Full Judgment
The alleged goods are said to have been manufactured at the site of the customers by the assessee i.e. M/s Kaishar Intriers Pvt. Ltd. The Ld.
DR has raised a point that both the authorities below have not discussed the issue involved in the matter and simply dropped the demand on the point of limitation as the show cause notice was issued beyond a period of six months invoking the provisions under Section 11A(1) of the Central Excise Act and there is no clear finding by the authorities concerned about the bar of limitation. As such, the matter needs to be remanded back for fresh disposal.
3. I have gone through the impugned orders passed by the Additional Commissioner as well as the Commissioner (Appeals), Central Excise, Mumbai. The Additional Commissioner, Central Excise in his impugned order at internal page 5 has observed the following in respect of the point of limitation which is as under: After going through the SCN, I find that there is no allegation of suppression, misstatement, fraud etc. anywhere in the SCN except at one place where it was stated that they cleared the goods by suppression of facts, but here also it was not elaborated as to how they suppressed the facts. In the case of Collr. of C. Excise v. Chemphar Drugs and Liniments, it was held by the Hon'ble Supreme Court that in order to make demand sustainable beyond the period of 6 months upto a period of 5 years, in view of the proviso of Sub-section 11 A(1) of the Act. it had to be established that duty of excise was not levied or paid or short levied or short paid or erroneously refunded either by fraud or collusion or misstatement or suppression of facts and contravention of any of the provisions of the Act or Rules made thereunder with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer knew otherwise, is required before it is saddled with any liability.
From the reading of the SCN, it appears that there was mere inaction or omission on the part of M/s. KIPL to take C.Excise registration or pay appropriate duty on the furniture manufactured by them, but there was no deliberate suppression, willful misstatement or violation of C. Ex. Rules with intent to evade C. Excise duty which are essential for invoking the provisions of Section 11A(1).
Wherever proviso is required to be invoked, these essential ingredients of this proviso are required to be brought in the SCN explicitly. In the case of Pushpam Pharmaceuticals Co. v. Collector of C. Ex. Bombay supra, it was also held by the Hon'ble Supreme Court that mere suppression to disclose the correct information is not a suppression of fact, unless it was deliberate escape from payment of duty.
From the above judgments delivered by the Hon'ble SC, it is very clear that where demand is raised for the period of 5 years, under the proviso to Section 11A(1) and it is the responsibility of the department to adduce the evidence or at least allege in the SCN that the party has not only suppressed information from the department, but it was a willful and deliberate act in order to evade the payment of duty. Mere inaction to give information to department would under no circumstances entitle the department to invoke 5 years period under proviso to Section 11A(1). Here in the instant case, no such allegation has been made in the SCN, on the contrary, M/s KIPL was keeping all the records of production and manufacture of such furniture and the information was voluntarily given to the department when asked for. Had there been intention to evade payment of duty, they would not have kept the records of production and manufacture and would not have produced it to the C.Ex. Officers on their visit. I find that this is a case of mere omission to take out the C.Excise license or register with C.Excise department and pay appropriate C.Excise duty on the furniture manufactured by them under bonafide belief that the activity undertaken by them was non excisable as they were doing the same activity for number of years.
Since there is no material on the basis of which the extended time limit was to be applied, so the normal period of limitation should apply as held by Hon'ble Supreme Court in Integrated Process Automation v. CCE 4. Similarly I have gone through the impugned order passed by the Commissioner (Appeals) where he discussed about the issue on limitation in para 9 which is extracted here under.
I have carefully considered the grounds in appeal, rejoinder filed by the Respondent and the position of law on limitation. It is evident from the facts on record that no basis is established to allege any willful suppression of information from the department with intention to evade payment of duty. The liability to duties on wood work activities conducted at the site on contractual basis was only clarified by the CBEC in the year 1997. Prior to this it can be accepted that there was a general understanding in the trade that the said activity did not attract Central Excise duties. Therefore, appellant not having obtained Central Excise licence and not following the procedures prescribed in Central Excise law in the year 1994-95 can only be construed as a bonafide lapse on part of a job worker having inadequate knowledge of the requirement of the law, and not an act of willful suppression of information with intent to payment of duty.
5. I have also perused allegations alleged in the show cause notice. As ordered by both the authorities below, the allegations in respect of suppression of facts is not positive assertion passed on specific instances. The allegations appears to be vague and casual. They do not meet the requirements of the provisions of Section 11A(1) of the Central Excise Act. Therefore, the findings given by both the authorities below are quite reasoned one based on the sound principle of law on the decisions rendered by the Apex Court as well as by the Tribunal. These findings do not call for any interference by the Tribunal at this stage and requires to be upheld.6. However, Ld. Counsel for the respondents/assessee, pointed out the amount involved in the appeal is less than Rs. 50,000/-. As seen from the record, no discretion has been exercised by the Tribunal in admitting the appeal before listing for regular hearing. I am of the considered opinion that provisions under Section 35B(2) of the Central Excise Act, to exercise the discretion of the Tribunal either in admitting or refusing the appeal if the value is less than Rs. 50,000/- is equally applicable to both the assessee as well as department appeals. The assessee's appeals are being scrutinized and the discretion is exercised at the initial stage of filing the appeal. A practice is said to have been developed in the Tribunal earlier in respect of receiving the departmental appeals where the value is less than Rs. 50,000/- and being listed directly for regular hearing without initial scrutiny. In my considered opinion this is not the correct procedure. The above referred provision is to be applied equally to both the assessee as well as department cases.
7. In the light of the aforesaid discussion, the present appeal is dismissed both on the point of merit as well as pecuniary jurisdiction.
Order accordingly.