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Judgment
Ramesh Ranganathan, CJ
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.
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
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.
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.
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.
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 assesses 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.
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 short-paid, 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.
Even from the date when the assessees submitted their declarations on 14.03.2008, the notices, calling upon them to show-cause 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.
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.
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 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.
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.
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 dutyâ€. The relevant factor, which would enable the Revenue to apply the extended period of limitation, is the assessees’ 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.
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.
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.
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.
Subject to the aforesaid observations, the appeals fail and are, accordingly, dismissed.