Rashiklal & Co vs Commissioner Of Central Excise

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No. E/MISC/131/2010, E/MISC/40448/2015 & E/143/2004

[Arising out of Order-in-Appeal No.152/2003 (M-I) dt. 4.11.2003 passed by the Commissioner of Central Excise (Appeals), Chennai]

Rashiklal & Co. Appellant

Versus

Commissioner of Central Excise, Chennai Respondent

Appearance:

Ms. Karthika Prasad, Advocate For the Appellant

Shri R.Subramanian, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 6.8.2015

FINAL ORDER No.40968/2015

Per R. Periasami

Appellant has filed appeal against OIA No.152/2003 (M-I) dt.4.11.2003. They have filed two applications seeking leave of the Bench to take into account the additional grounds for deciding the appeal. Leave granted. MAs are disposed.

2. The Appeal is taken up for hearing. This is second round of litigation before Tribunal. The issue relates to demand of differential duty of Rs.5,15,605/- on Scented Supari Betel Nut Powder falling under Chapter 2107 manufactured and cleared by the appellant on payment of duty. Show cause notice dt. 6.8.98 was issued and the adjudicating authority in his OIO dt. 30.11.98 confirmed the differential duty on the higher price collected as per commercial invoice. In the first round, the adjudicating authority confirmed the demand and also imposed penalty of Rs.1,75,728.66 under Section 11AC and also imposed penalty of Rs.1 lakh under Rule 173-Q of the Central Excise Rules, 1944. On appeal, Commissioner (Appeals) dismissed the appeal under Section 35F of the C.E. Act. Aggrieved by the order, appellant came to the Tribunal and the Tribunal by Final Order No.2319/99 dt. 10.9.99 remanded the case to Commissioner (Appeals) with a direction to decide the case on merits and also with a direction to discuss all the points pertaining to limitation raised by the appellant. The Commissioner (Appeals) in his order dt.16.3.2000 instead of deciding the case remanded the case to the adjudicating authority. The adjudicating authority in his de novo order dt. 31.3.2003 again confirmed the demand and imposed penalty as it was imposed in the original order dt. 30.11.98. Commissioner (Appeals) rejected their appeal. Hence the present appeal.

3. Ld. Advocate appearing for the appellant submitted a written synopsis and reiterated the same. She submits that the period involved in the present demand is 1994-97. She submits that in their additional grounds, it is pleaded that Hon'ble Supreme Court in the case of Crane Betel Nut Powder Works Vs CCE Tirupathi - 2007 (210) ELT 171 (SC) has held that crushing betel nuts into smaller pieces and sweetening the same with essential/non-essential oils, etc. is not amounting to "manufacture".

3.1 On the valuation, she submits that department demanded differential duty by taking into account higher rates of 18% and 20% whereas as per the notification No.1/93 dt. 28.2.93, they are eligible for slab rate of 10%, 15% & 20% whereas the department has not taken into consideration the slab rate which is applicable for value of clearances. If the slab rate was taken into consideration, the differential duty was worked out to Rs.3,75,741/-. She submits that along with written submissions they have also filed the table worksheet vide Annexures I to VI showing differential value and differential duty as per their calculation vis-a-vis value quoted in the SCN.

3.2 On limitation, she submits that there is no suppression of facts. She drew our attention to pages 9, 10, 11 of the paper book wherein they have informed the Superintendent of Central Excise, VIII-C Range, Madras vide letter dt. 20.11.95 as to how excise duty has been paid taking into account the deductions claimed as trade discount, turn over tax etc. and the amount collected from the buyers which were submitted as available in pages 10 & 11. She further submits that in the commercial invoice, they have collected Rs.232.48 per kg. whereas the duty was paid on Rs.194.05 per kg. They have worked out in the worksheet and the same was submitted to the jurisdictional authorities. She further relied on letter dt. 1.1.96 and series of letters wherein the department was already aware of the deduction. The Superintendent of Central Excise, by letter dt. 15.11.95 (Ref.page 7) sought for clarification from the appellant as to how they arrived at the assessable value after allowing deductions of trade discount, turn over tax etc. In turn appellant replied by their letter dt. 20.11.95 with a worksheet of arriving at the assessable value and amount collected from the buyer. She submits that this fact was clearly known to the department. She also relied on letter dt. 27.11.95 wherein the Superintendent of Central Excise sought for further clarification which is available in page 12. She submits that department was fully aware of the facts and therefore there is no suppression of facts and the demand is hit by limitation. The show cause notice was issued on 6.8.98 for the period 1994-97. She relied on the following case laws :-

(1) CCE Calcutta Vs Alnoori Tobacco Products 2004 (170) ELT 135 (SC)  [on additional grounds]

(2) Pushpam Pharmaceuticals Co. Vs CCE Bombay 1995 (78) ELT 401 (SC)

(3) Chandilya Chemicals Vs CCE Chennai 1999 (114) ELT 695 (Tribunal)

(4) CCE Meerut Vs Nulon India Ltd.

2000 (120) ELT 346 (Tribunal)

(5) CCE Mumbai Vs S. Narender Kumar & Co.

2011 (267) ELT 577 (S.C)

(6) Orissa Bridge & Construction Corpn. Ltd. Vs CCE Bhubaneswar -2011 (264) ELT 14 (SC)

- [on limitation]

4. On the other hand, Ld. A.R reiterated the findings. He submits that the issue of manufacture and excisability was not raised either before the adjudicating authority nor appellate authority and not disputed even after the Honble Supreme Court judgement, they continued to pay duty and also filed classification list and price lists. They cannot raise a new ground before the Tribunal whereas the present case is only on the demand of differential duty on the variation in higher price shown in the commercial invoice when compared to excise invoice which is purely on the valuation. Therefore, they cannot take a new ground before the Tribunal. He submits that adjudicating authority at page 67 has considered the slab rate of duty. He also submitted on the limitation issue that the adjudicating authority considered letter dt. 20.11.95 relied by the appellant. He relied the following case laws :-

(1) Naharwar Engg. Works Vs UOI 2002 (143) ELT 34 (SC) (2) CCE Chandigarh Vs Shital International 2010 (259) ELT 165 (SC)

(3) Central Coalfields Ltd. Vs CCE Jamshedpur 1999 (106) ELT 476 (T) (4) CCE Aurangabad Vs Tigrania Metal & Steel Industries 2001 (132) ELT 103 (5) Saraswati Sugar Mills Vs CCE Delhi 2011 (270) ELT 465 (SC)

5. We have carefully considered the submissions and also perused this Tribunals remand order dt. 10.9.99. The short issue relates to demand of differential duty. The appellants contended both on merits as well as on limitation as there is no suppression of facts. In the first round of litigation, the Tribunal in its order dt. 10.9.99 while remanding the case to Commissioner (Appeals) clearly directed the LAA to examine all the points pertaining to limitation raised by the appellant. On perusal of the impugned order as well as the remand order of the Tribunal, we find that in spite of the Tribunals direction, no clear cut findings have been brought out either by the adjudicating authority or by the lower appellate authority. On the issue of limitation and suppression of facts, on perusal of letter dt. 15.11.1995, issued by the jurisdictional Superintendent Central Excise, Range III-C Madras, we find that the Superintendent sought clarification for the appellant on variation in the invoice price and deductions claimed by the appellant. The Range Superintendent has clearly asked for details stating that price collected from the buyer is determined as Rs.237.22 whereas the assessable value has been worked out as Rs.194.06.

We find from letter dt. 20.11.95 that appellant submitted a detailed reply to the jurisdictional Superintendent explaining the deductions claimed by them and how assessable value has been arrived at. On a perusal of the worksheet annexed to their letter dt. 20.11.95, it is clearly explained to indicate LESS deduction on a/c of T.O.T 2% and the amount collected from the buyer. We also find from letter dt. 23.11.95, the jurisdictional Superintendent again sought for further clarification from the appellant and directed them to file Annexure-II. All these letters and correspondences between the appellant and the department clearly establish the fact that the details of deduction was brought to the notice of the department by the appellant. Therefore, we find that it is not a case of deliberate suppression of facts with intention to evade payment of duty. The Range Superintendent was very well aware of the variation between the commercial invoice and the excise invoice. Therefore, the records clearly confirms that demand is hit by limitation. The adjudicating authority as well as appellate authority in spite of the direction issued by Tribunal in the final order dt.

10.9.99 has not discussed on the issue of limitation and not made out a case of suppression of facts against appellant. In this context, we find that Honble Supreme Court in the case of Orissa Bridge & Construction Corpn. Ltd. Vs CCE Bhubaneswar (supra) clearly held that demand is hit by limitation and extended period cannot be invoked and there is no suppression of facts established by department. The relevant paragraph of Honble Supreme Court at paras-4 to 6 are reproduced as under:-

"4.?The second point on which the show cause notice was contested by the appellant was on the point of limitation. In the impugned order, it is mentioned that appellants activities were detected by the revenue on 24-8-1987 and show cause notice was issued on 4th December, 1989.

5.?On the previous date of hearing, we adjourned this case to enable the counsel for the revenue to seek instructions as to why the show cause notice was issued after two years and 4 months approximately of the inspection carried out by the authorities. Counsel appearing for the revenue informs us that file is misplaced and is not traceable.

6.?Keeping in view the facts and circumstances of the case and without laying any proposition of law, we hold that the department was not justified in invoking the extended period of limitation under Section 11A of the Central Excises and Salt Act, 1944 (for short, the Act) and accordingly, finding of the Tribunal on this point is reversed. We hope that the department shall initiate some action against the erring officer/official for issuing show cause notice to the assessee after a gap of approximately two years and four months from the date of inspection at the factory of the assessee."

In the present case, we find that show cause notice involved in the present demand for the period 1994-97 was issued on 6.8.1998 only demanding differential duty for the period March 1994-95 to March 1996-97. There is no suppression of facts by the appellant . By respectfully following the Supreme Court decision (supra), we hold that demand is hit by limitation. We do not find it necessary to consider the plea of appellant on the issue of excisability and other grounds raised by the appellant, as the demand is liable to be set aside on limitation. Accordingly, we set aside the impugned order and allow the appeal with consequential relief.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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