At, High Court of Judicature at Allahabad
By, THE HONOURABLE DR. JUSTICE SATISH CHANDRA & THE HONOURABLE MR. JUSTICE TARUN AGARWALA
For the Appellant: R.C. Shukla, Senior S.C. For the Respondents: Bharat Ji Agrawal, Sr. Counsel assisted by Piyush Agrawal, Sanyukta Singh, Advocates.
1. We have heard Sri R.C. Shukla, the learned counsel for the appellant and Sri Bharat Ji Agrawal, the learned Senior Counsel assisted by Sri Piyush Agrawal and Ms. Sanyukta Singh for the respondents. Having heard the learned counsel for the parties, we are of the opinion that the delay in filing the appeal is liable to be condoned. We, accordingly, condone the delay.
2. Having heard the learned counsel for the appellant on merit, we find that a show cause notice was issued under Section 11A of the Central Excise Act, 1944 alleging that the assessee for the period 2006-07, 2007-08 and 2008-09 had wrongly taken/utilized Cenvat Credit amounting to Rs. 13,35,804/-. We find that an audit was conducted in the month of March, 2010 and a show cause notice was issued in January, 2012, i.e. after a gap of 22 months. The issue with regard to misstatement or suppression of fact came to the knowledge of the department at the time when the audit was conducted in the month of March, 2010. Under Section 11A of the Act, a notice can be given within one year from the relevant date. In the instant case, the notice was given after 22 months i.e. much beyond the period of limitation.
3. The learned counsel for the appellant contended that the proviso to Section 11A of the Act would be applicable where the limitation is applicable for five years.
4. We are of the opinion that the proviso to Section 11A is not applicable because the show cause notice does not indicate that there was deliberate act of suppression of fact, fraud, mis-statement, etc. committed by the assessee. Mere act of omission by the assessee without there being any intention to evade payment of tax cannot be a ground to invoke the proviso to Section 11A of the Act, especially when the evasion came to the notice of the department when the audit was conducted in the month of March, 2010.
5. In the light of the aforesaid, mere suppression of facts without there being a deliberate act of fraud, etc. with the intention to evade payment of duty cannot entitle the department to invoke the proviso to Section 11A of the Act.
6. In Pahwa Chemicals Pvt. Ltd. Vs. The Commissioner of Central Excise, New Delhi, the Supreme Court held that:
"It is settled law that mere failure to declare does not amount to willful mis-declaration or willful suppression. There must be some positive act on the part of the party to establish either willful mis-declaration or willful suppression. When all facts are before the Department and a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no willful misdeclaration or willful suppression. If the Department felt that the party was not entitled to the benefit of the Notification, it was for the Department to immediately take up the contention that the benefit of the Notification was lost."
7. Similarly in Commissioner of Central Excise, Mumbai-IV Vs. Damnet Chemicals Pvt. Ltd. Etc., the Supreme Court held:
"In the circumstances, we find it difficult to hold that there has been conscious or deliberate withholding of information by the assessee. There has been no willful mis-statement much less any deliberate and willful suppression of facts. It is settled law that in order to invoke the proviso to Section 11A(1) a mere mis-statement could not be enough. The requirement in law is that such mis-statement or suppression of facts must be willful. We do not propose to burden this judgment with various authoritative pronouncements except to refer the judgment of this Court in Anand Nishikawa Co. Ltd. Vs. Commissioner of Central Excise, Meerut, wherein this Court held:
"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 t
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o find willful suppression." (emphasis supplied) 8. The reliance on the decision placed by the learned counsel for the appellant in the matter of The Commissioner of Central Excise, Visakhapatnam Vs. Mehta and Co., is distinguishable and is not applicable to the present facts and circumstances of the case. For the reasons stated aforesaid, we do not find any merit in the appeal and is dismissed at the admission stage itself.