Case title:
- THE COMMISSIONER, CENTRAL EXCISE AND CUSTOMS AND ANOTHER VERSUS M/S RELIANCE INDUSTRIES LTD.
Date of Order: 4th July 2023
Bench:
- (KRISHNA MURARI),J
- (BELA M. TRIVEDI),J
Parties:
- THE COMMISSIONER, CENTRAL EXCISE AND CUSTOMS AND ANOTHER APPELLANT(S)
- M/S RELIANCE INDUSTRIES LTD. RESPONDENT(S)
SUBJECT
- The appeals against the CESTAT order were dismissed due to time-barred demands, as per Civil Appeal 6033 of 2009. The central issues in Civil Appeal Nos. 6033/2009 and 5714/2011 are being adjudicated by this common order.
- The HC held that the notice does not support the Commissioner’s findings that certain documents were not filed and suppressed from revenue officers’ scrutiny.
OVERVIEW
- The CESTAT Tribunal allowed an appeal against an order by the Commissioner of Central Excise, Rajkot, confirming a demand for differential duty. The appeal alleged the assessee incorrectly determined the assessable value of its finished goods by not including the monetary value of duty benefits obtained from customers.
- The demand for differential duty was raised for clearances from September 2000 to March 2004. The Show Cause Notice issued on 28.9.2005 cited a court judgment in IFGL Refractories Ltd, arguing that duty benefits obtained through customer license transfers were additional consideration.
- The notice alleged the noticee deliberately suppressed facts and made wilful statements withholding information. The Commissioner confirmed the allegations, rejecting the assessee’s defence on merits and limitation.
- The assessee challenged the Commissioners’ order, which was allowed by a majority order. The CESTAT accepted the assessee’s plea that the dispute was revenue neutral, with no revenue implications, as customers could avail credit for duties paid or differential duty payable on goods cleared.
- The CESTAT held that the appellant could have entertained a bonafide belief that it had correctly discharged its duty liability during the relevant period. The difference of opinion arose only on the merits of the matter, which was decided in favour of the assessee by a 2-1 majority.
ARGUMENTS ADVANCED BY THE APPELLANT
- The assessee’s valuation practice from September 2000 to March 2004 was in line with CESTAT’s view in IFGL’s case. The Tribunal found that duty benefits and subsidies from the Central or State Government cannot be considered part of the buyer’s consideration.
- The assessee’s counsel argued that the Tribunal’s view in IFGL’s case held the field from 28.7.2000 to 9.8.2005, providing the basis for the assesse to believe its method and approach were in accordance with law.
- It was argued that there was no justification for alleging suppression of facts, as the assessee submitted copies of their pricing policy to Revenue authorities.
ARGUMENTS ADVANCED BY THE RESPONDENT
- The Ld. Counsel for Revenue argued that the Tribunal failed to consider the adjudicating authority’s allegations and specific finding. They argued that transactions with additional discounts were mislabelled with domestic clearances to mislead a range officer responsible for checking transactions. The assesse was found guilty of suppressing material facts.
- The Ld. Counsel emphasized that assesses were responsible for duty assessment during selfassessment procedures. They argued the CESTAT’s decision on bonafide belief was unsustainable due to the suppression of material facts and mislead range officers.
JUDGEMENT ANALYSIS
- In Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay, the Court ruled that “suppression of facts” must be interpreted as deliberate non-disclosure aimed at evading duty.
- In Collector of Central Excise, Hyderabad Vs. M/s. Chemphar Drugs and Liniments, the Court held that duty must not be levied or paid, short-levied, short-paid, or erroneously refunded due to fraud. The Tribunal concluded that the facts do not warrant any inference of fraud.
- The forms do not require separate columns or requirements for stating the value and details of clearances for deemed export buyers, such as holders of advance licenses. However, Note 4 under Form ER-1 requires separate details for exports under bond. Domestic buyers’ clearances are not considered deemed exports, and separate disclosure is required for these categories.
- The adjudicating authority found that there was suppression of facts due to the assessee’s failure to separately disclose the value of deemed export clearances. An accusation of non-disclosure can only be made if there is a requirement to disclose.
- The Revenue cannot argue its matters beyond written pleadings filed before the Court, as oral arguments are supported by findings of the adjudicating authority. The Tribunal’s order in the case of IFGL Refractories cannot be considered a valid basis for the assesse’s belief, as the relevant valuation provisions underwent amendments in 2000. The Ld. Counsel for the Revenue also lacks merit in arguing that the Tribunal’s order in the case of IFGL Refractories could not have constituted a valid basis for the assesse’s belief.
- The notice does not support the Commissioner’s findings that certain documents were not filed and suppressed from revenue officers’ scrutiny. An assessee can only suppress facts that were required to be disclosed under the law.
- The counsel for the Revenue has not shown a provision or rule requiring additional disclosures of documents or facts, making the assertion of suppression untenable. The same applies to appeal No. 5744/2011, which pertains to a different plant where clearances were affected from January 2001 to November 2003.
CONCLUSION
- The Revenue appeals was dismissed due to time-barred demands, as per Civil Appeal 6033 of 2009.
- No opinion was expressed on the merits of the matter, including revenue neutrality.
