1. Differential duty demand under Central Excise Act, 1944 — assessable value determination — invocation of extended period of limitation for alleged suppression of facts. (Para 2 , 3 , 4 , 5 )
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2023 Supreme(SC) 600
SUPREME COURT OF INDIA
Krishna Murari, Bela M. Trivedi, JJ.
The Commissioner, Central Excise and Customs and Another – Appellants
Versus
M/s Reliance Industries Ltd. – Respondent
Civil Appeal No. 6033 of 2009
With
Commissioner of Central Excise and Service Tax – Appellant
Versus
M/s Reliance Industries Ltd. – Respondent
Civil Appeal No. 5714 of 2011
Decided On : 04-07-2023
Advocates appeared:
For the Appellant(s) : Mr. Mukesh Kumar Maroria, AOR
For the Respondent(s): Mr. Shyam Divan, Sr. Adv. Mr. K. R. Sasiprabhu, AOR Mr. Jaydeep Patel, Adv. Mr. Vipin Jain, Adv. Ms. Shilpa Balani, Adv. Mr. Udayaditya Banerjee, Adv. Mr. Vishnu Sharma A. S., Adv. Mr. Prakhar Agarwal, Adv.
For the Appellant(s) : Mr. Mukesh Kumar Maroria, AOR
For the Respondent(s): Mr. Shyam Divan, Sr. Adv. Mr. K. R. Sasiprabhu, AOR Mr. Jaydeep Patel, Adv. Mr. Vipin Jain, Adv. Ms. Shilpa Balani, Adv. Mr. Udayaditya Banerjee, Adv. Mr. Vishnu Sharma A. S., Adv. Mr. Prakhar Agarwal, Adv.
Important Points
IMPORTANT POINT
An assessee can be accused for suppressing only such facts which it was otherwise required to be disclosed under the law.
An assessee can be accused for suppressing only such facts which it was otherwise required to be disclosed under the law.
Subject
Limitation - Extended Period of Limitation
Act Referred
Headnote
Central Excise Act, 1944 – Proviso to Section 11A (1) – Demand for differential excise duty – Limitation – In any scheme of self-assessment it becomes responsibility of assessee to determine his liability of duty correctly – This determination is required to be made on the basis of his own judgment and in a bonafide manner – Issue of valuation involved in this particular matter is indeed one were two plausible views could co-exist – In such cases of cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke extended period of limitation by considering assessee's view to be lacking bonafides – Mere fact that belief was ultimately found to be wrong by judgment of this Court does not render such belief of assessee a malafide belief particularly when such a belief was emanating from view taken by a Division Bench of Tribunal – Appeals filed by Revenue dismissed on the ground that demands are time barred. (Paras 23 and 26)
Result : Appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Revenue alleged willful suppression through misleading clearance clubbing — Assessee contended bonafide belief based on prevailing Tribunal precedent and lack of statutory disclosure requirements. (Para 16 , 17 , 18 , 19 )
3. Absence of specific disclosure requirements in statutory returns and reliance on prevailing judicial views negate findings of willful suppression or intent to evade duty. (Para 14 , 15 , 20 , 21 , 22 , 24 , 25 )
4. Extended limitation requires deliberate non-disclosure with intent to evade; bonafide belief based on a prevailing judicial interpretation precludes the invocation of the extended period. (Para 14 , 15 , 23 )
5. Appeals dismissed — demands held to be time-barred. (Para 26 )
6. What constitutes suppression of facts for invoking the extended period of limitation under Section 11A(1) of the Central Excise Act?
Suppression of facts cannot be a mere omission; it must be a deliberate act of non-disclosure aimed at evading duty, requiring an element of intentional action. (Para 14 , 15 )
7. Does reliance on a prevailing Tribunal decision justify a bonafide belief to avoid the extended period of limitation?
Yes. If an assessee determines liability based on a plausible interpretation or a view taken by a division bench of the Tribunal, such belief is considered bonafide, even if later reversed by a higher court. (Para 23 , 24 )
8. Can an assessee be accused of suppression for failing to disclose information not specifically required by statutory forms?
No. An accusation of non-disclosure is only sustainable if there is a prior legal requirement to disclose that specific information. Failure to provide details not required by law does not constitute suppression. (Para 20 , 21 , 25 )
9. Can the Revenue rely on a judicial precedent for the merits of a case while denying its relevance for determining the assessee's bonafide belief?
No. The Revenue cannot take contradictory positions by relying on a judgment to establish the correct valuation on merits while arguing the same judgment provided no basis for a bonafide belief. (Para 22 )
JUDGMENT :
KRISHNA MURARI, J.
1. The present appeals are directed against the impugned order dated 17.03.2009 passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Ahmedabad, in C.O No. M/419-21/WZB/AHD/08 whereby, the learned Tribunal allowed the appeal therein. Since the central issues involved in Civil Appeal Nos. 6033/2009 and 5714/2011 are the same, they are being adjudicated upon by this common order.
FACTS
2. For the sake of convenience, we are first taking up the facts of Civil Appeal No. 6033/2009. The order impugned in this appeal is that of Customs, Excise & Service Tax Appellate Tribunal (CESTAT or Tribunal) dated 17.3.2009 which had, by a majority of 2:1, allowed an appeal filed by the Respondent-Assessee against an order of the Commissioner of Central Excise, Rajkot by which a demand for differential duty was confirmed against the assessee by invoking the extended period of limitation available under the proviso to Section 11A (1) of the Central Excise Act, 1944.
3. The demand for differential duty of excise was raised on the allegation that the assessee had incorrectly determined the assessable value of its finished goods by not including therein the monetary value of the duty benefits that it had obtained from its customers as a result of the transfer of the advance licenses.
4. This demand for differential duty was raised for clearances made during the period of September 2000 to March 2004. The Show Cause Notice which was issued on 28.9.2005 relied upon a judgment of this Court on 9.8.2005 in the case of IFGL Refractories Ltd in support of the plea that monetary value of duty benefits obtained through transfer of advance licenses held by the customers constituted additional consideration flowing to the assessee from such customers.
5. Since the demand for differential duty was being raised on 28.9.2005, which was beyond the normal limitation period of one year prescribed in Section 11A(1) of the Act, the show cause notice also alleged that the noticee had deliberately suppressed relevant facts and had made willful misstatements withholding material information and documents from the departmental officers.
6. The allegations in the notice were confirmed by the Commissioner in his order dated 30.10.2006 wherein the assessee's defense on merits as well as on limitation were rejected.
7. The Commissioners' order was challenged by the assessee before CESTAT, which allowed that appeal by a majority order by accepting the assessee's plea that the dispute was revenue neutral having no Revenue implications since the customers of the assessee were eligible to avail cenvat credit of duties actually paid or any differential duty payable on the goods cleared by the assessee. We are not dwelling deeper on the other findings of the Tribunal on the merits of the matter since these appeals are being decided only on the issue of time bar.
8. On the issue of time bar, the CESTAT has held that during the relevant period the Appellant could have entertained a bonafide belief that it had correctly discharged its duty liability in view of the view taken by the Tribunal in the case of IFGL Refractories Ltd.( [2001 (134) ELT 230], which came to be reversed by this Court only on 9.8.2005. It is relevant to note here that insofar as the decision on time bar is concerned the view of the two learned members who constituted the division bench of CESTAT was unanimous.
9. The difference of opinion, therefore, arose only on the merits of the matter which also came to be decided in favour of the assessee by a 2-1 majority. Since arguments before us are confined to the issue of limitation, it is necessary to take note of the findings of the CESTAT on the same. The finding of the Member (Technical) on the issue of limitation was as under:
“As regards the submission on time bar, it is noticed that the Commissioner has relied on the Hon'ble Supreme Court's judgement dt. 9.8.2005 in the case of M/s. IFGL Refractories Ltd. cited supra. Th
