Case: Commissioner of Central Excise, Jalandhar Vs. Royal Enterprises

1. This is a statutory appeal Under Section 35L(b) of the Central Excise Act, 1944 against the judgment and order dated 22-7-2003 passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi (for short the Tribunal) in Final Order No. 342/2003-NB(A) in Appeal No. E/395/2003-NB(A) [2003 (156) E.L.T. 781 (Tribunal)]. In this case parties addressed only on the point of limitation. It was contended before the adjudicating authority as well as the Tribunal that the department could not invoke the extended period of limitation as all facts were already to the knowledge of the department. On this the Tribunal in Para 6 has recorded the following finding: 6. It is clear that details of the Appellants fabrication work for Railway Coach Factory including supply of raw material by the Coach Factory were known to the Revenue authorities for quite some time. As early as 1992, the Appellants contracts, sales invoices etc. relating to his work for Railway Coach Factory had been summoned and obtained by the Revenue authorities. All these contracts indicated issue of raw materials by the Railway Coach Factory to the Appellant upon the Appellant executing bank guarantee. The orders for fabricating bottom side wall sheet was also on the same basis. Order number were being indicated in the invoices under which the goods were cleared. It would appear that a mere look at the rates for fabrication should have alerted the excise authorities to the fact that such a low rate (Rs. 590/- per set etc.) could not include the cost of raw materials. Be that as it may, this is not a case where a charge of suppression of facts with intent to evade payment of duty could reasonably be made. If reasonable care had been taken by the Revenue authorities to scrutinize the contracts and other documents produced, they would have known in time that fabrication charges alone was being treated as assessable value. May be, Revenue was also of the opinion that fabrication charges alone was liable to duty. In either case, fault is not of the Appellant. Relevant facts had been disclosed. 2. This Court, in the case of Collector of Central Excise v. Chemphar Drugs & Liniments 1989 (40) E.L.T. 276 (S.C.) has held that in order to make the payment for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to Section 11A of the Act it has to be established that the duty of excise has not been paid or levied or short-paid or short-levied or erroneously refunded by reasons of either fraud or collusion or willful misstatement or suppression of facts or contravention of any provisions of the Act or Rules made thereunder, with intent to evade payment of duty. It was observed: ..........Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or willful misstatement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal came to the conclusion that the facts referred to hereinbefore do not warrant any inference of fraud. The Assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the Respondent when the declaration was filed by the Respondent. The Respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the Respondent and this was in the knowledge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence. 9. In that view of the matter and in view of the requirements of Section 11A of the Act, the claim had to be limited for a period of six months as the Tribunal did. We are, therefore, of the opinion that the Tribunal was right in its conclusion. The appeal therefore fails and is accordingly dismissed. 3. Similarly, in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay 1995 (78) E.L.T. 401 (S.C.), it was held that mere omission to disclose the correct information would not amount to suppression of facts unless there was a deliberate attempt made to escape the payment of duty. Where facts are known to both the parties it cannot be held that there was suppression of facts. It was observed in Para 4 as follows: 4. Section 11A empowers the Department to re-open 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 willful 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.

Decision reasoning: 0[ds]3. Similarly, in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay 1995 (78) E.L.T. 401 (S.C.), it was held that mere omission to disclose the correct information would not amount to suppression of facts unless there was a deliberate attempt made to escape the payment of duty. Where facts are known to both the parties it cannot be held that there was suppression of facts. It was observed in Para 4 as follows:4. Section 11A empowers the Department to re-open 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 willful 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.