Decided on July 18,2013

Purshotam Industries Ltd. Appellant


Barin Ghosh, C.J. - (1.) A declaration under rule 173B of the Central Excise Rules was filed by the appellant with effect from 5th April, 1994 in respect of goods having two descriptions. The first was pipes and tubes with market buyers brand name and the second was pipes and tubes with own brand/unbranded. There is no dispute that so far as own branded and unbranded pipes and tubes are concerned, exemption notice dated 28th February, 1993 was applicable to the appellant, provided its clearance did not exceed Rs. 3 crores in total. Appellant maintained RG -I register. Appellant submitted RT -12 returns on lime. On 14th November, 1994, Superintendent of Central Excise wrote to the appellant asking why brand names of other persons are not being mentioned in the invoices. To that, a reply was given on 30th November, 1994, where it was stated that it is the market practice of not mentioning brand name on the invoices. Subsequent thereto, a raid was conducted. Soon thereafter, power was exercised under section 11A of the Central Excise Act, 1944 (hereinafter referred to as "the Act"). Appellant went before the first Appellate Authority and succeeded, inasmuch as, the first Appellate Authority felt that everything was within the knowledge of the revenue and, accordingly, question of extending time beyond one year by invoking section 11A of the Act did not arise. Revenue went before the Tribunal. Despite several notices, appellant did not appear before the Tribunal. The Tribunal held that the original declaration itself was a false declaration and that came to light later and, accordingly, there was no impediment in exercising the power under section 11A of the Act. The Tribunal held that imposition of penalty under section 11AC was incorrect, inasmuch as, section 11AC was inserted in the Act subsequent to the period under assessment. Being aggrieved thereby, the present appeal has been preferred, where the only contention of the appellant is that it was obligatory on the part of the revenue to investigate every aspect of the matter, which was creating a doubt in their mind. It was contended that when the reply was given on 30th November, 1994 to the letter dated 14th November, 1994, it was obligatory on the part of the revenue to investigate, whether the market practice, upon which reliance was placed, was, in fact, a market practice or not. It was contended that RT -12 returns did indicate in detail what quantum of branded materials were supplied and who received those supplies. It was contended that the RT -12 returns also depicted how much of own brand/unbranded materials were cleared and to whom those were sold. It was contended that if there was any doubt, as regards the particulars furnished in RT -12 returns, it was obligatory on the part of the revenue to make appropriate investigation. That having not been done and no new fact having come to light, question of applying section 11A of the Act did not arise. The learned counsel relied upon an order of the Hon'ble Supreme Court, rendered in the case of Pahwa Chemicals (P.) Ltd. v. C.C.E. : 2005 (189) E.L.T. 257. In this case, the Court recorded that the classification list had been approved after carrying out verification. It was found that one consignment in transit was seized when the goods were found containing labels of foreign brand. It was also found that RT -12 returns were being regularly filed. With that, there was a finding to the effect "the invoices containing description of the goods have all been regularly approved by the Department". In that background, all facts were within the knowledge of the Department and, accordingly, there was no justification for invoking the extended period of limitation. In the instant case, the Tribunal has opined that the very declaration filed with effect from 5th April, 1994 was a false declaration. The basic reason thereof is the RG -1 register, followed by RT -12 returns, the letter of Superintendent of Central Excise dated 14th November, 1994 and the reply thereto dated 30th November, 1994. In other words, the RG -1 register which reflects the entries in RT -12 returns, does not have basic documents to support the entries made therein; as unless special knowledge of the appellant is inserted, it would not be possible to ascertain which customer, in fact, received the branded product and which customer received own branded/unbranded product. We find just reason to hold so and, accordingly, refuse to interfere.
(2.) THE appeal fails and the same is dismissed.;

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