Custom, Excise & Service Tax Tribunal
Mishrambu Beverages Pvt Limited vs Cgst Varanasi on 19 May, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Excise Appeal No.70446 of 2021
(Arising out of Order-in-Appeal No.189/CE/ALLD/2021 dated 16.07.2021
passed by Commissioner (Appeals) CGST & Central Excise, Allahabad)
M/s Mishrambu Beverages Pvt. Ltd., .....Appellant
(SH 13/113A, Tarna Bazar, Shivpur, Varanasi-221003)
VERSUS
Commissioner of Central Excise &
Service Tax, Varanasi ....Respondent
(9, Maqbool Alam Road, Varanasi-221002) APPEARANCE:
Shri Kartikeya Narain, Advocate & Shri Nishant Mishra, Advocate for the Appellant Shri A. K. Choudhary, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) FINAL ORDER NO.- 70287/2025 DATE OF HEARING : 19.02.2025 DATE OF PRONOUNCEMENT : 19.05.2025 P. K. CHOUDHARY:
The present appeal has been filed by the Appellant assailing the Order-in-Appeal No.189/CE/ALLD/2021 dated 16.07.2021 passed by Ld. Commissioner (Appeals) CGST & Central Excise, Allahabad, to the extent the same upholds the invocation of extended period of limitation and the excise duty payable thereon along with penalties of Rs.20,000/- and Rs.5,000/- under Rule 27 of the Central Excise Rules, 2002.
2. The facts of the case in brief are that M/s Mishrambu Beverages Pvt. Ltd1., was engaged in manufacture and clearances of dry fruits Sharbat/drinks, syrups and squashes and was paying duty under Section 4 of the Central Excise Act, 19442 by classifying the same as Sharbat under tariff item 2106 9011 1 Appellant 2 Act Excise Appeal No.70446 of 2021 2 of the Central Excise Tariff Act, 1985 @ 2% under Notification No.1/2011-CE dated 01.03.2011, as amended, and was also availing SSI exemption under the Notification No.8/2003-CE dated 01.03.2003.
3. The Appellant obtained central excise registration on 22.01.2015 by disclosing the goods as food mixes, separately classified as Sharbat falling under tariff item 2106 9011. The list of ingredients was also provided by the Appellant while seeking registration. Thereafter, the Appellant furnished Quarterly ER-3 Returns disclosing the details of manufacture and quantum of clearances, HSN number of Sharbat, details of exemption notifications etc. After the Appellant furnished Returns, audit was also conducted and no objection was taken by the Department, either in respect of the classification adopted or in respect of the benefit of exemption notifications.
4. During the second audit conducted by the Officers of CGST and Central Excise Audit Circle, Varanasi, it was observed that the Appellant has wrongly assessed and paid duty@ 2% under Section 4 of the Act on the transaction value and wrongly availed the benefit of SSI exemption, as the goods covered by tariff item 20169011 were liable to be assessed under Section 4A of the Act and duty was payable @ 6%.
5. On the basis of Draft Audit Report dated 02.05.2019 and Final Audit Report dated 09.05.2019, Show Cause Notice3 dated 06.06.2019 was issued alleging that the goods covered under tariff item 2106 9011 are assessable under Section 4A of the Act, assessable with reference to the Retail Sale Price and in terms of Notification No.49/2008-CE(NT) dated 24.12.2008 and therefore the effective rate of duty was 6%. The SCN also alleged that on resorting to valuation under Section 4A, the Appellant is not eligible for benefit of SSI Exemption since the total turnover (excluding abatement) was more than the prescribed threshold limit of four crores. The SCN invoked extended period of limitation on the ground that the Appellant has knowingly and willfully suppressed material facts from the 3 SCN Excise Appeal No.70446 of 2021 3 Department by resorting to wrong valuation and wrongly claiming SSI exemption, has belatedly taken registration, despite the total turnover for F.Y. 2016-17 being Rs.4,25,54,375/-, the Appellant availed benefit of SSI exemption in F.Y. 2017-18 (upto June'2017) even on declared transactional value of Rs.1,35,86,280/- and also that the Appellant tried to put hindrance in audit work by not submitting requisite information. The SCN thus proposed demand and recovery of duty of Rs.66,34,699/- alongwith interest, penalty under Section 11AC and also imposition of penalty for failure to take registration and file monthly Returns.
6. The SCN was adjudicated vide Order-in-Original dated 18.05.2020 confirming the proposals made in the SCN. So far as invocation of extended period of limitation is concerned, the order confirmed the same on the grounds that the Appellant had not submitted price list at any point of time, during 2016-17 the Appellant cleared goods valuing more than Rs.4 crores and was therefore not eligible for SSI exemption yet the Appellant availed SSI exemption during 2017-18.
7. Aggrieved with the aforesaid adjudication order, the Appellant preferred the appeal before the Ld. Commissioner (Appeals). It appears from records that during the pendency of appeal, the Appellant submitted additional submissions to the effect that only certain kinds of syrups like rose syrup, khus syrup etc. fall under tariff item 2106 9011 and other manufactured items i.e. premium thandai, kesaria pista and badam pista merit classification under tariff item 2008 1990 and squash merits classification under 2008 99. The Appellant also made detailed submissions on extended period of limitation.
8. By the impugned Order-in-Appeal dated 16.07.2021, the Ld. Commissioner (Appeals) partly allowed the appeal by disposing the appeal with the finding that syrup (rose syrup, khas syrup etc.) merit classification under item 2106 9011, premium thandai, kesaria pista and kesaria badam merit classification under 20081990 and squash merit classification under 200899. As regards valuation, the Ld. Commissioner Excise Appeal No.70446 of 2021 4 (Appeals) held that the goods of both the chapters 20 and 21 are assessable under Section 4A, as both such goods are covered by Notification No.49/2008-CE(NT) dated 24.12.2008 and abatement @ 35% is available for goods of chapter 20 and abatement @ 25% is available on the goods of chapter 21. The Ld. Commissioner (Appeals) thus re-quantified the duty liability to Rs.8,54,720/-, however in absence of verification report from the Assistant Commissioner, the matter has been remanded back to the Adjudicating Authority to examine and verify the genuineness of the MRP value of clearances of goods and accordingly re-quantify the duty liability. The Ld. Commissioner (Appeals) has also rejected the submission of the Appellant on extended period of limitation and held that the same was rightly invoked against the Appellant as under the self-assessment procedure, the Appellant was required to classify their products under specific chapter heading, disclose the same in statutory ER-1 returns and pay duty at appropriate rate, whereas the Appellant has wrongly classified goods, wrongly valued under Section 4 and the same was detected only during audit and therefore there was clear mis-declaration in the statutory returns and suppression of facts with intent to evade the payment of duty.
9. Aggrieved with the impugned order, the Appellant has filed the present appeal, to the extent it confirms invocation of extended period of limitation.
10. Ld. counsel for the Appellant has made the following submissions on extended period of limitation:-
(a) Extended period of limitation cannot be invoked as the registration was obtained on 22.01.2015 after disclosing the goods as food mixes, classifiable under tariff item 2106 9011 and providing list of ingredients, returns were furnished by disclosing the details of manufacture and quantum of clearances, HSN number of Sharbat, details of exemption Excise Appeal No.70446 of 2021 5 notifications etc. Thus, all material facts were duly disclosed by the Appellant;
(b) Despite the fact that HSN was disclosed in the returns and Department was aware that the Appellant is clearing goods of tariff item 2106 9011, no objection was taken by the Department regarding assessment under Section 4 and even in the first audit either to the classification adopted or to the applicability of exemption notifications. Thus, relevant facts were in the knowledge of the Department;
(c) The adjudication order has confirmed invocation of extended period on extraneous grounds and the Ld. Commissioner (Appeals) travelled beyond the scope of the adjudication order.
11. Ld. Authorized Representative for the revenue reiterated the findings recorded in the impugned order and submitted that the extended period of limitation has been rightly invoked in the present case.
12. Since, the matter has been remanded back by the Ld. Commissioner (Appeals), a pointed query was made from the parties regarding the status of adjudication pursuant to remand order. We have been informed that no order pursuant to the impugned order has been passed till date. Be that so as it may, the same will not make any difference in view of the settled law that as soon as the remand order is set-aside, the order, if any, passed pursuant to remand order, automatically gets non-est [Nagesh Datta Shetti vs. State of Karnataka (2005) 10 SCC 383]. Hence, there is no hindrance in hearing the present appeal.
13. Heard both the sides and perused the appeal records.
14. We find that the only issue arising in the present appeal is whether the extended period of limitation has been rightly invoked in the facts and circumstances of the case.
15. Since the impugned order has been challenged only on the ground of limitation, we deem it fit to reproduce the relevant Excise Appeal No.70446 of 2021 6 findings recorded in Paragraph 5.4 of the adjudication order as under:-
"I find that the case in hand is totally different from the above-mentioned cases as per analogy mentioned against each of them. In the present case, the party has not submitted their price list before the department at any point of time. As it is already proved that the assessee had suppressed the facts and contravened the provisions of Central Excise Act, 1944 and Central Excise Rules, 2022 with intent to evade payment of Central Excise, the consequences shall automatically follow. Further, the party during 2016-17 cleared the goods valued at Rs. 4,25,54,375/- i.e. more than four crore as per their own assessment under Section 4 of the Central Excise Act, 1944. Therefore, the party was not eligible for SSI exemption during 2017-18, but they have availed the same and have not paid any duty during April 17 to June 17, which shows intention of the party towards evasion of duty."
Thus, the adjudication order confirmed invocation of extended period on the ground of suppression of facts with intent to evade payment of duty.
16. So far as the charge of suppression is concerned, we fail to understand that as to how there can be any suppression on the part of the Appellant when registration was obtained after disclosing the nature of goods along with its ingredients and classification adopted by the Appellant. Further, returns were also filed by disclosing the quantum of clearances along with HSN number and also the details of exemption notifications etc. Thus, the revenue was all along aware that the Appellant is classifying goods under tariff item 2106 9011 by claiming SSI exemption and as contended by the Appellant, no objection was taken in the first audit also.
17. Now once the revenue was aware of the material facts regarding classification under tariff item 2106 9011 and also the claim under the exemption notification, we find that there was no suppression on the part of the Appellant as the Appellant disclosed the correct information. Merely because the goods classifiable under tariff item 2106 9011 were assessable under Section 4A and not under Section 4 will not make out a case of Excise Appeal No.70446 of 2021 7 suppression, as the relevant facts were already in the knowledge of the revenue. Therefore no case of suppression with intent to evade duty is made out against the Appellant, which is in consonance with the law laid down in Pushpam Pharmaceuticals Co. vs. CCE 1995 Supp. (3) SCC 462, where the Supreme Court has held as under:-
"4. Section 11-A empowers the Department to reopen proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of course the context in which it has been used indicates otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression."
The aforesaid proposition has been reiterated in Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut (2005) 7 SCC 749.
18. Even the findings recorded in paragraph 5.4 of the adjudication order to confirm invocation of extended period appears irrelevant to us. So far as non-submission of price list is concerned, we find that price list is relevant for the purposes of valuation under Section 4A of the Act and once the Appellant was paying duty under Section 4A without there being any objection of the revenue, the question of submission of price list does not arise and consequently it cannot be a ground for invoking extended period. We also cannot approve the finding in Excise Appeal No.70446 of 2021 8 paragraph 5.4 that it is already proved that the assessee had suppressed the facts as the adjudication order, prior to paragraph 5.4, nowhere deals with the issue of suppression. The fact that during 2016-17, the Appellant cleared goods of more than Rs.4 crores also does not lead to suppression, when the Appellant had admittedly paid duty on turnover in excess of Rs.4 crores. The fact that the Appellant did not paid duty in 2017-18 by claiming SSI exemption also cannot be a ground for alleging suppression, when the said fact was already in the knowledge of the revenue and non-payment of duty was under the bona-fide belief that the Appellant is still entitled for SSI exemption. It is important to note here that mere non-payment of duty is not sufficient to sustain the charge of suppression, since for suppression, there must be intent to evade payment of duty, which is not there in the present case.
19. We further find that in the impugned order, the charge of suppression has been sustained on grounds, which were not there in the adjudication order. This is clearly impermissible in law, as the case of the revenue cannot be sustained on a ground which was not there in the adjudication order and therefore the impugned order, to this extent, is not sustainable in law.
20. In view of the aforesaid discussion, the impugned order, to the extent challenged, is set-aside and the appeal is allowed with consequential relief, as per law.
(Order pronounced in open court on - 19.05.2025) (P. K. CHOUDHARY) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) LKS