Case Law Details
Steel Authority of India Limited vs Commissioner of CGST & CX (CESTAT Kolkata)
CESTAT Kolkata held that Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. Accordingly, CENVAT of such inputs available.
Facts-
M/s Steel Authority of India Limited, Rourkela Steel Plant (RSP) is a Central Public Sector Enterprise under the Ministry of Steel, Government of India and is engaged in the manufacture of Iron and Steel products falling under Chapters 72 and 73 of the First Schedule to the Central Excise Tariff Act, 1985.
Two Show Cause Notices were issued challenging availment of credit of Rs.5,00,000/- by RSP. The said Show Cause Notices were replied to and were adjudicated vide order in Original No. dated 29.12.2005.
Thereafter, another SCN dated 19.11.2007 was issued alleging that the Appellant (RSP) had availed CENVAT Credit in October 2003, i.e., the remaining 50% unavailed credit in respect of capital goods which allegedly were not in possession and use of the manufacturer (RSP).
The said SCN was adjudicated vide Order-in-Original dated 28.04.2016 wherein the demand of duty was dropped.
Thereafter, in furtherance to an Order-in-Review of the Ld. Commissioner, the Ld. Assistant Commissioner preferred an appeal before the Ld. Commissioner (Appeals) against the said Order-in-Original dated 28.04.2016 on the grounds that the transfer of CENVAT Credit is permissible only in terms of Rule 8 of the CENVAT Credit Rules, and the Appellant’s case in not covered by the said rule, hence the Order-in-Original dated 28.04.2016 should be set aside.
Accordingly, the Ld. Commissioner (Appeals) held that both the units of the Appellant were separate manufacturing units located at two different sites and separately registered with the Central Excise Department. Therefore, Rule 8 of the CENVAT Credit Rules is not applicable to the Appellant and hence availment of CENVAT Credit of the fertilizer plant by the Appellant is in contravention of Rule 4(2)(b) and Rule 8 of the CENVAT Credit Rules. Hence the present Appeal before the Tribunal.
Conclusion-
Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. Thus no distinction between the Rourkela Steel Plant (RSP) and Rourkela Fertilizer Plant (RFP) can be inferred as both are one and the same factory.
Tribunal in the case of Dhampur Sugar Mills has held that the number of different plants manufacturing different excisable goods in the same premises would constitute one factory. Their separate registration under Rule 173G of Central Excise Rules, 1944 would not mean that they are different factories. Different units to be regarded as one factory if all excisable goods are manufactured in the same premises.
Held that on identical issue the Show Cause Notice has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the Department. The subsequent notice cannot be issued beyond limitation.
FULL TEXT OF THE CESTAT KOLKATA ORDER
M/s Steel Authority of India Limited, Rourkela Steel Plant (hereinafter referred to as ‘SAIL-RSP’/’the Appellant’/’RSP’) is a Central Public Sector Enterprise under the Ministry of Steel, Government of India and is engaged in the manufacture of Iron and Steel products falling under Chapters 72 and 73 of the First Schedule to the Central Excise Tariff Act, 1985 (CETA).
1.1 The Appellant in the course of its business operates furnaces and coke oven in its plant. The residue gas emanating from such furnace and coke oven is processed in coal chemical division which comprised of the Rourkela Fertiliser Plant (hereinafter referred to as ‘SAIL-RFP’/RFP’). The coke oven gas contains ammonia which cannot be let out in the atmosphere, being hazardous in nature. Hence, the same is processed along with sulphuric acid to obtain ammonium sulphate which is a fertiliser. The coke oven gas after extraction of ammonia is further processed to obtain other dutiable by products.
1.2 The referred SAIL-RSP and SAIL-RFP units were simply two of the many divisions of the Appellant and were not different manufacturing plants, and the same are present in the same premise and in close proximity to each other. Also, there is a single legal entity when reference is made either to SAIL-RSP or SAIL-RFP. Undisputedly, both units are under the same management and have a common PAN, i.e., AAACS7062F.
1.3 Initially, the Appellant was granted one excise registration for the entire plant which included both SAIL-RSP and SAIL-RFP. However, on account on internal reorganization of excise divisions in Rourkela, the Excise Department suo moto granted separate registrations to SAIL-RFP (being AAACS7062FXM004) for its own administrative convenience, though it continued to remain part of the SAIL-RSP’s registration as well.
1.4 During 2002-03, RFP received capital goods in the nature of spares, components and accessories involving Central Excise Duty of Rs.32,58,646/- and RFP availed 50% of the total CENVAT Credit i.e., Rs. 16,29,323/- during the year 2002-03. The remaining credit of Rs.16,29,323/- was availed by RSP in October 2003. However, the operation of RFP was stopped w.e.f 02.11.2002 and no production has been undertaken since then. RSP vide letters dated 25.08.2004 and 02.11.2004 also intimated the jurisdictional Commissioner, Rourkela regarding availment of RFP’s credit by RSP so that the same could be utilized.
1.5 In furtherance to Appellant’s letter dated 02.11.2004 two Show Cause Notices were issued challenging availment of credit of Rs.5,00,000/- by RSP. The said Show Cause Notices were replied to and were adjudicated vide order in Original No. dated 29.12.2005. The said Order-in-Original specifically recorded in its findings that RSP and RFP are one and the same for the purpose of CENVAT Credit Rules. That only due to the convenience of Central Excise department, RSP and RFP were kept under two different Range Offices and were issued two separate registrations. In view thereof, intra transfer of credit cannot be denied as per the judgment of K.M. Sugar Mills Ltd., Vs. CCE, Allahabad [2001 (133) E.L.T. 567 (Tri.-Del.)]
1.6 Thereafter, another SCN dated 19.11.2007 was issued alleging that the Appellant (RSP) had availed CENVAT Credit amounting to Rs. 16,29,323/- in October 2003, i.e., remaining 50% unavailed credit in respect of capital goods which allegedly were not in possession and use of the manufacturer (RSP) since the RFP had stopped production at the time of availment of such CENVAT Credit. Such availment of credit was alleged to be violative of Rule 4(2)(b) of the CENVAT Credit Rules.
1.7 The said SCN was adjudicated vide Order-in-Original dated 28.04.2016 wherein the demand of duty was dropped. The Ld. Additional Commissioner held that the capital goods were in the nature of components, spares and accessories, thus, the condition of possession and use under Rule 4(2) of the CENVAT Credit Rules is not applicable. Further, it was also held that RFP has always been under the administrative management of RSP and both these units are one and the same, although for administrative convenience of the Central Excise Department, RFP was granted separate registration. In view of such facts, it was held that CENVAT Credit is allowable to the Appellant. Detailed reasons for dropping such demand are recorded in the referred Order-in-Original dated 28.04.2016.
1.8 Thereafter, in furtherance to an Order-in-Review of the Ld. Commissioner, Rourkela, the Ld. Assistant Commissioner preferred an appeal before the Ld. Commissioner (Appeals), Bhubaneswar against the said Order-in-Original dated 28.04.2016 on the grounds that the transfer of CENVAT Credit is permissible only in terms of Rule 8 of the CENVAT Credit Rules, and the Appellant’s case in not covered by the said rule, hence the Order-in-Original dated 28.04.2016 should be set aside.
1.9 In the above background, the Ld. Commissioner (Appeals) passed the impugned Order-in-Appeal dated 19.03.2018 setting aside the Order-in-Original dated 28.04.2016 and consequently allowed the Department’s appeal. The Ld. Commissioner (Appeals) held that both the units of the Appellant were separate manufacturing units located at two different sites and separately registered with the Central Excise Department. Therefore, Rule 8 of the CENVAT Credit Rules is not applicable to the Appellant and hence availment of CENVAT Credit of the fertilizer plant by the Appellant is in contravention of Rule 4(2)(b) and Rule 8 of the CENVAT Credit Rules.
Hence the present Appeal before the Tribunal.
2. Ld.Advocate, appearing on behalf of the Appellant submitted as under :-
2.1 Finding of the impugned order that RFP and RSP are two separate units, located at two different sites and separately registered with Central Excise Department is factually incorrect. The Appellant submits that RFP is only a part/ unit of the RSP and that both are parts of the same legal entity, i.e., Steel Authority of India Limited, Rourkela Steel Plant having the same PAN and located within the same premises. The Appellant submits that RSP is an integrated steel plant comprising various divisions/ plants such as Steel melting Shop, captive Power Plant, Coke Oven Plant, Fertiliser Plant, Hot Strip Mill, Cold Rolling Mill, etc. All the divisions/ plants are located within the boundary of RSP having inter-connected processes and all the units together comprise of the Steel Plant.
2.2 As submitted in the facts and as also recorded in the Order-in-Original dated 29.12.2005[pages 102-108 of the appeal paper book], RSP and RFP had the same excise registration and only when the Rourkela Division was fragmented, RFP and RSP, though within the same premises, were put under the control of different Range superintendents. Thus, for Department’s administrative convenience and without the Appellant’s request, on suo moto basis, RFP and RSP were given separate Central Excise Registrations. Accordingly, the said OIO dated 29.12.2005, allowed the availment of Rs.5,00,000/- of credit pertaining to RFP by RSP.
2.3 All these internal arrangements of the Department leading to grant of separate registration to the RFP did not change the ground reality, wherein RFP continued to be on the land and premises of RSP and had no independent existence from RSP.
2.4 Also, in another Order-in-Original dated 26.11.2001 (pages 86101 of the appeal paper book), the CENVAT Credit on Naphtha which was procured by RFP under Chapter X procedure but used in RSP, was allowed to be availed and utilized by RFP on the basis of TR-6 challans through which the duty was paid by RFP itself. This also lends credence to the understanding of the Department at all times that RFP and RSP are one and the same (and not distinct) units. Both these OIOs have attained finality and thus, the department cannot take stand to the contrary in the present proceedings.
2.5 Further, in terms of the definition of ‘factory’ in Section 2(e) of the Central Excise Act, 1944, units located in the same premises shall be considered to be ‘a factory’ and in terms of Rule 4 of CENVAT Credit Rules, 2002, Credit is available on receipt of goods at the ‘factory of the manufacturer’. In support of such submission, the Appellant relies upon the following judgments:-
a. Dhampur Sugar Mills Ltd. Vs. CCE Meerut [2001(129) ELT 73 (Tri-Delhi)]
b. CCE, Meerut Vs. Dhampur Sugar Mills Ltd., [2007 (216) ELT A23(SC)]
2.6 Appellant submits that no separate books of accounts were prepared for the fertiliser plant even when the fertiliser plant was in operation. The Profit and Loss Account, Balance Sheet and all other relevant accounts of the fertiliser plant were shown under the respective accounts of RSP. Even the assets, liabilities income, expenditure, profit/ loss, etc. of the fertiliser plant were recorded together with the assets, liabilities, income, expenditure, profit/loss of RSP and were having common management, control and administration. Thus, it is impossible to state that RFP and RSP were two sperateassessees. In support of such submission the Appellant relies upon the following judgments:-
a. M. Sugar Mills Ltd. Vs. CCE, Allahabad [2001 (133)ELT 567 (Tri.-Del.)]
b. Commissiner of Central Excise, Madurai Vs. Rajshree sugars & Chemicals Ltd., [2014 (299) ELT 277 (Mad)]
c. Inox India Ltd., Vs. CCE,[ 2001 (133) ELT, 487 (Tri.-Mum.)]
2.7 Even the relevant audit para number 2 of IR No. 30/2004-05 on the basis of which the present issue was raised has been dropped by AG (Odisha), as held in the present OIO (Para5.9 at Page 63]. Intimation by department to the Appellant regarding dropping of the said para forms part of the appeal paper book as Annexure-13 (pages 111-112 of the appeal paper book).
2.8 The Appellant further submits that in cases where Show Cause Notices are issued on the basis on audit paras and when such audit para itself is dropped by the department, the SCNs issued on the basis of such audit para also cannot sustain. In support of its submission, the Appellant places reliance on the case of Hindustan Zinc Ltd., Vs. Commissioner of CGST, Udaipur [2019 (370) ELT 1582 (Tri.-Del.)]
2.9 In view of the aforesaid, it is submitted that the availment of credit by the Appellant (RSP) of the remaining 50% unavailed duty paid on capital goods used in the RFP was in accordance with law. The Additional Commissioner in the Order-in-Original had thus correctly held that the credit was validly taken by the Appellant. Therefore, the impugned order in appeal is liable to be set aside on this ground alone.
2.10 The Appellant submitted that the nature of capital goods on which credit was availed was ‘spares and accessories’ and that rule 4(2)(b) of the CCR casts a specific exclusion for the said goods from the condition regarding the ‘possession and use’ for availment of the remaining 50% credit such was held by the Ld. Adjudicating Authority vide OIO dated 28.04.2016 in para 5.3 of the order in the terms that” ….. I find that the condition of “possession and use of the manufacturer of final products in such subsequent years” is not applicable on goods like components, spares and accessories, refractories and refractory material etc for availaing 50% Cenvat credit in subsequent years. I further, find that the impugned goods on which denial of CENVAT Credit has been proposed in the show cause notice are spares and accessories. “Such finding recorded in the OIO has never been challenged by the department in its appeal and thus, such finding of the order has attained finality. In view thereof, denial of credit to the Appellant is bad in law and such; impugned order in appeal must be set aside.
2.11 In support of submissions made above, the Appellant also relies upon the following judgments:-
a. Owens Corning (India) Pvt. Ltd., Vs. Commissiner of C. Ex, Belapur [2015(39) STR 158]
b. Siyaram Silk Mills Ltd., Vs. Commissioner of Central Excise, Mumbai-II[2007 (8) STR 108 (Tri.-Mumbai)]
2.12 The only allegation in the SCN was that the assessee (RSP) availed the CENVAT Credit even though he unit the unit RFP was closed and thus, such availment of credit was in violation of Rule 4(2)(b) of Cenvat Credit Rules, 2002.
2.13 The Show Cause Notice nowhere alleged regarding applicability of Rule 8 of CENVAT Credit Rules 2002 and transfer of credit from RFP to RSP. However, the grounds of appeal as well as the impugned order is based on the analysis that credit is not transferable under Rule 8 of the CENVAT Credit Rules, 2002 in the present case. Therefore, the grounds of appeal as well as the impugned order have travelled beyond the scope of show cause notice and the Respondents have attempted to improve their case in the appeal proceedings. The appellant submits that it is a well settled law that if any reasoning in the appellate order is beyond the allegations of SCN, it amounts to violation of the principles of natural justice as the assessee was never given an opportunity to rebut the same at the very first instance of replying to the SCN, which is not permissible under law. In this regard, the Appellant relies on the following case laws:
a. Commissioner of Central Excise vs. Gas Authority of India Ltd. [2008 (232) ELT 7 (SC)]
b. Commissioner of Customs, Mumbai Vs. Toyo Engineering India Ltd. [2006 (201) ELT 513 (SC)]
c. Commissioner of Central Excise, Nagpur vs. Ballarpur Industries Ltd. [2007 (215) ELT 489 (SC)]
2.14 Further, in any case, there is no applicability of the referred Rule 8 of CCR in the present case for absence of any merger, amalgamation etc. or for that manner any two separate legal entities. Thus, reference to Rule 8 of the CCR is completely unfounded and not applicable.
2.15 It is therefore submitted that for the impugned order having travelled beyond the allegations in the SCN and for being an attempt to erroneously apply the provisions of law, is liable to be set aside, on this ground alone.
2.16 In absence of any fraud, suppression, etc. on part of the Appellant, extended period of limitation cannot be invoked. That the underlying SCN dated 19.11.2007 was issued beyond the limitation period, inspite of the fact that:
- The department was in the knowledge of availment of the disputed credit as well as other credit of Rs.5,00,000/- vide the letters of the Appellant dated 25.08.2004 and 02.11.2004 (Ref. Page 109-110 of the Appeal paper-book). This fact has been acknowledged in the present OIO as well, however, has not been rebutted in the department’s appeal as well as the impugned order. Thus, the same has attained finality.
- Cenvat credit was clearly shown in the returns filed by the Noticee and its relevant records, so there is no question of any suppression of facts.
2.17 Thus, the department was well informed of the facts in the present case as early as in August 2004, however, still it chose to issue the SCN only on 19.11.2007.
2.18 It is settled law that no suppression can be alleged when facts are known to both parties. In the case of Anand Nishikawa Co.Ltd. v. CCE, Meerut [2005 (188) E.L.T. 149 (SC)] and also Continental Foundation Joint Venture v. CCE [2007 (216) E.L.T. 177 (SC)], it has been observed that when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression.
2.19 Further, on identical issue where the amount involved was Rs.5,00,000/-, the SCN had already been issued, which has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the department. The subsequent notice cannot be issued beyond limitation as held by the Hon’ble Supreme Court in the case of Nizam Sugar Factory v. Collector of Central Excise, AP [2006 (197) E.L.T. 465 (SC)]/
2.20 Further, it is a settled position of law that once it is clear that a particular case is beyond limitation, there is no scope for referring to the merits of the case. The Appellant in support of this proposition relies upon the judgment in the case of Commr. of Cus., C.Excise & S.Tax v. Monsanto Manufacturer Pvt.Ltd. [2004 (35) S.T.R. 177 (All.)]/ 2.21 Also, the issue involves interpretation of law. There are a number of judgements of the Tribunals and High Courts touching upon the issue raised by the department. Thus, issue being of interpretation of law, extended period of limitation cannot be invoked. Appellant being a PSU under the Ministry of Steel, GoI, the allegation of committing any fraud, suppression or misrepresentation, etc. cannot be sustained.
2.22 The Appellant being a PSU, no mala fide intent can be attributed to it and there exists a presumption of their bona fide act, thus, neither the extended period of limitation is invokable nor the penalty is imposable against the Appellant. Further, since no demand is sustainable, there is no question of imposition of penalty or recovery of interest. In the following judgements, it has been held that PSU cannot be charged with intent to evade duty:
a. CCE Channai-I v. Chennai Petroleum Corporation Ltd. [2007 (211) E.L.T. 193 (SC)]
b. Indian Oil Corporation Ltd. v. Commissioner of C.Ex., Delhi [2017 (4) G.S.T.L. 190 (Tri.-Del.)]
3. The Ld.Authorized Representative for the Respondent Department justified the impugned order and prayed that the Appeal being devoid of any merits may be dismissed.
4. Heard both sides and perused the Appeal records.
5. In the Central Excise Act, 1944, Section 2(e) defines factory as under:-
(e) “factory” means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on;
6. Rule 4 of the Cenvat Credit Rules, 2002 lays down the conditions for allowing Cenvat credit.
RULE 4. Conditions for allowing CENVAT credit. — (1) The CENVAT credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer:
Provided that in respect of final products falling under Chapter 61 or 62 of the First Schedule to the Tariff Act, the CENVAT credit of duty paid on inputs may be taken immediately on receipt of such inputs in the registered premises of the person who gets such final products manufactured on his account on job work subject to the condition that such inputs are used in the manufacture of such final products by the job worker.
(2) (a) The CENVAT credit in respect of capital goods received in a factory at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year :
Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year :
(b) The balance of CENVAT credit may be taken in any financial year subsequent to the financial year in which the capital goods were received in the factory of the manufacturer, if the capital goods, other than components, spares and accessories, refractories and refractory materials, moulds and dies and goods falling under heading 68.05 and sub-heading No.6801.10 of the First Schedule to the Tariff Act, are in the possession and use of the manufacturer of final products in such subsequent years.
7. Rule 8 of the CENVAT Credit Rules, 2002 provides for transfer of Cenvat Credit, which is as follows:-
RULE 8. Transfer of CENVAT credit. – (1) if a manufacturer of the final products shifts his factory to another site or the factory is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the factory to a joint venture with the specific provision for transfer of liabilities of such factory, then the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized in his accounts to such transferred, sold, merged, leased or amalgamated factory.
(2) The transfer of the CENVAT credit under sub-rule (1) shall be allowed only if the stock of inputs as such or in process, or the capital goods is also transferred alongwith the factory to the new site or ownership and the inputs, or capital goods, on which credit has been availed of are duly accounted for to the satisfaction of the [Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be].
8. Factory in terms of Section 2(e) of the Central Excise Act includes any number of inputs within the same premises irrespective of the number of Central Excise registrations. Thus no distinction between the Rourkela Steel Plant (RSP) and Rourkela Fertilizer Plant (RFP) can be inferred as both are one and the same factory. I find that the Tribunal in the case of Dhampur Sugar Mills Vs. CCE, Meerut (supra) held that the number of different plants manufacturing different excisable goods in the same premises would constitute one factory. Their separate registration under Rule 173G of Central Excise Rules, 1944 would not mean that they are different factories. Different units to be regarded as one factory if all excisable goods are manufactured in the same premises. Relevant paragraph is reproduced:-
“4. We have considered the submissions of both the sides. As per Section 2(e) of the Central Excise Act “factory” means any premises, including the precincts thereto, wherein or in any part of which excisable goods other than the salt are manufactured, or wherein or in part of which any manufacturing process connected with the production of these goods is being carried on or is ordinarily carried on. It has not been disputed by the Revenue that all the three plants manufacturing different excisable goods are situated in the same premises. The Revenue is treating them as different factory only on account of appellants taking three registrations under Rule 174 of the Central Excise Rules. The number of registrations, in our view, will not decide the number of factories unless and until they are situated in different premises. It is very clear from the definition of the term “factories” that all the three units will be regarded as one factory as all the excisable goods are manufactured in the same premises. Similar views were expressed by the Appellate Tribunal in the case of J.K. Synthetics Ltd. (supra) wherein it was held that as two units fall within the same premises within one boundary wall encircling the entire area of the land allotted to the appellants in the industrial area the appellant is entitled to obtain one consolidated licence for the manufacture of its goods within its factory complex as the object behind the grant of consolidated licence is that any person manufacturing different excisable goods within one factory area is entitled to obtain one licence instead of different licences for different commodities. The decisions relied upon by the learned SDR are not applicable as the facts are different. In Devidayal Electonics case the Bombay High Court was interpreting the term “Industrial Unit”. In fact in the said case it was observed by the Bombay High Court that as the Notification uses the word “factory and it uses the word industrial unit, it must, therefore, be assumed that the words were intended to bear different meanings.” Put differently the words “Industrial Unit” must mean something other than “factory”. Similar was the situation in the case of Dhampur Sugar Mills, 1998 (26) RLT (669). Accordingly we hold that the benefit of Notification No. 67/95 is available to the Appellants as the excisable goods have been used in the factory of manufacture only. Both the appeals are thus allowed.”
9. The Appeal filed against the aforesaid decision of the Tribunal before the Hon’ble Supreme Court was dismissed, wherein it was observed that :
“We do not find any merit in this civil appeal filed by the Department. Apart from the reasons given in the impugned judgment by the Tribunal, we find that in the present case, the show cause notice given by the Department itself proceeds on the basis that the factory of the assessee consisted of different units (plants); that it was one single factory consisting of separate units; that sugar and molasses came under one of the units, paper and paper board came in the other unit and that chemicals came in the third unit. In the circumstances, the assessee-respondent was entitled to the benefit of exemption notification. It is not even alleged in the show cause notice that there are three factories as submitted on behalf of the Department.
In the circumstances, we find no merit in this civil appeal. The same is, accordingly, dismissed with no order as to costs.”
10. Further, I find that it has been held by this Tribunal and various High Courts that inter-unit transfer of Cenvat Credit is allowed. I find support from the following decisions of the Tribunal:-
a. M. Sugar Mills Ltd. v. CCE, Allahabad (supra)
b. CCE, Madurai v. Rajshree Sugars & Chemicals Ltd. (supra)
c. Inox India Ld. V. CCE, Vadodara (supra)
11. Further, I find that the audit para No.2 of IR No.30/2004-05 on the basis of which the present issue was raised has been dropped by AG (Odisha) as held in the present Order-in-Original (para 5.9 at page 63). Intimation by the Department to the Appellant regarding dropping of the said para forms part of the Appeal Paper book. The Show Cause Notice dated 19.11.2007 was issued to the Appellant on the basis of said audit para. When the audit Memo itself has been dropped, the present proceeding which has been originated from the said audit Memo has become non est. I find that the Hon’ble Supreme Court in the case of Anand Nishikawa Co. Ltd. v. Commissioner of Central Excise, Meerut (supra) has held that when facts were known to both
the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. The relevant paragraph is reproduced:-
“27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that “suppression of facts” can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. We are, therefore, of the firm opinion that where facts were known to both the parties, as in the instant case, it was not open to the CEGAT to come to a conclusion that the appellant was guilty of “suppression of facts”. In Densons Pultretaknik v. Collector of Central Excise [2003 (11) SCC 390], this Court held that mere classification under a different sub-heading by the manufacturer cannot be said to be willful mis-statement or “suppression of facts”. This view was also reiterated by this Court in Collector of Central Excise, Baroda v. LMP Precision Engg. Co. Ltd. [2004 (9) SCC 703].”
12. I further observe that on identical issue the Show Cause Notice has been adjudicated in favour of the Appellant and has attained finality in the absence of any challenge by the Department. The subsequent notice cannot be issued beyond limitation as held by the Hon’ble Supreme Court in the case of Nizam Sugar Factory v. Colllector of Central Excise, A.P. [2006 (197) E.L.T. 465 (S.C.)].
13. In view of the above discussion, the impugned orders cannot be sustained and are accordingly set aside. The Appeal filed by the Appellant is allowed with consequential relief, as per law.
(Order pronounced in the open court on 01 November 2022.)
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