Dismissed

Commissioner Of Central Excise and Service Tax v. Shri Satyabrata Swain

Uttarakhand HC6 May 2019CEXA/5/2015

Case brief

AI extract

What is this about?

High Court of Uttarakhand dismissed appeals against CESTAT order. Court held extended limitation under Section 11-A(4) not applicable as no intent to evade duty existed. Explained exemption notification binds Revenue from declaration filing date but not retrospectively.

What did the court decide?

Both appeals under Section 35-G of the Central Excise Act, 1944 dismissed.

Commissioner Of Central Excise and Service Tax Vs… — Customs and Excise | Uttarakhand HC (2019)

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IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL

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CENTRAL EXCISE APPEAL NO. 05 OF 2015

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Commissioner of Central Excise & Service Tax ….Appellant. Vs.

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Shri Satyabrata, Swain, General Manager of Surya Polyback Private Limited. ...Respondent

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CENTRAL EXCISE APPEAL NO. 04 OF 2015

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Commissioner of Central Excise & Service Tax ….Appellant. Vs.

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Surya Poly Pack Pvt. Ltd. ...Respondent

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Sri Shobhit Saharia, learned counsel for the petitioner. Sri Inder Kohli, Sri Rajesh Chibber and Sri Anil Sood, learned counsel for the respondent.

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COMMON JUDGMENT

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Dated: 6^th May, 2019 Coram: Hon’ble Ramesh Ranganathan, C.J. Hon’ble N.S. Dhanik, J.

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Ramesh Ranganathan, C.J. (Oral)

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These appeals, under Section 35-G of the Central Excise Act, 1944 (for short ‘the 1944 Act’), are preferred against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi dated 30.09.2014 allowing the appeals filed by the assessees, and holding against the Revenue on the ground of non-applicability of the extended period of limitation.

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While both the members of the Tribunal had also examined the contentions, urged on behalf of the Revenue and the assessees, on merits, and on the question whether the assessees were entitled to claim the benefit of the exemption notification, both of them differed from each other on these issues. Consequently, if the Revenue’s claim, that the extended period of limitation is applicable, were to merit acceptance by us, the appeal may

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necessitate being remanded to the Tribunal for a third member to examine the assessees’ claim, that they are entitled for the benefit of the exemption notification, as both the members of the Tribunal have differed with each other on the question whether or not the exemption notification was applicable to the assessees during the period 2006-2008.

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As we are required to only examine the submission of Sri Shobhit Saharia, learned Senior Standing Counsel for Central Excise, that the extended period of limitation, as stipulated under Section 11-A(4) of the 1944 Act, would apply in the present case, let us take note of the facts to the extent relevant.

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The assessees are engaged in the manufacture of multilayer poly film, printed as well as non-printed, chargeable to Central Excise Tariff, in their unit located at the Integrated Industrial Estate, SIDCUL, Haridwar. In terms of the Exemption Notification No. 50 / 2003 dated 10.06.2003, the goods specified in the first and second Schedule to the Central Excise Tariff Act, 1985, other than those specified in Annexure-1 to the notification and manufactured in the industrial area specified in Annexure-II to the notification, are exempt from the whole of the duty of excise, as also the whole of the additional duty of excise.

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The assessees started effecting clearance of these goods from their factory on 21.05.2006. However, they filed declarations, in terms of the exemption notification, only on 14.03.2008 contending that they were unaware of the amendment made, to Notification No. 50 / 2003 dated 10.06.2003, on 05.11.2003 whereby manufacturers were entitled to claim exemption, in terms of Notification No. 50 of 2003, only if they submitted a declaration. The assessees’ premises were inspected by the Department in the year 2009, and statements of several persons are said to have been recorded. Show cause notices were, however, issued to the assessees only on 31.03.2011. Thereafter, the assessees were assessed to duty by the Commissioner, Central Excise against whose order the assessees

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carried the matter in appeal to the Tribunal. In terms of the order passed by the Commissioner, Central Excise, the assessees were required to pay excise duty with penalty for two years, i.e. 2006-07 and 2007-08.

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Under Section 11A(1) of the 1944 Act, where any duty of excise has not been levied or paid or has been short-levied or shortpaid, 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 Central Excise Officer shall, within one years from the relevant date, serve notice on the person, chargeable with the duty which has not been so levied or paid, requiring him to show cause why he should not pay the amount specified in the notice.

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Even from the date when the assessees submitted their declarations on 14.03.2008, the notices, calling upon them to showcause why duty should not be levied and penalty should not be imposed upon them for claiming exemption without submitting a declaration, were issued on 31.03.2011 i.e. more than three years after the assessees filed their declarations on 14.03.2018.

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While the show cause notices issued by the Commissioner, no doubt, state that the assessees had deliberately suppressed the fact that they did not furnish a declaration while claiming exemption in terms of the notification, the fact remains that that the assessees had, on their own volition, filed the required declarations on 14.03.2018, and they were granted exemption, in terms of Notification No. 50 / 2003 dated 10.06.2003 as amended on 05.11.2003, from 14.03.2008 when the declarations were submitted.

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The extended period of limitation, stipulated in Section 11A(4) of the 1944 Act, would apply only in cases where any duty of excise has not been levied or paid or has been short-levied or short-paid by reason of (a) fraud; (b) collusion; (c) any wilful mis-statement; (d) suppression of facts; (e) contravention of any of the provisions of the

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Act, or of the rules made thereunder, with intent to evade payment of duty. Mere suppression of facts would, itself, not suffice to attract the extended period of limitation, and it is only if suppression of facts is with the intention of evading payment of duty, is the Revenue entitled to apply the extended period of limitation of five years in seeking to assess the respondent-assessees to duty under the 1944 Act.

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On the question whether there was any intent on the part of the assessees to evade payment of duty, both the member of the CESTAT have held that there was none. While one member opined that, since the assessees were not even required to pay duty if they had exercised their option and had submitted their declarations, and there was evidently no question of mala fide intention of evading payment of duty, the second member observed that, while the assessees started availing exemption from 20.05.2006 when the first clearances were made by them, they filed their declarations on 14.03.2008; there was no dispute that the goods, being manufactured by them, were not in the negative list of Annexure-1, and the unit was located in the industrial area mentioned in Annexure-II; since declaration had been made by the assessees themselves on 14.03.2008, and the same was correct, they could not be accused of suppression of relevant information with the intention of evading payment of duty; when the declarations were filed on 14.03.2008, the jurisdictional Central Excise authorities should have examined the question regarding the assessees’ eligibility for exemption for the period prior to 14.03.2008; they chose to sleep over the issue, and had served a show cause notice only on 31.03.2011; and the assessees could not be blamed for the delay of three years in the officials issuing the show cause notices. Both the learned members of the CESTAT opined that the provision relating to the extended period of limitation could not cover up the delay.

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Section 11A(4) is attracted not in all cases of “suppression of facts” but only where “suppression of facts is with the intent to evade payment of duty”. The relevant factor, which would enable the Revenue to apply the extended period of limitation, is the assessees’

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intent of suppressing facts to evade payment of duty. It is not in dispute that the assessees would have been entitled to claim exemption, under the exemption notification, on their satisfying the requirements stipulated therein i.e. of submitting their declaration. It is also not in dispute that the assessees, on their own volition and more than three years prior to issuance of the show cause notices by the Department, had filed their declarations on 14.03.2008. The Tribunal was satisfied that their claim of being ignorant of the amendment made to the Exemption Notification No. 50/2003 dated 10.06.2003, by the amendment dated 05.11.2003, was the reason why they did not file their declaration earlier, i.e. on or before 21.05.2006 when they first cleared the goods.

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An appeal under Section 35-G of the Central Excised Act would lie only if the order of the Tribunal gives rise to a substantial question of law. A finding of fact, which is either perverse or is not based on any evidence, would alone constitute a substantial question of law necessitating exercise of jurisdiction under Section 35 G of the Act. It is only if the view taken by the Tribunal is held not even to be a possible view, would interference be justified. We are satisfied that the view taken by the Tribunal does not suffer from any such infirmity. We see no reason, therefore, to entertain this appeal under Section 35-G of the 1944 Act.

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Sri Shobhit Saharia, learned Senior Standing Counsel, would request this Court to clarify that the benefits of the Exemption Notification No. 50 / 2003 dated 10.06.2003 would be available only from the date on which the assesees filed their declarations, and not prior thereto. He would submit that the order of the Tribunal should not be permitted to be treated as a binding precedent for others to claim the benefit of the Exemption Notification from a date anterior to the date on which they file their declarations. This apprehension, expressed on behalf of the Revenue by Sri Shobhit Saharia, learned Standing Counsel, is wholly unfounded.

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On the applicability or otherwise of the exemption notification, both the members of the CESTAT have differed with each other. But for the fact that the proceedings initiated by the Department were held to be barred by limitation, the question regarding applicability, or otherwise, of the exemption notification dated 10.,06.2003 to the assessees before 14.03.2008, when they filed their declarations, would have been referred to a third member. On the applicability of the exemption notification from a date anterior to the date on which the declaration was submitted, the order under appeal does not constitute a binding precedent, since both the members have differed from each other. We may not be understood to have held that the exemption notification would apply from a date anterior to the date on which the declaration is filed, or that it does not. All that we have held is that it is wholly unnecessary for us to examine this question, since the differing views, expressed by both the members of the Tribunal, can only mean that the applicability of the exemption notification has not been finally decided by the order under appeal.

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Subject to the aforesaid observations, the appeals fail and are, accordingly, dismissed.

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(N.S. Dhanik, J.) (Ramesh Ranganathan, C.J.) 06.05.2019 06.05.2019

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Rathour

Commissioner Of Central Excise and Service Tax v. Shri Satyabrata Swain

Case brief

What is this about?

What did the court decide?

Commissioner Of Central Excise and Service Tax v. Shri Satyabrata Swain

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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