Case: M/S. Larsen &amp; Toubro Ltd Vs. Commnr. Of Central Excise, Pune-Ii

The appellant is a company incorporated under the Companies Act. It undertook a contract for construction of bridges for M/s. Konkan Railway Corporation Ltd. (Konkan Railway, for short), which is a public sector undertaking. Appellant manufactured Pre Stressed Concrete Girders (PSC Girders). It used to transport them to the site of construction of bridges of the Railways. It did not register itself with the authorities of the Central Excise.2. Alleging that the appellant, for the period March 1993 and December 1994, although was involved in the manufacturing activity, by undertaking manufacture of 75 PSC Girders, but did not pay any excise duty thereupon.3. A notice was issued to the appellant directing it to show cause as to why Central Excise duty to the tune of Rs.32,35,575/should not be demanded and recovered from them in terms of the proviso appended to Rule 49(1) of the Central Excise Rules, 1944 (Rules) read with Section 11A of the Central Excise and Salt Act, 1944 (Act) and as to why penalty should not be imposed on them and the plant & machinery and the manufactured goods should not be confiscated. Cause was shown by the appellant inter alia stating that no excise duty was payable. The said notice was withdrawnsaid Show Cause Notice has been issued without obtaining approval of the proper authority or by the proper officer. Accordingly, Show Cause Notice dated 27.1.94 hereby withdrawn.The withdrawal of the Show Cause Notice is without prejudice to any action including issue of fresh Show Cause Notice which may be taken against M/s. Konkan Railway Corporation Ltd., Ratnagiri (North), Lanjekar Compound, Phansi Baug, Udyamnagar, Ratnagiri of Central Excise Law or any other law of the time being is force.After a long time, namely, on 1.5.1996, another show cause notice was issued on the same premise for the period March 1993 and December, 1994. The extended period of limitation was invoked alleging suppression of fact on the part of the appellant. Appellant herein filed a show cause wherein inter alia the question of applicability of the extended period of limitation as contained in the proviso appended to Section 11A of the Act was specifically raised. The Commissioner of Central Excise, Pune, in his judgment opined that basically following four issues wereWhether a process of manufacture is involved?(ii) Whether the girders can be considered as immovable property or not?(iii) Whether the girders can be considered as marketable or not and whether exemption under Notification No.59/90 can be extended?(iv) Whether there was suppression of facts on the part of the noticees so as to invoke extendedIt was held that as construction of the bridges consists of many things, including foundation and super structure, manufacture of PSC Girders would come within the purview thereof; and the same would not be immoveable property. It was further held that the longer period of limitation has rightly been invoked as the appellant had suppressed the fact from the department that the goods in question were excisable articles. It wasAs regards penalty on KRCL under Rule 209A, since the manufacturing activity was undertaken by M/s. L & T and there is no evidence of their mala fides in the matter, further they have also alerted the contracting party about discharge of central taxes etc. as seen from clause 47 of contract, I refrain from imposing any penalty on them.13. As regards confiscation of 75 Nos. of PSC girders, though M/s. L & T were given a notice in writing informing them the grounds on which it is proposed to confiscate the goods and they were also given an opportunity of making a representation within reasonable time against the said proposed confiscation and a reasonable opportunity of being heard in the matter, they only stated that these were not liable for confiscation being permanently embedded in the earth, thus immoveable property. As already held since girders at the earth, they came into existence were not embedded to the earth, they cannot be considered as immoveable property and therefore I hold these 75 Nos. of PSC girders liable for confiscation under Rule 173Q read with Rule 226 of CER, 1944.The appeal preferred there against by the appellant, as noticed hereinbefore, was dismissed by the Tribunal.

Court's reasoning:
11. The Tribunal in its order dated 25.4.2003, in the case of M/s. B.E. Billimoria & Co. Pvt. Ltd. opined that similar goods manufactured by others do not attract the provisions of the Central Excise Act. It is stated that the same bench of the Tribunal in its judgment dated 10.5.2004, in Ragunath Ramchandra Shanbhag (supra), came to a similar conclusion.12. During the period in question beingno direct decision on the point involved was available. It was noticed that different benches of the Tribunal in different cases had rendering their decisions differently. In the case of Billimoria (supra), it was categorically held that manufacture of PSC Girders would not attract the provisions of Central Excise Act, 1944.13. Correctness of Billimoria (supra) was questioned by another Bench of the Tribunal and the matter was referred to a larger Bench. The larger Bench in Asian Techs Ltd. (supra) relying upon or on the basis of a large number of decisions of this Court opined that the excise duty was payable and the principles of works contract would not be applicable in a case of this nature. We, therefore, accept the contention of the learned counsel that it was not a case where element of suppression extended to apply to extended period of limitation. It is also not a case where the appellant did not plead bona fide. It is furthermore not a case where the Tribunal and consequently this Court, could have arrived at a finding that the appellant took recourse to suppressio veri.14. Acts of fraud or suppression, it is well settled, must be specifically pleaded. The allegations in regard to suppression of facts must be clear and explicit so as to enable the noticee to reply thereto effectively. It was not the case of the revenue that the activities of the appellant were not known to it.15. Admittedly, when the first show cause notice was issued, the extended period of limitation was not resorted to. A notice should ordinarily be issued within a period of six months (as the law then stood) i.e. within the prescribed period of limitation but only in exceptional cases, the said period could be extended to 5 years. When in the original notice, such an allegation had not been made, we are of the opinion that the same could not have been made subsequently as the facts alleged to have been suppressed by the appellant were known to them.Furthermore, extension of the period of limitation entails both civil and criminal consequences and, therefore, must be specifically stated in the show cause notice, in absence whereof the Court would be entitled to raise an inference that the case was not one where the extended period of limitation could be invoked.Another aspect of the matter cannot also be lost sight of. Appellant as also the Konkan Railawy raised a definite plea of bona fide. Such a plea had not been rejected. As a matter of fact, while considering imposition of penalty under Section 11A of the Act, the Commissioner has refused to impose any penalty upon the appellant on the premise that it was not guilty of any act of mala fide. We, therefore, keeping in view the facts and circumstances of this case, are of the considered view that the impugned judgment cannot be sustained. It is set aside accordingly. We hold that the Revenue was not justified in invoking the extended period of limitation in the instant case.