ORDER
S. Kalyanam, Vice-President
1. This appeal is directed against the order of the Collector of Central Excise, Madras dated 30.1.1992 demanding a duty of Rs. 5,38,282/- on the appellant M/s Engineering & Commercial Agencies Ltd. and penalty of Rs. 1,10,000/- on appellant Madan, Proprietor thereof. The duty is levied for the period from 1.3.1986 to 4.3.1991 by issue of show cause notice dated 28.8.1991 with an Addendum dated 9.9.1991.
2. Shri Raman, the learned Counsel for the appellants at the outset submitted that the demand is barred by limitation and in respect of the duty liability for the period of 6 months preceding the date of issue of the show cause notice dated 28.8.1991, the appellant is not contesting the issue on merits. In regard to the rest of the period the demand is barred by limitation because the longer period of limitation in terms of proviso to Section 11A of the Central Excises and Salt Act, 1944 has been invoked. It was contended that the appellants were not guilty of suppressing any facts and the allegation of the Department was that the appellant was manufacturing the goods with the brand name of Millar in the concrete mixers manufactured by them and this position was brought to the notice of the Department way back in 1984 itself in response to a query from the Department by their communication dated 12.4.1984. Shri Raman submitted that by their reply to the aforesaid communicated dated 18.4.1984, the appellants specifically brought to the notice of the Department about the manufacture of concrete mixers under the brand name ‘Millar’ under licence from M/s ACME Manufacturing Company Ltd., Bombay. It was further submitted that even in the year 1986 in the classification filed on 30.9.1986, reference to Millar was made as the brand name owner. The learned Counsel also referred to the letter dated 11.12.1986 where also it was clearly stated that the appellants were offering a trade discount of 10% to cover sales expenses including royalty payment of 5% to the principals at Bombay. It was urged that the allegations in the show cause notice do not spell out precisely and clearly that the appellant was guilty of suppression with intent to evade payment of duty and in elaborating on this plea, the learned Counsel submitted that suppression of simplicitor would not suffice and apart from wilful suppression the evidence must also indicate that the appellant was actuated by intention to evade payment of duty. The learned Counsel, therefore, submitted that the appellants were not aware of the notification in question and had not concealed from the purview of the Department any relevant piece of information with intent to evade payment of duty. It was, therefore, urged that the bona fides on the part of the appellants cannot be doubted from the circumstances available. The Department cannot impute conscious knowledge to the appellants for alleged disregard of statutory obligations with intent to evade payment of any excise duty. The learned Counsel placed reliance on the ruling of the Supreme Court in this context in the case of Tamilnadu Housing Board v. Collector of Central Excise . Reference was also made to the other ruling of the Supreme Court in the case of Pushpatn Pharmaceuticals Company v. Collector of Central Excise, Bombay . Finally, it was urged that it is a proprietary concern and the concern remains now closed.
3. Shri Murugandi, the learned DR submitted that at the time when the classification was disclosed, the Notification No. 175/86 had not come into existence and affixture of the brand name for clearance of the goods manufactured was not a disqualification to avail benefit under notification that existed at the relevant time. Therefore, the issue should be considered is as to whether the appellants had furnished the fact of affixture of brand name subsequent to the advent of the notification and in the present case there is no evidence to hold that the appellants had brought to the knowledge of the Department this information. The learned DR further submitted that the appellants were filing annual declarations from 1987 onwards which also would not disclose the use of the brand name.
4. We have considered the submissions made before us and indeed heard the appeal in extenso. On considering the various circumstances and the evidence available on record, keeping in mind that the ratio of the ruling of the Supreme Court aforesaid, we are inclined to think that in the factual background of the case, the appellants cannot be said to have been actuated malafides suppressing any relevant piece of information from the purview of the Department with intent to evade payment of duty. It would be seen that as early as in 1984 itself, the appellants disclosed the factual information including the use of the brand name of others for clearances of the goods and in the communications referred to above would also show that the payment of royalty was also brought to the notice of the Department. The classification list referred to above also makes mention about the use of the brand name. Above all, we also take note of the fact that the unit continued to function in the same place under the Superintendent of the same Range. Keeping all these factors in mind we would like to refer to the allegations in the show cause notice. As rightly contended by the learned Counsel for the appellant, the show cause notice was merely proceeded on the basis that the appellants had not furnished the material information and, therefore, the longer period of limitation was extended and reference is made to suppression simplicitor. On the other hand, the Supreme Court in the case of Tamilnadu Housing Board dealing with the Clause in 11A proviso of the Act relating to intentional evasion of payment of duty has highlighted that when lav/ requires an intention to evade payment of duty it is not mere failure to pay duty that would suffice but there must be something more. The assessee must be aware that the duty was leviable and must have deliberately evaded paying the same. The Supreme Court also went into the connotation of evasion “in the context and held that the use of the word ‘intent’ is made more stringent by use of the word ‘intent’ and the assessee must be proved to have deliberately evaded payment of duty which is payable in accordance with law. The Supreme Court also held that the proviso was in the nature of an exception to the principal Clause and the proviso used therein impress such as fraud, collusion etc. and, therefore, it is to be construed strictly and the burden is on the Department to prove the same. Keeping the ratio of the ruling of the Supreme Court which is also re-affirmed in the later ruling in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, cited sufpra and considering the factual background of this case and also the evidence available on record and taking all these factors in junta position in the allegations set out in the show cause notice we are inclined to think that the intentional evasion of payment of duty cannot be attributed to the appellants in the above case. In other words, the situation does not indicate that the appellant was actuated by mala fides to suppress any relevant information from the purview of the Department with intent to evade payment of duty. In this view of the matter, we hold that the impugned order is not sustainable and in this view the same is set aside and the appeal is allowed on the grounds of limitation.
Pronounced and dictated in the open Court
