the relevant period, the job cards of the products in question were indicative of the classification under chapter 34. In any case, revenue having failed to indicate to the appellant assessee that the classification sought by them is unacceptable now cannot rely upon the job cards which were of latter period. It is settled law that the case of classification of a product, the revenue has to play a proactive role, which is absent in the case in hand.
6.3 Thirdly, on a specific query from the bench, learned Counsel submits that the products in question in this appeal, are even today are cleared under chapter heading number 27.01. If that be so, the entire exercise of the reclassification of the product is of academic interest as there is no dispute which is before the Tribunal on the classification of the said products, subsequent to the period we concerned with.
6.4 Honble Supreme Court in the case of Densons Pultretaknik (supra) has held mere classifying the goods under different headings does not amount to willful misstatement or suppression. We, with respect reproduce the ratio in paragraph number 7 of the judgement.
7. Next question is - whether the Tribunal was justified in invoking first proviso to sub-section (1) of Section 11A. Prima facie, it is apparent that there was no justifiable reason for invoking larger period of limitation. There is no suppression on the part of the appellant-firm in mentioning the goods manufactured by it. The appellant claimed it on the ground that the goods manufactured by it were other articles of plastic. For the insulating fittings manufactured by it, the tariff entry was correctly stated. The concerned officers of the Department, as noted above, after verification approved the said classification list. This Court has repeatedly held that for invoking extended period of limitation under the said provision duty should not have been paid, short-levied or short-paid by suppression of fact or in contravention of any provision or rules but there should be wilful suppression. [Re : M/s. Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore, C.A. No. 2693 of 2000 etc. decided on 13-1-2003]. By merely claiming it under heading 3926.90 it cannot be said that there was any wilful misstatement or suppression of fact. Hence, there was no justifiable ground for the Tribunal for invoking the first proviso to sub-section (1) of Section 11A of the Act.
6.5 Above reproduced ratio squarely covers the issue in the case in hand.
6.6 As we have disposed of the appeal only on the ground of limitation, we are not recording any findings on various other submissions made by both sides.
7. In view of the foregoing, we hold that the impugned order is unsustainable on the ground of limitation, and is liable to be set aside and we do so. Impugned order is set aside and appeal is allowed.
(Dictated in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 8Appeal No. E/1738/05