The allegation of suppression of facts is not sustainable if the SCN was issued solely on the basis of SC decision.

PJ/Case Laws/2012-13/1466

Case:-KDL BIOTECH LTD. V/S COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:- 2013(288) E.L.T. 81(Tri.-Mumbai)

Brief Facts: - The present appeal has been filed by the appellant against the order whereby the demand is confirmed from the period December 2000 to September 2005 by invoking extended period on the ground of suppression of facts and penalty imposed on under Section 11AC of the Central Excise Act, 1944. The appellant submitted that in view of the decision of the Hon’ble Supreme Court in case of CCE, Bhubaneswar v. IFGL Refractories Ltd., reported in 2005 (186) E.L.T. 529(SC), the appellants are not contesting the appeal on merits. The appellants are contesting the demand only on the issue of time bar.

Appellant’s Contention: - The Appellant contended that they are selling the goods to certain buyers who are having advance licence. The customers surrendering their advance licence in favour of the appellants. The contention is that as per the decision of the Hon’ble Supreme Court this is additional consideration for sale of the goods. Further they contended that prior to this decision of the Tribunal in the case of IFGL Refractories Ltd., reported in 2001(134)E.L.T. 230(Tri.-Kolkata) is in favour of the assessee. The show cause notice was issued on the basis of the decision of the Hon’ble Supreme Court in the case of IFGL Refractories Ltd. Therefore, the allegation of suppression of facts intend to evade duty is not sustainable. In view of the earlier decision of the Tribunal in favour of the manufacturer, the demand beyond normal period is not sustainable and penalty under Section 11AC is also not sustainable.

Respondent’s Contention: - The respondent argued that the appellant had never disclosed the fact regarding the additional consideration to the revenue. Therefore, the appellants are suppressing the fact that intends to evade payment of duty.

Reasoning of Judgment: - The Hon’ble CESTAT held that the issue of additional consideration is settled by the Supreme Court in favour of the Revenue by the decision in case of CCE v. IFGL Refractories Ltd. (Supra), earlier to this, decision of the Tribunal was in favour of the manufacturer. Further they find that the present show cause notice is issued on the basis of the Supreme Court’s decision, which is in favour of the Revenue. In these circumstances, they find that the allegation of suppression with intend to evade duty is not sustainable. The demand beyond the normal period of limitation is set aside. The appellants are liable to pay duty and interest for the normal period of limitation, the same will be recalculated. In respect of the imposition of penalty under Section 11AC as they held that there is no suppression of facts with intends to evade duty. Therefore, imposition of penalty under Section 11AC is not sustainable and set aside.

Decision: - The appeal was allowed.

Comment:-The conclusion that can be drawn from this case is that a decision of SC cannot be sole basis to allege the suppression of facts when prior to the said decision of SC, Tribunal had held the issue in favour of the assessee.

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PJ/Case Laws/2012-13/1466

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