Reserved Judgment IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Central Excise Appeal No. 09 of 2005 The Commissioner of Custom and Central Excise Meerut. ...…………. Appellant Versus M/s Khushal Fertilisers (P) Ltd., Roorkee. ...…………. Respondent Mr. Arvind Vashisth, Standing Counsel for the appellant. Mr. S.K. Posti, Advocate for the respondent. Coram : Hon’ble Prafulla C. Pant, J. Hon’ble Dharam Veer, J. [Per Hon’ble Prafulla C. Pant, J.] This reference (wrongly registered as Appeal), made under Section 35-G of the Central Excise and Salt Act, 1944, by the Commissioner of Central Excise, Meerut –I, Mangal Pandey Nagar, Meerut, is directed against the order dated 21.03.2005, passed by the Customs Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred as CESTAT), in E / Appeal No. 3154 / 2004 – NB(B), whereby the appeal of the revenue was partly allowed. 2 2) Heard learned counsel for the parties. 3) The point of reference is as under: Whether wilfully non-furnishing of information and non-obtaining of Central Excise Licence will not constitute suppression of facts on the part of the party (respondent company) and consequently the demand w.e.f. 22.01.1991 should not be time barred? 4) According to the Revenue, brief facts of the case are that M/s Khushal Fertilizers (P) Ltd., Roorkee, (present respondent) were engaged in the manufacturing of M.S. Conduit Pipes w.e.f. 29.03.1990 and are registered as an S.S.I. unit with the Directorate of Industries. During the course of investigations made by the Central Excise Officers of the Preventive Unit of Division Saharanpur, with respect to the business activities of the respondent company, it was observed that the company had neither obtained any Central Excise licence for manufacturing of conduit pipes, nor filed any declaration with the department for exemption from licencing. On this, the respondent company produced a letter dated 22.01.1991 (i.e. 10 months after the commencement of production in the factory) addressed to the Sector Officer, Central Excise, Range Roorkee, whereby, a certificate to the effect that their product is exempt from the levy of duty, is sought. The said authority directed the respondent company to seek such certificate from the Assistant Collector, Central 3 Excise, Division Saharanpur, by giving complete information about the nature of raw material used by it in the manufacture of steel pipes. It is alleged that the respondent company wilfully abstained from writing to the said authority with an intention to evade duty on the steel pipes by suppressing the facts regarding the nature and kind of raw material used by it. At the time of recording of statement under Section 14 of the Central Excise and Salt Act, 1944, before the Superintendent (Preventive), Division Saharanpur, Mr. Manoj Kumar, one of the Directors of respondent company stated that their product i.e. M.S. conduit pipes were made of raw materials namely bars, other bars of non-alloy steel and flat rolled product and hence were not considered to be dutiable by them by virtue of exemption under Notification No. 202 / 88 because of which clearances of M.S. Conduit Pipes were effected by them without payment of any Central Excise duty thereof. Mr. Pankaj Gupta, another Director of the respondent company had stated that M.S. Conduit Pipes manufactured in his factory were out of flats / strips of thickness below 5 mm. He further stated that though units supplying raw materials to his factory mentioned their product as bars / flat bars but the goods supplied by them are basically flat rolled products. According to Revenue, there are contradictions in the statements of the two Directors of the respondent company. The intention behind this is to project the dutiable conduit pipes manufactured by them as exempted from excise duty under Notification No. 202 / 88. The allegations against the respondent company is that they were under legal obligation either to obtain a Central 4 Excise Licence for manufacturing the conduit pipes, or if the company desired exemption from obtaining the required licence, they were required to file a declaration with the Central Excise Department for exemption from licensing under unamended Rule 174 of the Central Excise Rules, 1944. By not following the procedure prescribed under the rules, the respondent company managed to hide the facts from the revenue which enabled them to evade duty on conduit pipes. 5) Learned Standing Counsel for the appellant / revenue argued that the respondent company had not furnished any material to the Department on the basis of which action could have been initiated by the Department as it was only in the letter of the respondent company dated 29.04.1991 that the details regarding date of production, total production, total purchase of inputs along with its thickness were furnished, and as such, the Department came to know about the matter only from the date of receipt of letter dated 29.04.1991. It is further stated that the respondent company’s failure to submit the required declaration or apply for a licence, establishes the attempt to conceal the facts from the department. Thus, there is no doubt that the respondent company intentionally contravened Central Excise rules in order to evade payment of duty leviable on their goods. Therefore, the department is justified in imposing the penalty on the respondent. Per contra, learned counsel for the respondent submitted that the demand is barred by time as there is no suppression of the facts and activities carried out by the respondent company were well within the knowledge of the 5 department. It is further contended that the respondent company vide their letter dated 22.01.1991, have already informed and requested the Central Excise Inspector for issuing certificate regarding exemption of their product from levy of duty, and as such, the department had acquired knowledge of said fact on receipt of said letter. It is further contended the Notification No. 202 / 88-CE dated 20.05.1988, provides full exemption from excise duty to the goods manufactured by the respondent company. 6) The whole dispute relates to the classification of raw material at the supplier’s end. The contention of the supplier was that the goods in question were rectangular bars. However, the department collected duty on the said goods as flats under Ch. Sub heading 7211.19 and the duty was paid by them under protest. However, the dispute reached the Tribunal and it was held that the goods being manufactured by the suppliers were rectangular bars and not flats as per department contention. During the material time in question, all the inputs received by the respondent company were classified under sub-heading 7211.19 and the duty was discharged at the rate applicable to the flats. In this regard, it is found that the respondent company has started its production activity w.e.f. 29.03.90, whereas they have SSI registration certificate dated 29.05.1990 issued by Directorate of Industries. Thereafter, only after a gap of 10 months period, they wrote a letter to the Sector Officer, Range Roorkee, to issue a certificate to the effect that their product does not attract the levy of excise. It was further found that in this letter the assessee company has shown quantity of strips / bars purchased by them and quantity of production 6 during the period of March 1990 and 1990-91. In this letter, the party has nowhere shown any ground to avail exemption vis-à-vis notification No., if any. Similarly in the gate passes attached to the letter dated 05.06.1991 description of the goods was shown as rectangular bars. Moreover, the respondent company also failed to file declaration in prescribed proforma under Notification No. 11 / 88 –CE(NT) dated 15.04.1988, by which every assessee was required to disclose the ground of exemption under the heading / subheading or the notification under which exemption was claimed. It is noticed that the respondent company nowhere clearly declared that the raw material being used in the manufacture of conduit pipes were specific inputs. It is settled law that onus lies on beneficiary to make sure before exemption provided under any notification. 7) Having considered submissions of learned counsel for the parties this Court is of the view that the information given on 22.01.1991, to the Inspector of the Range with regard to which he had no jurisdiction in the matter, cannot be said to be information to the office of Assistant Collector, Central Excise. Therefore, the observation of CESTAT that no concealment was made by the assessee is erroneous in law. The point of reference stands answered accordingly, in favour of the Revenue. (Dharam Veer, J.) (Prafulla C. Pant, J.) Dt. June 16, 2008. H. Negi 7 8