(a) Whether the yearly ‘declaration’ filed, by a small scale manufacturer can be treated as a ‘return’ under Sec. 32E(1) of the Central Excise Act.
Answer: Yes. As discussed supra. A return of production, clearance and duty paid in the prescribed manner, is a statutory requirement. In the absence of a specific reference in Section 32E to ER1/ER3 i.e. monthly/quarterly returns prescribed under Rule 12 of the Central Excise Rules, since the ‘declaration’ filed by a small scale manufacturer also contains the basic particulars of estimated production and clearances though not the duty paid, as the product is totally exempt, and keeps the Department aware of the bona fide existence of the applicant, the yearly declaration can be deemed to serve the purpose of ‘return’, in so far as Sec. 32E(1) of the Central Excise Act is concerned.
(b) Whether a consolidated return filed just before filing the application or along with the application by a person who is not registered with Central Excise and did not obtain ECC Number can be considered as satisfying the condition in Clause (a) of Sec. 32E(1) of the CEA, 1944.
Answer: No. Though Section 32E(1) does not refer to Rule 12 of the C.E. Rules under which ER1/ER3 returns are prescribed, since the said returns contain details of excisable goods manufactured, cleared and duty paid in the prescribed manner, the said return can be deemed to be the ‘return’ referred to in Section 32E(1). Therefore, even if the views of the counsels that clause (a) of the first proviso to Section 32E(1) lays down for filing of returns in the prescribed manner are to be accepted, then too as per Rule 12 of the Central Excise Rules, 2002, ‘returns’ are to be filed by an assessee on a monthly/quarterly basis. There is no provision for filing of these ‘returns’ in a consolidated manner covering more than one month. Though there is no specific bar against filing of belated returns relating to a particular month, there is no provision for consolidating the returns for any number of months. But going by the earlier stated view that the said Section 32E(1) only refers to mention of the duty paid in the prescribed manner in the return, the Bench observes that if the applicant is to file a consolidated return belatedly without ECC Number, and covering more than one month, such return cannot, naturally, contain the details of any duty paid in the prescribed manner, as no duty would have been paid at nil till then. Further, if the assessee is to file a consolidated return before filing an application or along with the application, there would be questions even on the details of production and clearances shown therein. If the applicant is to furnish the quantum, which is to be reflected in the application for settlement, there will be no additional duty liability disclosure in the said settlement application over and above that in the consolidated return. He cannot also show at the belated stage any ad hoc quantum of production and clearances merely to be able to show extra disclosure in the application form, as the said ad hoc disclosure would not be truthful at that stage. As a result, a consolidated return filed just before filing the application or along with the application by a person, not registered with Central Excise and not having ECC Code Number, cannot be considered as satisfying the requirement of having filed returns as laid down in Clause (a) of the first proviso to Section 32E(1) of the Central Excise Act, 1944.
(c) Can returns filed after obtaining ECC Code, but for the period prior to obtaining such Code Number, be treated as valid returns as per Sec. 32E(1) of the Central Excise Act, 1944.
Answer : No. The reply furnished to question (b) applies in toto to this also. The only difference in the instant question is that in the earlier point, reference was to the consolidated returns filed without obtaining ECC Code, whereas the present question is on the returns (without reference to consolidated or otherwise) filed after getting ECC Number. In this case also, the applicant would not be able to indicate ‘duty paid’ in the prescribed manner (or even in any manner) and question would continue to agitate about the details of production and clearance to be filled in such belated returns. However, in case the applicant had filed monthly/quarterly returns voluntarily, even if late, but before the commencement of any inquiry or at least issuance of a SCN, the position would be different. In the said belated returns filed after getting ECC Code the applicant would be able to indicate the duty paid by him in the prescribed manner atleast from the date of obtaining the ECC Code, along with production and clearance as desired by him. Such returns can be taken cognizance of for the purpose of Section 32E(1) of the Central Excise Act, 1944 to allow filing of settlement application.
(d) Whether a limited company or partnership firm having two divisions at two different locations, one of which pays duty and files returns and another neither pays duty nor files returns, can be said to have complied with the conditions of filing the returns as per Sec. 32E(1) of the CEA, 1944.
Answer : No. Unlike direct taxes, in the case of excise levy, the registration by an assessee is premises – specific, i.e. a corporate or a firm or an individual having more than one premises for manufacturing excisable goods, is enjoined under Rule 9 of the C.E. Rules, 2002 to register each place of manufacture of the excisable goods and to maintain accounts and registers separately in respect of each premises. The said manufacturer is also to file return specifically for each of the said manufacturing premises registered separately, and as a corollary in case total exemption is to be availed declaration in lieu of registration is also required in respect of each premises. It may be a different issue that in the application for registration, or in the declaration form, the assessee is directed to furnish the details of all other manufacturing premises that they have and the addresses of such places. But this does not, and cannot, substitute the requirement of registration (and, therefore, returns) or declaration for each of the premises. This being the case, if a limited company or a partnership firm having two (or more) divisions at different locations, cannot be said to have complied with condition of filing return in respect of both (or all) the divisions for purpose of Section 32E(1) if one of the divisions pays duty and files returns. The said limited company or a partnership firm can be said to have complied with the requirement of Section 32E(1) only in respect of the premises for which required declaration has been filed.
Additional Points :
(e) Whether applications filed by units, which had functioned as SSI units, but had not even filed declarations during the material period, would be eligible for admission.
Answer : No. Unless the SSI units, which did not have to file returns, had filed prescribed declaration before the intervention of Revenue authorities, they would not be eligible to apply for settlement.
(f) The practice of filing declaration upon commencement of manufacturing operations in every financial year (by 15th April) was dispensed by Notification No. 52 of 98-C.E. (N.T.), dated 2-6-1998, whereby a declaration filed at the time of commencement would suffice. Whether such non-filing of declaration renders the applicant ineligible for filing application for settlement?
Answer: No. If declaration had been filed at the appropriate time as required under the above Notification, an application can be made for settlement. (Para 11)+
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BEFORE THE SETTLEMENT COMMISSION, CUSTOMS AND CENTRAL EXCISE, MUMBAI
[ADDITIONAL BENCH]
S/Shri K.P. Sridhara Raman, Chairman, V.K. Sharma, Vice-Chairman, M.V.S. Prasad, Vice-Chairman, B.N. Das and R. Mukhopadhyay, Members
IN RE: EMERSON ELECTRIC COMPANY (INDIA) PVT. LTD.
Special Bench Order No. 1/CEX/2005, dated 13-6-2005
S/Shri K. Kumar, C. Natarajan, Sr. Advocates, V. Sridharan, Gajendra Jain and B.N. Gururaj, Advocates, for the Appellant.
O R D E R
A.Background of the case leading to constitution of the Special Bench :
1.0The genesis leading to constitution of the Special Bench is narrated below in a nut-shell :
(a) M/s. Emerson Electric Company (India) Pvt. Ltd. applied for settlement of the case covered under Show Cause Notice dt. 3-6-2004 before the Additional Bench, Mumbai of the Customs & Central Excise Settlement Commission. The Show Cause Notice was not issued to this applicant, but was issued to M/s. Branson Ultrasonics, demanding C.E. duty amounting to Rs. 16,52,725/-, which the applicant accepted as payable though simultaneously praying for adjustment of the net duty amount granting deduction from the demanded amount, Rs. 2,27,962/- by way of deeming their price as cum-duty price and extending permissible deduction therefrom to re-determine correct assessable value and a further deduction of Rs. 2,18,876/- on account of Modvat credit. As such, the applicant prayed for settlement of the case accepting the duty liability as Rs. 12,05,887/-. The application was heard for admission by the Additional Bench, Mumbai on 25-11-2004.
(b) The issue involved in the case was that the noticee M/s. Branson Ultrasonics [Division of M/s. Emerson Electric Company (India) Pvt. Ltd.], were engaged in the activities of trading of ’Ultrasonic Plastic Welding and Cleaning Machines’ as well as manufacturing of ‘‘Horns of Fixtures” made out of Aluminium Titanium materials. They affixed the brand name ‘BRANSON’ on the Horns. They were active since 1996-97 and cleared the branded goods without following Central Excise procedure and without paying the Central Excise duty. They were also not registered with Central Excise and were not filing ‘return’ showing production, clearance and amount of duty paid. They, however, filed one RT-12/E.R.-1 return for each financial year covering the entire period from 1996-97 to 2003-04 i.e. from 1-4-1996 to 31-3-2004 on the date of filing the S.C.(E)-1 application before the Settlement Commission, i.e. 30-7-2004.
(c) Since the application for settlement was submitted by someone other than the noticee namely M/s. Branson Ultrasonics, a reference was made to the noticee by the Commission asking for clarifications. The noticee in their reply dt. 14-9-2004 submitted that they were a Division of the applicant company M/s. Emerson Electric Company (India) Pvt. Ltd.
(d) According to the Show Cause Notice, the noticee manufactured Horns & Fixture with a brand name and were thus not eligible for exemption available to small scale manufacturers and, accordingly, duty due on the entire value of clearance Rs. 1,03,29,530/- during the entire period from May ’99 to March ’04 came to Rs. 16,52,725/-.
(e) The respondent Commissioner of C.E., Mumbai-IV, in his report under Section 32F(1) of the Central Excise Act, 1944, submitted that the applicant could not be treated as a manufacturer going by the address of M/s. Branson Ultrasonics, appearing in the relevant Registration Certificate. Further, the provisions under Section 32E makes filing of application by an ‘assessee’ obligatory. As such, M/s. Branson Ultrasonics, who are the manufacturers, are the ‘assessee’ and not the applicant and hence the application should have been filed by them only and not by the applicant, herein, M/s. Emerson Electric Company (India) Pvt. Ltd.
(f) The Addl. Bench, Mumbai under F. No. SC/Mz/CE/147/2004/ 5472, dated 24-12-2004, accordingly referred to the Chairman, Customs & Central Excise Settlement Commission for referring the issue to Special Bench.
2.0Similar issues had been decided by the various Benches of the Commission in the following cases :
2.1On somewhat similar issue, earlier, the case of M/s. Sunshine Jewellers was rejected by the Additional Bench, Mumbai. The matter related to a final product which was exempt and thus not requiring submission of any ‘return’, but an intermediate product emerging in the course of manufacture of the said exempted final product was not exempt from payment of duty. In the said case, application was filed on 13-2-2002 and after filing the application for settlement, ER-1 return was filed on 19-3-2002 for the period October, 2000 to March, 2001. They cited the following case laws reg. Kullu Valley Transport reported in 77 ITR 518, passed by the Hon’ble Supreme Court : State of Andhra Pradesh v. Donthala Rajaiah reported in (1960) 11 STC 819 (AP). They also quoted the Circular No. 2/93-CX.6, dated 15-1-1993 issued by the Central Board of Excise & Customs permitting submission of belated return in cases of evasion by bulk drug manufacturers in order to substantiate that filing of return belatedly is also to be treated as return filed. It was observed in that case that in the said return, which was not accepted by Revenue for the reason that the applicant was not registered with Central Excise, the applicant had declared certain amount of duty as payable but in the application for settlement did not declare anything more, and hence they did not fulfil one of the conditions enabling an assessee to seek settlement. The application was rejected.
2.2In the case of M/s. Bharat Industrial Works, it had been pleaded that the applicant undertook job work on site and was under the impression that their activities did not fall under the purview of ‘manufacture’ and that is why they did not file ‘declaration’ nor applied for registration before a case was detected and a Show Cause Notice issued. In that case also, the Revenue had a similar objection that since the applicant did not have themselves registered and did not file any return, their case could not be entertained. The case was also rejected under Order No. A-116/CE/2003-SC(PB), dated 4-6-2003 [2003 (160) ELT 951 (Sett. Comm.)]. However, when the matter was contested in a writ before the Hon’ble High Court of Delhi, the ld. Chief Justice while disposing the Writ Petition No. WP(C)5091/2003 directed that “It is stated that the petitioner will file the return and in view of that there would be compliance. On behalf of the respondent it is stated that the application will, thereafter, be considered in accordance with law.” Four weeks’ time was granted for filing the said ‘return’ by the Hon’ble Court. Thus in this case the concept of a ‘belated’ return, as also referred by the ld. Advocate in the case of M/s. Sunshine Jewellers supra, was given cognizance by the Hon’ble High Court.
2.3In another case of Shri Rajendra Sharma, proprietor of M/s. Muskhan Trading Company, having marginally different set of facts, the application was admitted by the Principal Bench of the Settlement Commission under Admission Order No. A-l57/CE/03-SC(PB), dt. 4-11-2003. In this case, there was suppression of production and removal of excisable goods during the financial year 2000-2001. The applicant did not take out registration nor did he file return till October, 2001. After the visit of the Central Excise Officers on 10-10-2001, in the course of investigation, the applicant deposited an amount of Rs. 10 lakhs and got registered with Central Excise on 29-10-2001. Thereafter they continued to submit return from the subsequent month. In the Show Cause Notice demand of duty was made and the applicant submitted that they were agreeable to have the deposited amount appropriated towards the demand of duty. As mentioned supra the application was admitted, citing the case of M/s. Oriflame India Ltd., reported in 2000 (l22) E.L.T. 601 (Sett. Comm.) [Order No. 1/2000, dated 10-10-2000] it was held that ‘if a person has filed returns for a certain period, there is no inhibition to come to the conclusion that the applicant has fulfilled the proviso to Section 32E(1) of the Act.’ (emphasis supplied).
2.4The case of M/s. FabIndia Overseas, Delhi/Bangalore/Mumbai, manufacturer of garments from handloom fabrics and exporter, was also admitted under Admission Order A-127 to 129/CE/03-SC(PB), dated 14-7-2003. In the case, the applicants pleaded that since C.E. duty was imposed w.e.f. 1-5-2001, the applicant took some time to understand the implications of the levy and before they could develop/install appropriate accounting systems for all its shops located at different places, their premises were raided and show cause notices were issued.
2.5Another similar case was of M/s. Search Pharma Pvt. Ltd., Gurgaon & Anr., engaged in manufacture of Ayurvedic Medicine, some of which were affixed with brand names belonging to other persons. The main applicant was not registered with the C.E. department. It was pleaded in that case that they were under the bona fide belief that being a SSI unit, they were not required to pay C.E. duty nor were they required to take even the registration till the visit of the Officers of C.E. Immediately thereafter, they obtained C.E. registration and started complying with the provisions of law. The Revenue objected to admission of the case on the ground that at the time of detection of evasion, the applicant was not registered and that there was no fresh declaration inasmuch as after detection of the case, the applicants filed returns showing all the details therein. The Bench informed Revenue of the following views taken in the case of M/s. Shield Biotech in Admission Order No. A-192/CE/04-SC(PB), dated 19-5-2004 and the Revenue agreed with those views.
“5………… Rule 9 of Central Excise (No. 2) Rules, 2001 exempted a manufacturer from applying for registration till the aggregate value of clearances exceeded the specified limit. Similarly, both the notifications did not prescribe any conditions to file any declaration before availing the exemption. In view of the above, it is clear that a manufacturer eligible for availing SSI exemption was exempt from taking registration till the aggregate value of clearances exceeded the specified limit and as a consequence was not required to file the returns. Hence once the applicant believed that the SSI exemption, was available, it is natural that the applicant was not required to file the return. In such a situation, non-filing of return cannot be held against the applicant. Perusal of the SCNs do not give the impression that the applicant knew he was not eligible for the exemption but still availed the same. There does not appear to be any clandestine clearance as goods were cleared on invoices, without charging duty. However, the applicant has filed a consolidated return in March, 2004 covering the period 1-1-2002 to 27-12-2002 and have been filing the returns regularly after taking out the registration in January, 2003. Therefore, the Bench holds that the application has to be taken as satisfying the requirement under Clause (a) of the first proviso of sub-section (1) of Section 32E of the Act. On a query from the bench that in the consolidated return filed in the month of March, 2004, the applicant has disclosed the full duty liability and hence whether there is any fresh disclosure in the settlement application, the Advocate submitted that the consolidated return was filed long after issue of the SCN and whereas it will be clear from the SCNS that the applicant has not disclosed the fact of manufacturing and clearing the goods affixing the brand name of other persons and thereby becoming ineligible to avail the benefit of SSI exemption as per para 4 of both the notifications namely 8/2001-C.E., dt. 1-3-2001 and 8/2002-C.E., dt. 1-3-2002.“
3.0The Chairman, Customs and Central Excise Settlement Commission, New Delhi in his reference F. No. C-18/Tech/02-SC(PB), dated 12-1-2005 constituted a Special Bench under sub-section (7) of Section 32A of Central Excise Act, 1944, read with Section 127N of the Customs Act, 1962 (hereinafter referred to as the Act in this order) comprising (1) Shri K.P. Sridhara Raman, Chairman, Customs & Central Excise Settlement Commission, New Delhi – Presiding Officer; (2) Shri M.V.S. Prasad, Vice-Chairman, CCESC, Chennai – Member; (3) Shri R. Mukhopadhyay, Member, CCESC, Kolkata – Member; (4) Shri V.K. Sharma, Vice-Chairman, CCESC, Mumbai; – Member; and (5) Shri B.N. Das, Member, CCESC. Mumbai – Member.
4.0The following issues were referred to the Special Bench for decision :
(a) Whether the yearly ‘declaration’ filed by a small scale manufacturer can be treated as a ‘return’ under Section 32E(1) of the Central Excise Act, 1944?
(b) Whether a consolidated return filed just before filing the application or along with the application by a person who is not registered with C. Ex and did not obtain ECC No., can be considered as satisfying the condition in clause (a) of Section 32E(1) of the Central Excise Act, 1944?
(c) Can returns filed after obtaining ECC No., but for the period prior to obtaining such code no., be treated as valid returns as per Section 32E(1) of the Central Excise Act, 1944?
(d) Whether a limited company or a partnership firm having two divisions at two different locations, one of which pays duty and files returns and another neither pays duty nor files returns, can be said to have complied with the conditions of filing the returns as per Section 32E(1) of the Central Excise Act, 1944?
Additional points :
(e) Whether applications filed by units, which had functioned as SSI units, but had not even filed declarations during the material period would be eligible for admission?
(f) The practice of filing declaration upon commencement of manufacturing operation and on every financial year (by 15th April) was dispensed with by Notification No. 52/98-C.E. (N.T.), dated 2-6-1998, whereby a declaration filed upon commencement would suffice. Whether such non-filing of declaration renders the applicant ineligible for filing application for settlement?
Submissions B. made in course of proceedings before the Special Bench.
5.0 Submissions by Shri V. Sridharan, Advocate appearing for hearing before the Special Bench. He submitted his arguments exhaustively and also submitted written submission which was followed up by further submission dated 13-4-2005, signed by Shri Gajendra Jain, Advocate; and 18-4-2005 signed by Sh. V. Sridhara, Advocate and submissions of Sh. B.N. Gururaj :
Sum and substance of such arguments and submissions are as follows :
[I] Whether annual declaration filed by SSIs can he treated as ‘return‘ under Section 32E(1) of the Act.
It is submitted that the object of the conditions stipulated in the proviso to Section 32E(1) must be gathered from a total reading of that provision. It is submitted that the first condition of filing return showing production, clearance and Central Excise duty paid, is that the applicant must not be someone who has totally stayed away from the Revenue with the presumable intent of evading duty on its manufacture. Thus an applicant who has not at all disclosed his existence to the Revenue would no doubt be ineligible to invoke the assistance of this Hon’ble Commission. However, it is submitted that a person who has filed the annual declaration and disclosed his existence to the Revenue as also all the relevant particulars such as location of the factory, nature of goods manufactured, estimated clearance for the current year, and value of past clearances cannot be placed on the same footing as someone who has totally failed to disclose his existence and thereby escaped the liability to pay duty. It is submitted that when the law itself has provided that a person who opts for SSI exemption may file such a declaration annually, it must not be converted into a disability for approaching this Hon’ble Commission for settling the dispute. It is therefore submitted that the yearly declaration filed by SSI who are under total exemption is liable to be treated at par with periodic returns filed by the other assessees.
[II] Whether consolidated return filed before or along with the application without obtaining registration of ECC be treated as valid returns?
It is submitted that a person who has not obtained C.E. registration or ECC would not have disclosed his existence or the nature of his activities to the Revenue. Even at the time of filing the application before this Hon’ble Commission, if the applicant has not obtained registration or ECC, it is a pointer to the lack of bona fide of the applicant. Such a person would not have discharged any duty liability whatsoever. It is, therefore, submitted that this factor is liable to be held against the applicant, where the case involves a commodity which is prima facie, an excisable goods as defined in Section 2(d) of the C.E. Act ’44 or the activity of the applicant is prima facie, a process of manufacture as defined in the Section Notes and Chapter Notes of the C.E. Tariff or the Third Schedule to the C.E. Act ’44. The required ‘prima facie’ satisfaction can be reached by the jurisdictional Bench of the Commission at the time of hearing of the application for admission.
However, it is submitted that a further important factor merits consideration in this context. If the applicant has entertained a bona fide belief that his activities, or goods produced, are not excisable, the fact that he did not obtain ECC or declare its existence to the Revenue must not be held against him.
It is submitted that the Hon’ble Settlement Commission has the discretion to look into the factual backdrop of each application and determine the bona fide nature of application at the time of admission of the application and before ordering the application to be proceeded with.
In this context, it is pleaded that the reference under clause (a) of the first proviso to Section 32E(1) that “the applicant has filed returns showing production, clearance and central excise duty paid in the prescribed manner” does not denote filed “within the specified” time and reliance for this is placed on the decision of the Apex Court in the case of Sales Tax Officer v. K.I. Aloraham [1967 (20) STC 367-SC].
[III] The case of applicant filing consolidated return after obtaining registration and ECC.
It is submitted that the distinction between the issue addressed at 2 above and in this para is marginal. In a case arising under para 2 above, even at the time of making the application to this Hon’ble Commission, the applicant would not have obtained registration or obtained the ECC. In contradistinction, in a case arising under this para, at the time of filing consolidated return, the applicant has already obtained registration and ECC Code. Hence, it is submitted that the fact that he has obtained registration and ECC and has also disclosed all the past affairs by filing consolidated return, must be treated as bona fide act without any trace of malice. This would be in keeping with the spirit of settlement and making of full and true disclosure.
[IV] A case where one Division of a company or firm discloses its affairs and another Division does not do so.
It is submitted that under Section 6 of the C.E. Act ’44, as well as under erstwhile Rule 174 of the C.E. Rules, 1944 as also Rule 9 of the C.E. Rules, 2002, the assessable entity under the Central Excise Act is either a ‘factory’ as defined under Section 2(e) of the said Act or a ‘warehouse’, or the place of ‘registered dealer’. The term ‘assessee’ as defined in Rule 2(c) of the C.E. Rules, 2002 applies to every person who carries on production or manufacture or trade in excisable goods. Further, a combined reading of these provisions with Rule 4 of the C.E. Rules, 2002 (or Rule 9 of the Rules of 1944) would show that the place of removal is the point at which the statute exercises control over a manufacturer or warehouse keeper or trader for collection of duty. In contradistinction with other laws, such as Income-tax, where the company or firm is a single assessee, under the Central Excise law, each Division or factory is an independent assessee, carrying on the act of manufacture or production at each location. It is, therefore, submitted that each factory or division is under a statutory obligation to register itself with the jurisdictional Central Excise Authority and pay duty or claim exemption as may be available to it.
It is submitted that if a company or firm discloses its activities and pays duty in one geographical location, but does not do so at another location before the jurisdictional C.E. authorities, to the extent of failure to disclose, in respect of the second location, it cannot be said that the company or the firm has complied with the provisions governing filing of returns for the said second location. It is submitted that the benefit of having filed the periodical returns would accrue only to that Division or Factory which has done so and not to another Division or Factory which has failed to do so. Therefore, it is submitted that to the extent the company or the firm has failed to register itself, failed to pay duty and file returns it would be disqualified from making an application to this Hon’ble Commission.
It is contended that a Division of a company is not recognized as a person in the eyes of law. Reliance is placed in support on a decision of Hon’ble Andhra Pradesh High Court in the case of KCP Ltd. v. State of Andhra Pradesh [1993 (88) STC 374(AP)]. Wherein, the High Court is claimed to have observed that ”…….The registration certificate obtained by each branch or unit may, at best show, that they are separate assessable entities. But it has no bearing on the question whether they are distinct and different legal entities capable of transferring property in goods from each other ………….separate registration certificates issued to the units or branches of an incorporated company have never been considered to be sufficient to confer the legal personality on such units and branches.”
[V] The reason for introduction of the requirement of filing a return before approaching the Settlement Commission under the Income-tax Act.
Prior to 1987, filing of return was not a requirement for approaching Settlement Commission, in terms of proviso to Section 245C of the Income-tax Act, 1961. Therefore, a person who has been previously assessed under the Income-tax Act, 1961 would approach Settlement Commission without filing return for the previous year in dispute. Hon’ble Kerala High Court had held in the case Re : Thoppil Kutty Eroor v. CIT 1958 (34) ITR 850 (Ker.), that penalty for concealment of income cannot be imposed under Section 271(1)(c) of the Income-tax Act, 1961 or corresponding provision thereof in Income-tax Act, 1922 or other similar Acts, when the assessee had not furnished a return of income relevant for the previous year. Therefore, even if the Settlement Commission came to a finding that the assessee had concealed particulars of income and the Settlement Commission is desirous of imposing penalty, the Settlement Commission was not empowered to impose penalty under Explanation 3 to Section 27l(1)(c) of the Income-tax Act, 1961. In other words, the Settlement Commission was handicapped by non-filing of return for the previous year in dispute, by the applicant-assessee who has been previously assessed under Income-tax Act, 1961. Accordingly, the Finance Act, 1987 amended the proviso to Section 245C of the Income-tax Act, 1961 which required that the applicant assessee should have filed a return of income before approaching the Settlement Commission. It is, however, contended that the Customs & Central Excise Settlement Commission even in the absence of a return is empowered to impose penalty, if the Commission feels it is called for. The power of the CCESC to impose penalty is not restricted by filing or non-filing of return by the applicant-assessee. The counsel, accordingly contended that the provisions relating to Settlement Commission under Central Excise Act, 1944 have been borrowed from Income-tax Act, 1961. Hence, the applicants submit that the condition of filing return under proviso to Section 32E(1) has to be construed accordingly keeping in mind the legislative history explained above.
[VI] Belated return is also a ‘return’.
(i) It has been held by the following case laws that return filed beyond the prescribed time limit is also a valid return.
(a) CBEC Circular dated 15-1-1993
(b) CIT v. Ranchhoddas Karsondas, 1959 (36) ITR 569 (S.C.)
(c) State of Andhra Pradesh v. Donthala Rajaiah, 1960 (11) STC 819 (AP)
“It is open to the department to accept a return submitted by an assessee as the basis of assessment even after expiry of the period prescribed by the statutory rules. There is no legal bar to complete the assessment on the return so made.“
(d) State of Andhra Pradesh v. Pyarelal Malhotra, 1962 (13) STC 946 (AP).
6.0 Parawise comments of the respondent Commissioner under F. No. V-Adj(Misc.)30-06/05, dated 7-4-2005 w.r.t. the issues raised in the Annexure to letter No. SC/MZ/CEX/147/04, dated 7-4-2005.
(1) The definition of the term ‘declaration’ and ‘return’ has not been given in the Central Excise Act, 1944 or rules made thereunder. However, the meaning of the above two words as given in the “Concise Oxford English Dictionary’ is as under –
‘Declaration’ – A formal or explicit statement or an announcement.
