Continental Foundation Joint Venture Sholding Vs Commissioner of Central Excise (Supreme Court of India)
The Supreme Court disposed of the appeals by a common judgment, as they involved an identical question of law relating to the financial year 1997–98. The controversy arose from the manufacture of concrete by construction companies engaged by M/s Nathpa Jhakri Power Corporation (NJPC) for the Nathpa Jhakri Power Project. The Commissioner of Central Excise, Chandigarh issued show cause notices alleging that the construction companies were manufacturing Ready Mix Concrete (RMC), classifiable under Chapter Heading 3824.20 of the Central Excise Tariff Act, 1985, on which central excise duty was payable, but had described it as mix concrete to evade duty. The Commissioner confirmed the duty demand and imposed penalty under Rule 209A of the Central Excise Rules, 1944, rejecting the appellants’ contention that the extended period of limitation under Section 11A of the Central Excise Act, 1944 was unavailable.
Before the Tribunal, the appellants contended that they entertained a bona fide belief, based on the Board Circular dated 6.1.1998 and the applicable standards, that they were manufacturing mix concrete and not RMC. They also argued that there was no intention to evade payment of duty because the contract with NJPC provided for reimbursement of additional costs arising from changes in law. The Tribunal rejected these contentions, holding that the plea of bona fide belief was unsupported by evidence and that the appellants had neither sought clarification from the excise authorities nor obtained legal opinion regarding the classification or exemption. The Tribunal also rejected the plea relating to absence of intention to evade duty, while permitting the appellants an opportunity to establish entitlement to MODVAT credit before the original authority.
