important point
Mere omission to give correct information is not ‘suppression of facts’ unless it was deliberate.

Headnote:(a)Central Excise Act, 1944 – Section 11A – Section 11A postulates suppression and, therefore, involves in essence mens rea – The expression ‘Suppression’ has to be construed strictly – Mere omission to give correct information is not ‘suppression of facts’ unless it was deliberate to stop the payment of duty. (Paras 9 and 10)
       (b)Central Excise Act, 1944 – Section 11A – The burden to prove suppression of fact is cast upon the party invoking the extended period of limitation under Section 11-A – An incorrect statement cannot be equated with a willful misstatement – The latter implies making of an incorrect statement with the knowledge that the statement was not correct. (Para 10)
       (c)Central Excise Act, 1944 – Section 11A – The factual scenario showed that there was scope for entertaining doubt and taking a particular stand, which ruled out application of Section 11A of the Act. (Para 11)
       2006 (198) E.L.T. 503 (Tri.-LB) – Referred.
       (d)Central Excise Act, 1944 – Section 11A – There cannot be suppression or misstatement of fact, which is not willful and yet constitute a permissible ground for invoking the proviso to Section 11A – Adjudicating authorities were not justified in raising the demand and CEGAT was not justified in dismissing the appeals. (Paras 12 and 13)
       Facts of the case :
       The appellant M/s Nathpa Jhakri Power Corporation (‘NJPC’) is a Joint venture between the Government of India and Govt. of Himachal Pradesh, set up for the purpose of construction of a power-project between the towns of Nathpa-Jhakri in Himachal Pradesh known as Nathpa Jhakri Power Corporation funded by the World Bank. The civil work relating to the project was allotted to three construction companies viz. M/s Continental Foundation Joint Venture (in short ‘CFJV’), M/s Nathpa Jhakri Joint Venture (‘NJJV’) and M/s Jai Prakash Hyundai Consortium, (in short ‘JPHC’). The agreement was entered into by M/s NJPC and the construction companies to provide inter alia ‘mix concrete’ for execution of various items of work under the contract.
       The Commissioner of Central Excise, Chandigarh issued a show cause notice dated 20.1.1999 to all the above parties alleging that the construction companies employed by M/s NJPC were manufacturing Ready Mix Concrete (in short ‘RMC’) on which no central excise duty is being paid. Since the said RMC falls under Chapter Heading No.3824.20 of the Schedule to the Central Excise Tariff Act, 1985 (in short ‘Tariff Act’) and is subject to Central Excise duty under Central Excise Act, 1944 (in short the ‘Act’), duty is payable. All the three parties are adopting the same method of manufacture of RMC for which the rock is blasted from the designated quarry of M/s NJPC. It is transported to the crusher and crushed to the specified sizes and specific quantity at the project site. Some aggregate, cement and sand are also produced from the crushing plant set up at the site. Some natura1 sand is also used. The aggregate and sand are transported and stored in bins adjacent to the automatic batching plant. The cement purchased from the market is stored in the cement silons at the site. The batching plant is an automatic plant which regulates and delivers the specified sizes and quantities of aggregate, sand and cement into the mixing drums through the built- in-conveyor. The admixture for water reduction or air entraining is incorporated in the concrete as per the approved mix design given by the NJPC. The whole process is fully automatic and is electronically controlled. The concrete of approved mix design and the specified quantity is manufactured in the batching plant strictly in accordance with IS: 456-1978 as stipulated in the contract with M/s NJPC. The concrete so produced is transported by transit mixers up to the location of placement and is placed at the specified location by concrete pumps or placers before the setting time of concrete, which varies depending upon the type of cement used. Noticee companies are manufacturing RMC but with some motive, they are naming it as mixed concrete to evade the central excise duty. There is a difference between the process and method of manufacture of RMC provided in the Bureau of Indian Standards (in short ‘BIS’) literature under IS: 4926/1976 and the Board’s letter No.368/l/98-CX dated 6.1.1998. In this Circular of the Board, the process of manufacture of RMC is spelt out and it is clarified that RMC is a dutiable product. The matter was referred to the BIS who vide their letter dated 23.10.1998 reported that the query raised by the department vide their letter dated 9.7.1998 was considered by the Concrete Sub Committee and its views are as follows:
       Considering the reply of the notices, the Commissioner of Central Excise, Chandigarh-I confirmed the amounts of duty and also imposed penalty in terms of Rule 209A of the Central Excise Rules, 1944 (in short the ‘Rules’). One of the stands taken by the appellant was that the extended period of limitation under Section 11A of the Act was not available. There were doubts raised and, in fact, at different points of time, circulars had been issued. This plea was turned down by the adjudicating authority.
       In appeal, apart from the other challenges the plea relating to non-applicability of the extended period of limitation was also urged. The Tribunal did not accept the contention. Similar view was expressed by the CEGAT in other appeals which is the subject-matter in the other appeals.
       Findings of the Court :
       Adjudicating authorities were not justified in raising the demand and CEGAT was not justified in dismissing the appeals.
       Result : Appeal allowed.

JUDGMENT

Dr. ARIJIT PASAYAT, J.—

1.These appeals involve identical question of law and are, therefore, disposed of by this common judgment. The controversy relates to the financial year 1997-98. Post 1997-98 the tariff entry provides that the rate is nil. The basic facts are noted in the appeal filed by Continental Foundation Joint Venture-the appellant in Civil Appeal No.3139 of 2002.

2.The appellant M/s Nathpa Jhakri Power Corporation (in short ‘NJPC’) is a Joint venture between the Government of India and Govt. of Himachal Pradesh, set up for the purpose of construction of a power-project between the towns of Nathpa-Jhakri in Himachal Pradesh known as Nathpa Jhakri Power Corporation funded by the World Bank. The civil work relating to the project was allotted to three construction companies viz. M/s Continental Foundation Joint Venture (in short ‘CFJV’), M/s Nathpa Jhakri Joint Venture (in short ‘NJJV’) and M/s Jai Prakash Hyundai Consortium, (in short ‘JPHC’). The agreement was entered into by M/s NJPC and the construction companies to provide inter alia ‘mix concrete’ for execution of various items of work under the contract.

3.The Commissioner of Central Excise, Chandigarh issued a show cause notice dated 20.1.1999 to all the above parties alleging that the construction companies employed by M/s NJPC were manufacturing Ready Mix Concrete (in short ‘RMC’) on which no central excise duty is being paid. Since the said RMC falls under Chapter Heading No.3824.20 of the Schedule to the Central Excise Tariff Act, 1985 (in short ‘Tariff Act’) and is subject to Central Excise duty under Central Excise Act, 1944 (in short the ‘Act’), duty is payable. All the three parties are adopting the same method of manufacture of RMC for which the rock is blasted from the designated quarry of M/s NJPC. It is transported to the crusher and crushed to the specified sizes and specific quantity at the project site. Some aggregate, cement and sand are also produced from the crushing plant set up at the site. Some natura1 sand is also used. The aggregate and sand are transported and stored in bins adjacent to the automatic batching plant. The cement purchased from the market is stored in the cement silons at the site. The batching plant is an automatic plant which regulates and delivers the specified sizes and quantities of aggregate, sand and cement into the mixing drums through the built- in-conveyor. The admixture for water reduction or air entraining is incorporated in the concrete as per the approved mix design given by the NJPC. The whole process is fully automatic and is electronically controlled. The concrete of approved mix design and the specified quantity is manufactured in the batching plant strictly in accordance with IS: 456-1978 as stipulated in the contract with M/s NJPC. The concrete so produced is transported by transit mixers upto the location of placement and is placed at the specified location by concrete pumps or placers before the setting time of concrete, which varies depending upon the type of cement used. Noticee companies are manufacturing RMC but with some motive, they are naming it as mixed concrete to evade the central excise duty. There is a difference between the process and method of manufacture of RMC provided in the Bureau of Indian Standards (in short ‘BIS’) literature under IS: 4926/1976 and the Board’s letter No.368/l/98-CX dated 6.1.1998. In this Circular of the Board, the process of manufacture of RMC is spelt out and it is clarified that RMC is a dutiable product. The matter was referred to the BIS who vide their letter dated 23.10.1998 reported that the query raised by the department vide their letter dated 9.7.1998 was considered by the Concrete Sub Committee and its views are as follows :

“It is agreed that in so far as the process of manufacturing the concrete is involved, the process described in the letter of Central Excise is similar to the process given in IS;4926 specification for “Ready Mix Concrete’”.

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2007 Supreme(SC) 1126

important pointMere omission to give correct information is not ‘suppression of facts’ unless it was deliberate.

Cases Referred (1)

important point
Mere omission to give correct information is not ‘suppression of facts’ unless it was deliberate.