JUDGMENT
R. Gururajan.J
Page 0963
1. Revenue is before us aggrieved by an Final Order Nos. 732, 733 of 2005 dated 11.5.2005 passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore in Appeal No. E/1171, 1172/2003.
2. Facts of the case as narrated in the appeal are as follows: M/s Bripanil Synthetics Industries (P) Limited, Bangalore, respondent in this appeal, Page 0964 manufactures dipped tyre cord fabrics. Its office was at Magadi Road, Bangalore prior to April 1999. It was taken over by M/s Bripanil Industries Limited. Search was conducted on 6.8.1996, 7.8.1996 and 8.8.1996. It resulted in seizure of incriminating documents at the above said premises. The Officer noticed shortage of stock of grey tyre cord fabrics valued at Rs. 5,96,897/- and the shortage of dipped tyre cord fabrics valued at Rs. 48,73,743/-. Mahazar was drawn. Show cause notice was issued on 31.8.2001 requiring the assessee to show cause as to why basic duty and the additional duty should not be demanded and penalty imposed on the assessee. Reply was submitted. Thereafter, an adverse order was passed by the Additional Commissioner of Central Excise. Aggrieved by the same, an appeal was filed. Appeal was rejected. Second appeal was filed. Second appeal stood allowed on the ground of limitation. This order is challenged in this appeal.
3. The following questions of law are raised by the appellant in the case on hand:
(1) Whether the Tribunal is correct in holding that the show cause notice issued on 4.9.2001 is clearly hit by time bar while ignoring the relevant date as defined under Section 11(A)(3)(ii)(a)(A) and that the cause of action occurs only from the date of failure in submitting returns on the following month by the respondent?
(2) In view of the facts of the case pleaded above, the Customs, Excise and Service Tax Appellate Tribunal has erred in allowing the above appeal of the respondent and setting aside the Order-in-Original No. 6/2002 (CX) dated 15.2.2002/13.3.2002 and Order-in-Appeal No. 102/2003 dated 5.9.2003?
(3) In view of the above, final order dated 11.5.2005 passed in No. 732-733/2005 by the Tribunal needs to be set aside and Order-in-Appeal No. 102/2003 dated 5.9.2003 passed by the Commissioner (Appeals) be restored and upheld in the facts and circumstances of the case.
4. Heard Sri M.V. Chandrashekhar Reddy, ld. Advocate for the appellant. He would invite our attention to the material facts and material pleadings to say that the findings of the Tribunal with regard to limitation require our interference. He would strongly rely on a judgment of the Tribunal in Nizam Sugar Factory v. Collector of Central Excise, Hyderabad , with regard to the extended period of limitation. Learned Counsel therefore says that interference is necessary. He would also rely on a judgment of the Supreme Court in Jaiprakash Industries Limited v. Commissioner of Central Excise, Chandigarh .
5. Per contra, learned Counsel for the respondent would place before us a subsequent judgment of the Supreme Court reported in Page 0965 Nizam Sugar Factory v. Collector of Central Excise, AP. 2006(197) ELT 465 (SC), to say that the findings of the Larger Bench of the Tribunal in Nizam Sugar Factory v. Collector of Central Excise, Hyderabad, stood rejected by the Supreme Court in the subsequent judgment. He would therefore say that the appeal has to be rejected.
6. After hearing, we have seen the material placed on record.
7. From the material on record, it is seen that the Department in its search held on 6.8.1996 found gray tire fabrics and dipped tyre cord fabrics. A Notice was issued on 4.9.2001 i.e. after five long years. Assessee took a specific contention with regard to limitation. Same was rejected Aggrieved by the same, petitioner ultimately approached the Tribunal. Tribunal, on the ground of limitation, has chosen to allow the appeals. Let us see as to whether the order of the Tribunal is acceptable or not. Admittedly, the case of the respondent is of an extended time in terms of Section 11A of the Act. The said Section reads as under:
11A. Recovery of duties not levied or not paid or short-levied or short paid or erroneously refunded.- (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice:
Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, 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, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words, ‘one year’, the words “five years” were substituted.
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8. We have seen the show cause notice issued to the assessee. In para-19 this is what the said show cause notice would say:
19. From the foregoing facts and evidences discussed, it appears that BSIPL have wilfully suppressed the facts regarding actual removal of excisable goods from their factory and have deliberately removed 14, 313 kgs. Of dipped fabrics without accounting and without following the central excise procedures; BSIPL have also removed 3226.47 Kg. of grey fabrics on which MODVAT was availed without following Central Page 0966 Excise Procedures and without accounting in the statutory records. This act appears to have been done with a wilful intention to suppress the facts and thereby to evade payment of Central Excise duty. Therefore it appears, that extended period under proviso to Section 11A(1) of Central Excise Act, 1944 and Rule 57 I (1) (ii) of Central Excise Rules 1944 can be invoked to demand duty.
9. A reading of the same would show that the show cause authority has only said that the assessee has removed 3226.47 kgs. Of grey fabrics on which MODVAT was availed without following Central Excise procedures and without accounting in the statutory records. This appears to have been done with a wilful intention to suppress the facts. There is absolutely no allegation forthcoming either with regard to fraud, etc. in terms of Section 11A of the Act. Therefore, the case of extended period is not available in the absence of factual foundation in terms of the show cause notice. There should be a positive application of mind and positive finding with regard to rejection of extended period under Section 11A of the Act. Mere presumption would not give any such jurisdiction for extended period of limitation.
10. It is further seen that the visit to the premises was on 6.8.1996 and a notice was issued after five years i.e. on 4.9.2001. Department relies on a larger Bench ruling of the CEGAT with regard to the extended time in the light of Section 11A of the Act. ‘Relevant date’ was considered to mean any reference date of knowledge, and that knowledge itself has no relevance, according to the Larger Bench of the Tribunal. This judgment was considered by the Supreme Court subsequently and the Supreme Court has not accepted the view of the Larger Bench of the Tribunal. In fact, Revenue could not have relied on this judgment in the light of non-accepting this view by the Supreme Court in the very case of Nizam Sugar Factory. Be that as it may.
11. The Supreme Court in Nizam Sugar Factory v. Collector of Central Excise, A.P., 2006 (197) ELT 465 (SC) has ruled in the said judgment that the extended period of limitation could not be invoked in the light of the knowledge in terms of the said judgment. The Supreme Court noticed its earlier judgment and ultimately the Supreme Court has ruled that the allegation of suppression of facts against an assessee cannot be sustained, as in the first show cause notice all the relevant facts were noticed, and later on while issuing second show cause notice not noticing same or similar could not be taken as suppression of facts as these facts were already in the knowledge of the authority. Supreme Court ruled that when the authorities had the knowledge of these facts, there is no question of suppression for the purpose of extended period of limitation in terms of Section 11A of the Act. The said judgment squarely applies to the facts of this case. The Supreme Court also has noticed that unless there is evidence or proof that the licence was not taken out or duty not paid on account of Page 0967 any fraud, collusion, wilful mis-statement or suppression of facts, show cause notice cannot be issued under Section 11A of the Act. In the case on hand, as we mentioned earlier, there is absolutely no foundation with regard to either fraud, collusion, wilful mistake or suppression in terms of Section 11A of the Act. This judgment would support the assessee.
12. In the circumstances, on the facts and in the circumstances of this case, we are in agreement with the judgment of the Tribunal. Questions of law are answered against the Revenue. Appeal stands rejected.