Maintaniability of allegation of Wilful Suppression of Facts

PJ/Case Laws/2011-12/1193

Case: Commissioner of Central Excise, Mumbai v/s S Narendra Kumar & Co

Citation: 2011-TIOL-52-SC-CX

Issue:- Classification list submitted and approved from the Department from time to time and no objection raised – suppression of facts cannot be alleged.

Brief Facts:- Respondent-assessee were manufacturers of Jaljira powder. They were filing classification declaration from time to time i.e. from 1994 to 1999 under heading 0903.10 and claiming exemption from payment of excise duty. The said declarations were approved by the Department from time to time and therefore, the said assessment had reached finality.

Thereafter, a circular was issued by the Board clarifying that Jaljira masala was not a spice but was essentially an edible preparation falling under Chapter 21. It was clarified that Jaljira was used as a drink in the water and therefore, fell under heading 2108.

Accordingly, Department issued show cause notice to the respondent-assessee demanding duty and alleging that there was willful suppression of facts. Extended period of limitation was invoked. The Commissioner in the impugned order held that there was suppression of facts and also clandestine removal or evasion od excise duty and therefore, respondent was liable for duty.

On appeal, the Tribunal set aside the impugned order by holding that the extended period of limitation is not available to the department. Hence, Revenue is in appeal before the Supreme Court.

Reasoning of Judgment:- The Supreme Court held that the decision given in Anand Nishikawa Co. Ltd v/s Commissioner of Central Excise, Meerut [2005 (188) ELT 149] is squarely applicable to the facts of the present case. It was held therein that when the classification list continued to have been approved regularly by the department, it could not be said that the manufacturer was guilty of “suppression of facts”. Reliance was also placed on O. K. Play (India) Ltd v/s Commissioner of Central Excise, Delhi-III, Gurgaon[2005-TIOL-18-SC-CX-LB] wherein similar decision was given. It was held that the ratio given in both the above cases was squarely applicable to the facts of the present case.

It was held therein that the classifications were duly approved by the Department from time to time. The Department could have called upon the assessee to produce their catalogues in case there was some confusion or doubt over the product of the respondent. No infirmity in decision of Tribunal. There was no willful suppression on the part of assessee enabling the department to invoke the extended period of limitation under the proviso to Section 11(A) of the CEA, 1944.

Decision:- Appeal dismissed.

Comment:- The allegation of “willful suppression” has to be proved by the department. The department normally invokes such an allegation in each and every case and in majority of cases, it is not proved. We have seen that the demands have been dropped on limitation in cases where all the facts are recorded in books of accounts and audit has come to know about the same from the same. But the department has changed the provision of Section 11AC and penalty can be invoked in such cases also. We have to wait and see whether the penalty can be imposed in such cases.

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PJ/Case Laws/2011-12/1193

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