Case: Kushal Fertilisers Ltd Vs. The Commissioner of Customs and Central Excise, Meerut

3. An investigation was said to have been carried out by the Preventive Unit of Saharanpur Division of the Central Excise Department in regard to the business activities of the appellant in which it was observed that it had neither obtained any Central Excise licence for manufacture of conduit pipes nor filed any declaration with the department for granting them exemption from the licensing provisions. It is, however, now not disputed that the appellant on or about 22nd January, 1991 informed the Section Officer of the Central Excise, Roorkee that it had been manufacturing M.S. conduit pipes and its production is exempt from payment of Excise Duty in terms of Notification No.202/98-CE dated 20th May, 1988. It, furthermore, appears from the letters addressed by the appellant to the Superintendent, Customs and Central Excise, Rishikesh dated 29th April, 1991 and the Superintendent, Preventive and Intelligence Branch, Central Excise Division, Saharanpur dated 6th June, 1991 that the officers of the Central Excise Department had been visiting the appellants factory for inspection of their factory.4. Indisputably again the appellant submitted its production and raw material register for inspection. However, by a notice dated 12th August, 1992 the appellant was directed to file a declaration under Rule 174 of the Central Excise Rules, 1944 (for short `the Rules) for the purpose of claiming exemption from licensing control.5. However, a show cause notice was issued on or about 28th March, 1994, proposing demand of Central Excise Duty of Rs.57,80,363/- under Section 11A of the Central Excise Act, 1944 (for short `the Act) and also asking the appellant to show cause as to why penalty shall not be levied in terms of Rule 209A of the Rules contending that the appellant was not entitled for exemption as the gate passes covering the inputs described the product as `bars and it suppressed the said fact with an intention to evade payment of duty.6. Appellant filed his reply to the said show cause notice.7. By reason of an order dated 21st July, 1994 the Commissioner of Central Excise, Merrut opined that the appellant was not entitled for exemption under Notification No.202/88 and that it suppressed the material facts with an intention to evade payment of duty as a result whereof extended period of limitation could be invoked. Appellant, however, was held to be entitled for Modvat credit of duty paid on inputs but restricted the credit to the extent of duty payable on bars.8. The appeal preferred by the appellant before the Customs, Excise & Gold (Control) Appellate Tribunal was allowed by an order dated 23rd November, 2000 whereby the matter was remanded bank to the Commissioner for his consideration afresh. The Commissioner, however, reaffirmed his earlier order by an order dated 19th March, 2004.9. An appeal preferred by the appellant thereagainst was allowed by the Customs, Excise & Service Tax Appellate Tribunal by its order dated 3rd March, 2005, directingwe observe that in their letter dated 22.01.91 they had requested the department for certificate to the effect that their product is exempt from the levy of duty. The department had thus acquired knowledge, on receipt of the said letter, that the Appellants are manufacturing tubes and pipes and are availing the benefit of exemption under Notification No.202/88. Whether further details were provided by the Appellants or not in the said letter, the department cannot deny the fact that they had come to know about the Appellants manufacturing tubes and pipes and availing benefit of exemption and nothing prevented the department from conducting investigation or seeking further information from the Appellants. In view of this we hold that the suppression of facts stopped from 22.01.91 and the extended period is applicable only prior to 22.01.91.Respondent preferred an appeal thereagainst in terms of Section 35-G of the Act which by reason of the impugned judgment was allowed treating the same to be a Reference in terms of old Section 35-G of the

Court's reasoning:
18. The High Court has not said that the finding of fact arrived at by the High Court was perverse and/or was based on applying wrong legal principles etc. The High Court proceeded on the basis that the failure on the part of the appellant to submit required declaration or application for licence for establishment, would amount to concealment of facts from the department. We will assume to be so. But, as we have noticed earlier, requisite information was not only furnished on 22nd January, 1991, indisputably the officers of the Central Excise Department made inspection of the factory and the books maintained by the appellant, including the production register, which must have disclosed the nature of the products from the factory in question. If the requisite information had been given to the authorities on 22nd January, 1991, the question which should have been posed and answered was as to whether despite such knowledge, the Commissioner of Central Excise could have proceeded on the basis that there had been a suppression on the part of the appellant.19. Section 11-A of the Central Excise Act, 1944 provides for penalty. It, therefore, requires strict consideration. Period of limitation provided for in the Act bars the jurisdiction of the Commissioner to initiate a proceeding for imposition of penalty on the expiry thereof. The proviso appended to Section 11-A(1) of the Act makes an exception to the said Rule, the ingredients whereof are thus required to be established for invoking the extended period of limitation. If on the materials produced by the parties, the Tribunal had arrived at a finding of fact that there had been no suppression on the part of the appellant after 22nd January, 1991, the question of invoking the extended period of jurisdiction did not arise. The show cause notice dated 28th March, 1994 thus having been issued after the expiry of the period prescribed under Section 11A of the Act, was clearly barred by limitation.20. In any view of the matter, whether a party is guilty of suppression of fact or not is essentially a question of fact. It does not per se give rise to substantial question of law per