JUDGMENT
V.K. Jain, Member (T)
1. The present appeals are directed against the Order-in-Original Nos. CCE/Kol-II/30,31 and 32/2002 dated 30.08.2002 passed by the Commissioner of Central Excise, Kolkata-II, Kolkata.
2. The facts of the case in brief are as follows:-
The Appellant M/s. Indian Oil Corporation, Haldia Refinery Division (hereinafter referred to as appellants) are engaged in the manufacture of different petroleum products classifiable under Chapter 27 of the schedule to the Central Excise Tariff Act, 1985. They import crude oil and refine the same into their final products and their final manufactured products are cleared under the Central Excise invoices issued by the haldia Marketing Division as per their internal arrangement. The refinery wing of the appellant cleared motor spirit, high speed diesel etc. in tank wagon and realized siding/shunting charges from its buyers at specified rates applicable at the production point. However, the said siding/shunting charges were not included in the assessable value of the cleared products for the determination of Central Excise duty during 01.04.1994 to 30.06.1996.
In addition to above the appellants also during the period quoted above realized free delivery zone (FDZ) charges from their buyer against the clearances of motor sprit and high speed diesel oil. The said amount was collected by the assessee in addition to the normal delivery charges for the relevant clearances. It was alleged by the Revenue that the non-inclusion of extra realized amount was completely suppressed by the assessee in their monthly RT-12 returns and thus they evaded the payment of Central Excise duty.
3. Three show cause notices were issued to the Appellants on 16.10.2001 for the period covering the following period as under:-
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a) Appeal No. 835/2002 dated Period April, 1994 to June
16.10.2001 1996 and April 1994 to
June 2000.
b) Appeal No. 836/2002 dated Period April, 1994 to June
16.10.2001 1996.
c) Appeal Nos.837/2002 dated Period April, 1994 to June
16.10.2001 1996.
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4. The Commissioner of Central Excise, Kolkata-II confirmed the amount involved in the show cause notices and an equal amount of penalty was imposed on the Appellant in all the three-show cause notices. Being aggrieved of the orders of the Commissioner, the Appellants have filed these three appeals. Since the common question of valuation is involved in all the three appeals. They are being disposed together.
5. Shri Bagaria, ld. Sr. Advocate appeared for the Appellant in all the three appeals. Shri Bagaria submitted that in Appeal Nos. 836 and 837/2002 show cause notices were issued on 16.10.2001 for the period from April 1994 to June 1996 i.e. the entire period was beyond the 5 years from the date of issuance of the show cause notice. He submitted that when this fact was pointed out to the Commissioner, he has recorded that in the year 1999 superintendent had written a letter to the Appellant asking them to give details of the free distribution zone (FDZ) charges being collected from their customers and as such the said letter is to be taken as the relevant date. Mr. Bagaria has drawn our attention to the Hon’ble Supreme Court decision in the case of Metal Forging and Anr. v. UOI and Ors. reported in 2002 (53) RLT 507 wherein the Apex Court has observed that the law requires issuance of show cause notice in a particular format and this is a mandatory requirement of law which cannot be done away with by treating each and every communication as a show cause notice. In view of above, he submits that:
a) Show Cause Notice involved in Appeal No. 836/2002 was totally time barred as having been issued after expiry of 5 years.
b) Show cause notice involved in Appeal No.837/2002 was totally time barred as having been issued after expiry of 5 years.
c) First part of the disputed demand covered by Annexure “A” to the show cause notice involved in Appeal No.835/2002 was totally time barred as having been issued after expiry of 5 years.
d) Second part of the disputed demand covered by Annexure “B” to the Show cause notice involved in Appeal No. 835/2002 was time barred in so far as it related to the period prior to 16.10.96 as having been issued after expiry of 5 years.
6. As regards the show cause notice No.835/2002 the show cause notice was in two parts. The first part comprising the disputed amount of Rs. 20,62,501/- was totally beyond 5 years and the second part comprising of disputed amount of Rs.29,17,000.77 paise related to period from 01.04.1994 to 30.06.2000 is partly within 5 years period and partly beyond 5 years. In this regard the Advocate submits that the first part of the disputed demand covered Annexure “A” to the show cause notice involved in this appeal was totally time barred as having been issued after expiry of 5 years. The second part of the disputed demand covered by Annexure “B” to the show cause notice involved in this appeal was time barred in so far as it related to the period prior to 10.10.1996 as having been issued after 5 years.
7. In respect of the second part covered by Annexure “B” to the show cause notice dated 16.10.2001 involved in Appeal No.835/2002, the Sr. Advocate submitted that there was no scope to invoke longer period of limitation of 5 years. Even in respect of the said second part of the show cause notice the demand was totally time barred as it was issued after expiry of one year from the relevant date. This part of the show cause notice relates to charges raised by the appellant called free delivery zone charges (FDZ). It is stated by the Advocate that an area of 19.5 Kms. from the refinery is treated as free delivery zone. From the buyers located within this area, the appellant only charges FDZ charges and no amount towards transportation is separately charged. If the buyers are located outside FDZ area they are liable to pay FDZ charges and for the distance beyond it they are liable to pay transportation charges. The Advocate submits that the delivery charges are the equalized transportation charges for the distance within 19.5 Kms. thus, according to him, FDZ charges are nothing but transportation charges on equalized basis. He, further, submits that FDZ charges were clearly disclosed by the appellant in the Central Excise invoices by specifically describing the same as FDZ charges. The said invoices were submitted to the Central Excise Department with the RT-12 returns up to the period September 1996. Thus the fact about the FDZ charges was disclosed to the Central Excise authorities by the Appellants. He, further, submits that particulars relating to the said charges were called for by the Superintendent vide his letter dated 07.07.99. Thus it was known to the Department prior to the relevant date that Appellant is charging FDZ charges. He, further, submits that the Appellant was under a genuine and bonafide belief that FDZ charges are nothing but cost of transportation on equalized basis and were not liable to be included in the assessable value. The Revenue has not disclosed any intention to evade Central Excise duty. The Sr. Advocate further submits that the Hon’ble Supreme Court has held in a number of judgments that in order to invoke longer period of limitation of 5 years, “the assessee must be guilty of withholding information deliberately with intent to evade payment of duty” and that in his case longer period cannot be invoked at all. In support of his contention he puts reliance on the following decisions of the Hon’ble Apex Court:-
(a) Baidyanath Ayurved Bhawan Ltd. v. Commissioner of Central Excise – 2004 (165) ELT 494
(b) Jaiprakash Industries Ltd. v. Commr. of Central Excise reported in 2002 (53) RLT 50.
(c) Amco Batteries Ltd. v. CCE reported in 2003(55) RLT 272.
(d) T.N. Dadha Pharmaceuticals v. CCE reported in 2003(55) RLT 1 (SC)=2003 (152) ELT 251.
(e) Cadila Laboratories Pvt. Ltd. v. CCE reported in 2003 (55) RLT 1 (SC)=2003 (152) ELT 262.
(f) Cosmic Dye Chemical v. CCE reported in 1995 (6) RLT 333 (SC)=1995 (75) ELT 721
(g) Padmini Products reported in 1989 (43) ELT 195
(h) National Radio & Electronics Company Limited v. CCE reported in 2000 (36) RLT 363 (SC)= 2000 (115) ELT 35.
8. In view of above decisions the Sr. Advocate submits that the show cause notice issued on 16.10.2001 cannot invoke longer period of 5 years and is time barred. He, further, submits that FDZ charges were nothing but cost of transportation on equalized basis for carrying the goods from the Appellants’ refinery to the buyers places. During the entire period involved in the appeal the said cost of transportation or equalized basis was liable to be excluded from the assessable value. In support of his contention, he submits the following decisions:-
a) Govt. of India v. Madras Rubber Factory Ltd. – 1995 (8) RLT 517 (SC)=1995 (77) ELT 433-Supreme Court.
b) Baroda Electric Meters Ltd. v. CCE – 1997 (22) RLT 5 (SC)=1997 (94) ELT 13-Supreme Court.
c) Birla Corporation v. CCE – 2001 (45) RLT 448-CEGAT-Kolkata.
9. He, further, submits that in a similar case relating to the FDZ charges the Commissioner of Central Excise Ludhiana has dropped the Show Cause Notice by his Order dated 10.12.2003. In view of above, he submits that the appeals filed by the Appellants kindly be allowed.
10. We have heard Shri J.R. Madhiam, ld. JDR who reiterates the findings of the Commissioner.
11. After hearing both the sides, we find that Show cause notices in Appeal Nos.836/2002 and 837/2002 were issued beyond 5 years from the relevant date. The Apex Court in the case of Metal Forgings and Anr. v. UOI and Ors. reported in 2002 (53) RLT 507 (SC) has held that-
“Issuance of a show cause notice in a particular format is a mandatory requirement of law. The law requires the said notice to be issued under a specific provision of law and not a a correspondence or part of an order. The said notice must also indicate the amount demanded and call upon the assessee to show cause if he has any objection for such demand. The said notice also will have to be served on the assessee within the said period which is either 6 months or 5 years as the facts demand. Therefore, it will be futile to contend each and every communication or order could be construed as a show cause notice.”
In the light of the above observation of the Hon’ble Supreme Court, the letter from the Jurisdictional Range Officer issued in July 1999 has no force to extend the period of limitation beyond 5 years. We hold that the demands in these cases being beyond 5 years is clearly time barred.
12. The period involved in the Appeal 835/2002 is from April 1994 to June 1996 and from April 1994 to June 2000 the Show Cause Notice was issued on 16.10.2001. The first part of the demand is admittedly beyond the period of 5 years. The Second part is beyond the normal period of one year as provided under Section 11A of the Central Excise Act. In the case of Padmini Product v. Collector of Central Excise reported in 1989 (43) ELT 195, the Apex Court has observed in para 8 as follows:-
“Shri V. Lakshmikumaran, learned Counsel for the appellant drew our attention to the observations of this Court in Collector of Central Excise, Hyderabad v. Chemphar Drugs and Liniments, Hyderabad-1989 (40) ELT 276 (SC)=1989 (2) SCC 127 where at 131 of the report this Court observed that in order to sustain an order of the Tribunal beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it had to be established that the duty of excise had not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of the Act or rules made thereunder, with intent to evade payment of duty. It was observed by this Court that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability beyond the period of six months had to be established.”
13. The apex Court held in T.N. Dadha Pharmaceuticals reported in 2003 (55) RLT 1 (SC)= 2003 (152) ELT 251 (SC) held that the burden to establish suppression of facts is on the Revenue. Some view has been held by the Hon’ble Supreme Court in Cadila Laboratories Private Limited. The appellant has submitted the information relating to FDZ charges to the Revenue with the RT-12 returns up to September, 1996. Revenue has not refuted the same….
14. We find that the Hon’ble Apex Court in a series of judgments has held that in order to invoke longer period of limitation of 5 years, the assessee must be guilty withholding the information deliberately with intent to evade payment of duty. Revenue has not proved that Assessee was guilty withholding the information deliberately with intent to evade payment of duty for invoking longer period of limitation of 5 years. In view of Hon’ble supreme Court judgment in number of cases as above, we find that extended period of limitation was not available to the Revenue. Thus we allow the above appeals on point of limitation.