High CourtSingle Judge2008-03-07Appeals allowed in part and dismissed in part: ...

M/S GEO TECH FOUNDATIONS & CONSTR. v. COMMNR. OF CENTRAL EXCISE, PUNE

Case / Petition Number:Civil Appeal Nos. 5305/2005; 7412/2005; 7621/2005; 1330/2008; 2383/2006; 2385/2006

Neutral Citation:[2008] 4 S.C.R. 575

Case Details & Bench

Court: High Court
Hon'ble Judges: Dr. ARIJIT PASAYAT
P. SATHASIVAM
Judgment Date: 2008-03-07
Court Decision / Holding: Civil Appeals Nos. 5305/2005, 7412/2005, 7621/2005 allowed; Civil Appeals Nos. 1330/2008, 2383/2006, 2385/2006 dismissed.
Final Disposition: Appeals allowed in part and dismissed in part: 5305/2005, 7412/2005, 7621/2005 allowed; 1330/2008, 2383/2006, 2385/2006 dismissed.

Parties to the Case

Appellants / Petitioners

M/S GEO TECH FOUNDATIONS & CONSTR.

Respondents

Commissioner of Central Excise, Pune

Legal Representation & Advocates

Counsels for Petitioners

• Joseph Vellapally

Case Synopsis & Summary

This Supreme Court judgment addresses whether Central Excise duty could be demanded on PSC girders cleared at site for a railway bridge project without payment of duty. The girders were cleared between June 1994 and February 1995; a show cause notice dated 8 May 1996 demanded duty, confiscation, and penalties. The appellant contended the notice was time-barred under the six-month limitation in effect, and that the extended period under Section 11-A of the Central Excise Act, 1944, was inapplicable because there was no suppression of facts known to the department; they also argued that PSC girders were not marketable and thus not excisable. CESTAT initially held that the extended period could be invoked and referred the marketability issue to a larger bench, which later held the goods were subject to duty as not manufactured at site. On appeal, the Supreme Court considered Larsen & Turbo’s guidance on bona fide doubt as to manufacture causing a debatable issue, and concluded that the extended period could not be invoked in these facts. Accordingly, Civil Appeal Nos. 5305/2005, 7412/2005, 7621/2005 were allowed, while Civil Appeal Nos. 1330/2008, 2383/2006, 2385/2006 were dismissed as time-barred. The decision sets aside CESTAT orders consistent with the findings and effectively resolves the marketability issue as academic.

Provisions of Law Cited

Central Excise Act, 1944, Section 11-A

Legal Doctrines & Maxims

Bonafide doubt as to whether the activities carried on amounted to manufacture creates a debatable issue; different Benches have given divergent views, which can preclude application of the extended period under Section 11-A
Extended period of limitation under Section 11-A cannot be invoked where the facts alleged to have been suppressed are known to the department and there is bona fide doubt about manufacture
Marketability/excisability aspects may be academic where the grounds of challenge prevail on limitation/ manufacture

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends that the first show cause notice was issued beyond the statutory six-month period, and that extended period under Section 11-A was not applicable since the facts alleged to be suppressed were known to the department. They submit that if there is bonafide doubt on whether manufacture occurred, the relevant issue is debatable and courts have not uniform views (as evidenced by earlier Benches), which bars invocation of the extended period. The appellants also argued that marketability of PSC girders is not established as a precondition for excise levy and that the CIT/CESTAT’s reliance on a larger bench to decide marketability was unnecessary and academic given the other legal conclusions. They rely on Larsen & Turbo to show that where manufacture is a debatable issue, the extended period should not apply, and emphasize that the notice dated 8 May 1996 was issued after the original six-month period. On merits, the girders’ site-based manufacture status is central to the taxability, and the extended period question is dispositive.

Contentions of Respondents

Revenue contends that the extended period under Section 11-A is applicable in cases of suppression of facts and where the department was aware of relevant facts; marketability and excisability bear upon the duty, and the CESTAT correctly referred broader questions to a larger bench. They argue that the facts showed suppression or non-disclosure and that the period cannot be reduced solely on the six-month limitation. They also rely on the CESTAT’s conclusions and subsequent demand for duty as consistent with existing law and notifications; the marketability issue, though later deemed academic by the Court, still informs the initial conclusion of excise liability.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Larsen & Turbo Ltd. v. Commissioner of Central Excise, Pune-1	2007 (211) ELT 513 (SC)	Positive	Cited to illustrate that bona fide doubt about manufacture creates a debatable issue, thereby limiting the applicability of the extended period under Section 11-A.
P&B Pharmaceuticals (P) Ltd v. Collector of Central Excise	2003 (153) ELT 14 (SC)	Positive	Cited in context of interpreting Section 11-A proviso and the limits of invoking proviso, including issues of suppression/assignment and exemption notifications.

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Extracted Judgment Text

Exact text extracted from official judgment records.

, ~2008] 4 S.C.R 575 A 8 _MIS._ GEO TFCH FOUNDATIO~S & CONSTRUCT'ON _v._ COMMNR. OF CENTRAL EXCISE. PUNE (Civil Appeal No. 5305 of 2005) MARCH 7. 2008 [DR. ARIJIT PASAYAT AND _?._ SATHASIVAM, JJ.] - - - _Central Fxctse Act, 1944_ s. _11--A PSC Girders_ - _Clearance of- Without payment of E:.'xcise duty Show_ cause _notice demandtng duty issued beyond period of_[c ] - _limitation Held: InvocatiOn of extended period of limitation is impermissible m the facts of the cases._ In Civil Appeal Nos 5305/2005, 7412/2005 and 7621/ 2005, PSC Girders were cleared without payment of duty. D Show cause notice was issued demanding the duty. Appellant-assessee contended that show cause notice was barred by limitation having been issued beyond the statutory period of six months prevalent at the relevant time. Alternatively it was contended that since the Girders E were not marketable, it could not be subjected to levy of duty. Central Excise and Service Tax Appellate Tribunal (CESTAT) held that extended period of limitation was available to the Revenue. On the question of marketability, the matter was referred to larger Bench of CESTAT. The "' larger Bench of CESTAT held in its orders which are F • subject of Civil Appeal Nos. 7412/2005 and 7621/2005 that the articles were subject to excise duty as they are goods which are not manufactured at site for construction of buildings. Civil Appeal Nos. 1330/2008, 2383/2006 and 2385/[G ] 2006 were also filed which bore the same issue. In appeal to this court, appellant contended that this court in _Larsen_ & _Turbo_ case had held that since there was 575 H J _)_ 576 SUPREME COURT REPORTS [2008] 4 S.C.R. - A _bonafide_ doubt as to whether the activities carried on amounted to manufacture or not, it was a debatable issue and the questions were answered differently by different - ·Benches, therefore, extended period of limitation is not applicable. ## B Allowing Civil Appeal Nos. 5305/2005, 7412/2005 and 7621/2005, and dismissing Civil Appeal Nos. 1330/2008, 2383/2006 and 2385/2006, the Court _'t_ HELD: 1.1 Admittedly, in Civil Appeal No. 5305/2005, c[when ][the ][first ][show ][cause ][notice ][was ][issued, ][the ] extended period of limitation was not resorted to. A notice should ordinarily be issued within a period of six months (as the law then stood) i.e. within the prescribed period of limitation but only in exceptional cases, the said period D[could ][be ][extended to one year ][or ][five years, ][as ][the case ] may be. When in the original notice, such an allegation had not been made, the same could not have been made subsequently as the facts alleged to have been suppressed by the appellant were known to them. [Para 1 0] [579-D, E] ## E t: _P and B Pharmaceuticals (P) Ltd v. Collector of Central Excise_ 2003 (153) E.L.T.14 (S.C.) -relied on. > 1.2 The plea of _bona fide_ had not been rejected. On the contrary, there was diversion of views and the issue F was answered by different Benches of the CESTAT. That being so, the extended period of limitation could not have been invoked. As the facts alleged to have been suppressed by the appellant were known to the department, in that view of the matter the extended period G of limitation under Section 11-A of Central Excise Act, 1944 > has no application. Invocation of Section 11-A, was impermissible. [Para 12] [580-E, F, G] > 2. In view of the· conclusions regarding nonH[availability ][of ][extended period ][of ][limitation, there ][is ][no ] " ..., ?- _}_ ' 577 M/S GEO -~ECH FOliNDATIONS & CONSTR. _v._ COMMNR OF CENT EXCISE. PU~E [PASAYAT, J.] ~ • need to consider the question of marketability and/or A excisability. The issue is academic. [Para 13] [580-H; 581-A] ' CIVIL APPELLATE JURISDICTION : Civil Appeal No 5305 of 2005 B From the f~nal Judgment and Order dated 11.03.2005 of the Customs Exctse and Service Tax Appellate Trlbunal, West Regional Bencn at MLmbai in Appeal No. E/3048/98, Final Order No W286, 287/WZB/2005/CII. ## WITH c Civil Appeal Nos. 2383 & 2385 of 2006: 7412 & 7621 of 2005 & 1330 of 2008, ~ Joseph VellapaUy, P Vishwanatha Shetty and P.H. Parekh, Romy Chacko, Arpit Gupta, Rashmi Malhotra, B. Krishna Prasad, M.P Vinod, Ajay K. Jain, Vimlesh Kumar, P. Parmeswaran. Atul Y. Chitale, Sunanina Dutta Suchitra Atul Chitale, L.P Dhir, Maneesha Dhir, N. Keerti Singh, Kirti Singh, Pranab Kumar Mullick and Ajay Kumar Jha (for M/s. Parekh and Co.) for the Appearing parties. D E The Judgment of the Court was delivered by Dr. ARIJIT PASAYAT, J. Civil Appeal Nos. 5305/2005, 7412 and 7621/2005. F 1. These appeals are directed against separate judgments of the Customs, Excise and Service Tax Appellate Tribunal, Mumbai Central (in short 'CESTAT') . The factual background needs to be noted in brief. G 2. Factual scenario is noted in respect of Civil Appeal No.5305 of 2005. But the conclusions on the legal issues will cover the other appeals. 3. Appellant manufactures PSC girders at site to be used :n the construction of Railway Bridge for Kor.kan Railways. The H 578 SUPREME COURT REPORTS [2008] 4 S.C.R. - A period involved is June 1994 to February, 1995. These articles were cleared without payment of central excise duty under Central Excise Act, 1944 (in short the 'Act'). A show cause notice was issued on 8.5.1996 and the appellant was asked to show cause as to why duty amountmg to Rs.53,91.498/- should not , - B[be ][demanded ][from ][it, ][as ][the ][girders were cleared without ] payment of duty, why they should not be confiscated and why penalty should not be imposed on the person concerned. 4. The Commissioner adjudicated the case demanding duty and confiscating the girders which were by then removed c to be placed on the bridge and imposed penalties. 5. The stand of the appellant before the CESTAT was that the show cause nottce was barred by limitation, inasmuch as it was issued beyond the statutory period of 6 months as provided at the relevant time. Further. the department had knowledge of 0 the fact that the appellant manufactured PSC girders in 1994 itself. The show cause notice was issued in 1996 i.e. after the penod of limitation. It was further submitted that even on merits there was no scope for demanding duty. In the alternative, it was pleaded that there was no marketability of PSC girders E and since the girders are not marketable, therefore, the question of levying any exc1se duty under the Act did not arise. 6 The CESTAT held that the larger period of limitation was ava~lable. On the question of marketability the matter was referred to a larger Bench of the CESTAT. F 7 In C.A. Nos.7412/2005 and 7621/2005, chaHenge is to the final order of CESTAT rendered by a larger Bench holding that the benefit of Notification No.59/90-CE cannot be extended to PSC girders as they are goods which are not manufactured G[at site for construction ][of ][buildings. Therefore, the articles were ] held to be subject to excise duty. 8. In support of the appeals, Mr. Joseph Vellapally, learned senior counsel for the appellant submitted that two appeals were decided by CESTAT on the question of manufacture. One H[.-elated ][to ][the present appellants and the other to M/s Asian ] )l "' ..., ~ ' _I_ M/S GEO TECH FOUNDATONS & CONSTR. _v._ 579 COMMNR. OF CENT. EXClSf. PUNE :PASAYAT, J.] Techs. Ltd. Correctness of the judgment in M/s Asian -rechs. A Ltd. was considered by this Court in _Larsen_ & _Toubro Ltd. v. Commissioner of Central Excise, Pune-/1_ (2007 (211) E..L T. 513 (S C.). This Court held that since there was bora fJde doubt as to whether the activities carried on arrounted to manufacture or not, same was a debatable issue and the questions were B answered differently by different Benches and. therefore. the extended per!od of limitation in terms of Section 11-A of _the_ Act cannot be applied. 9. it is to be noted that _!n_ the facts of the present case. earHer r.otice was issued which was withdrawn and the second C notice was issued on 8.5.1996. Prior to the arT',endment by Act 1 C of 2000 w.e.f. 12.5.2000 the extended period of :imitation was one year. After the 2000 amendment the period has become 5 years. 10 Admittedly. when the first show cause not1ce was[0 ] issued. the extended period of limitation was not resorted to. A notice should ordinarily be issued wrthm a period of six months (as the law then stood) i.e. with;n the prescribed per!od of limitation but only in exceptional cases, the said period could be extended to one year or five years, as the case may be. E When in the ong1nal not1ce such an allegat:or. had r.ot been made, we are of the opinion that the same could r.ot have beert made subsequently as the ~acts alleged to have been suppressed by the appellant were known to them. 11 . In _P_ & _B Pharmaceuticals (P) Ltd v Collector of Central Excise_ (2003 (153) E.L.T.14 (S.C) th1s Court held as Jnder· "19 However, Mr. Jaideep Gupta submits that the Tnburai did not accept that here has been assignment of iogo n favour of the assessee. We are unabie to accept the G contention of the learned counsel. The tenor of the order "the assessee had produced certain documents such as registration form. trade mark authorities assigning the trade mark to them but the fact remairs that there was ,.,aterial evidence by way of seizJre o~ goods H \ , - [2008] 4 S.C.R. SUPREME COURT REPORTS 580 A manufactured by M/s P & B Laboratories bearing the same logo much after the alleged transfer of trade mark to the appellants' discloses that the Tribunal accepted that there has been an assignment but proceeded to deal with the case of inapplicability of the exemption under the B notification on the ground that the logo was being used by M/s P & B Laboratories also. We have already indicated above that use of logo of the manufacturer by third parties is alien for purposes of denial of exemption on the strength of Para 7 of the notification. In this view of the matter, we are unable to uphold the order of the Tribunal denying the c exemption to the assessee. 20. In any event, the ground that the assessee has suppressed the fact that M/s P & B Laboratories was also using the logo for availing the benefit under the notification D cannot be a valid reason to invoke the proviso to Section 11A of the Act. There is no obligation on the owner of a logo to make a roving enquiry to ascertain whether any other person is also using his logo and disclose it to the authorities to avert a possible allegation of suppression E of fact for purposes of invoking the proviso." 12. One further aspect cannot be lost sight of. The appellant as well as Konkan Railways raised a definite plea of bona fide. Such a plea had not been rejected. On the contrary, as noted above, there was diversion of views and the issue F was answered by different Benches of the CESTAT. That being so, the extended period of limitation could not have been invoked. As the facts alleged to have been suppressed by the appellant were known to the department, in that view of the matter the extended period of limitation under Section 11-A of G the Act has no application. Invocation of Section 11-A, was impermissible, and therefore, we set aside the order of CESTAT which is the subject matter of challenge in Civil Appeal No.5305 of 2005. The appeal is allowed. " .., -~. 13. In view of the conclusions in C.A.5305 of 2005 there is H MIS. GEO TECH FOUNDATIONS & CONSTR _v_ COMMNR. OF CENT. EXCISE, PUNE [PASAYAT, j_) 581 ~;. _I :,_ :.~.:, .. no ~ee~. to con~ider ~he question of marketability and/or exc1sabihty. The Jssue IS academic. In view of the decision in connected CivilAppeal No.5305of2005, Civil Appeal Nos.7412 of 2005 and 7621 of 2005 are allowed. ## Civil Appeal 1330/2008 •.- A 8 14. The show cause notice was issued on 30.5.1996. In view of what ~s been decided in C.A. No.5305/2005, the appeal deserves fa. be dismissed only on the ground of limitation. ## Civil Appeal No.2383/2006 : ~ . . 15. The dispute relates to the period from April 1993 to July, 1993. _A show cause notice w~s issued on 8.5.1996. In view of what has been stated in C.A.No.5305 of 2005 decided today, the appeal deserves to be dismissed only on the ground of limitation. c D ## Civil Appeal No 2385 of 2006 . 16. The period involved is November, 1993 to December, 1994 and the show cause notice was issued on 3.12.1996. In view of what has been stated in C.A.No. 5305 of 2005 decided today, this appeal deserves to be dismissed which we direct. .. E . K.K.T. C.A. Nos. 5305 of 2005, 7412 of 2005, 7621 of 2005 allowed and C.A. Nos. 1330 of 2008, 2383 of 2006, 2385 of 2006 dismissed. --...