The Chandigarh bench of the Customs Excise & Service Tax Appellate Tribunal(CESTAT) has held that mere failure to declare does not amount to willful suppression and set aside the demand of excise duty as it was without suppression of fact.
M/s M R Beltings, the appellant challenged the impugned order passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant and upheld the Order-in-Original.
The appellant is registered as SSI unit and engaged in the manufacture of conveyor and transmission belting, classified under T.I. 40103999/40103992 of the 1st schedule to the Central Excise Tariff Act, 1985. The appellant manufactured the goods in terms of the orders received from various public sector customers including M.P. Power Generating Co. Ltd. for supply of 8000 meters conveyor Belts at Barkakana during 2007-08 as per the terms of purchase orders.
Audit was conducted on 21 & 22.01.2009 and it was found by the audit party that the appellant has charged the packaging and forwarding charges separately on invoices @ Rs. 22/- and Rs. 67.05/- per meter in case of F.O.R Supply of 8000 and 1400 meters conveyor belt to M/s Satpura Thermal Power Station during 2007-08 but the same had not been included in the assessable value for payment of central excise duty.
The appellant contested the audit objection by writing letters stating that they have not short paid duty and has charged the duty as per the terms in the purchase orders. Further, on the insistence of range officer they have debited total amount of Rs. 44,473/- under protest vide letter dated 21.10.2010 along with Form-R for refund thereof.
A show cause notice dated 09.11.2010 was received on 16.11.2010 from AC, C.E. Kundli, demanding duty of Rs. 1,88,597/- under Section 11A(2) of the Central Excise Act,1944 by invoking the extended period of limitation. The appellant filed detailed reply to the show cause notice.
Original authority confirming the demand of Rs. 1,88,597/- and appropriated the amount of Rs.
44,473/- deposited under protest and also demanded interest under Section 11AB and imposing equal penalty of Rs. 1,88,597/- under Section 11AC. The Commissioner (Appeals) rejected the appeal.
The appellant submitted that appellant is an SSI unit and has been supplying the impugned goods to only public sector units as per the purchase order furnished by the public sector units. He further submitted that as per the audit, the appellant had short paid Rs. 44,473/- which was paid under protest at the insistence of range officer.
On the other hand, the department representative reiterated the findings of the impugned order and submitted that the appellant has under valued the impugned goods and has not included transportation and packaging and forwarding charges in the assessable value. He further submitted that the appellant has not forwarded the purchase orders to the department and therefore concealed the material facts from the department and the department has rightly invoked the extended period.
A two member bench comprising S.S. Garg , Member (J) and P. Anjani Kumar, Member (T) found that the show cause notice was issued on 09.11.2010 which was received by the appellant on 16.11.2010 for the period pertaining to 2007-08 by invoking the extended period of limitation without the ingredients present as required under Section 11A(4) of the Central Excise Act,1944.
It was evident that the appellant has regularly been filing the ER-1 returns which was scrutinized by the department and the department never raised the objection regarding the irregularity committed by the appellant. Further, department has not been able to bring on record anything to show that the appellant has suppressed the material fact in order to evade the payment of duty.
It was 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.
The CESTAT held that the entire demand is barred by limitation and set aside the impugned order by allowing the appeal of the appellant.
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