CENTRE FOR DEVELOPMENT OF ADVANCED COMPUTING, PUNE versus COMMISSIONER OF CENTRAL EXCISE, PUNE

Citation: [2002] 2 S.C.R. 103 · Decided: 27-02-2002 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

CENTRE FOR DEVELOPMENT OF ADVANCED 
COMPUTING, PUNE 
v. 
COMMISSIONER OF CENTRAL EXCISE, PUNE 
FEBRUARY 27, 2002 
•I 
[B.N. KIRPAL, SHJVARAJ V. PATIL AND 
BISHESHWAR PRASAD SINGH, JJ.] 
Central Excises Act, 1944 
S.11-A, first proviso-levy of duty within extended period-Research 
organization-Import of goods-Getting exemption from payment of customs 
duty-Goods emerged during research and experiments-Bona fide believed 
by assessee as exempt from duty-Revenue imposing duty under the provisions 
A 
B 
c 
of s.11-A-Held, it can not be said that goods supplied by assessee come D 
within the expression "that the goods are produced during the ·carrying out 
of experiments or research"-However, since the assessee was treated as a 
research and development unit and was entitled to import goods without 
payment of customs duty, it cannot, be-ruled out that assessee might have 
believed that the goods manufactured and supplied by it were not liable to 
excise duty-There was no tangible basis for Revenue tq conclude that there E 
was wilful suppression for evasion of duty by assessee-Thus, though duty 
was leviable on the said goods, Revenue could not invoke the extended period 
of limitation of five years u/s 11-A. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2749 of p 
2001. 
From the Judgment and Order dated 18.12.2000 of the Customs Excise 
and Gold (Control) Appellate Tribunal, New Delhi in A. No. E/1790/96-B in 
F.O. No. 1965 of 2000-B. 
V. Lakshmikumaran, M.P. Devanath and V. Balachandran for the 
Appellant. 
N .K. Bajpai, Jaideep Gupta, Ms. Nisha Bagchi and B. Krishna Prasad 
. for the Respondent. 
103 
G 
H, 
104 
SUPREME COURT REPORTS 
[2002] 2 S.C.R. 
A 
The following Order of the Court was delivered : 
In the instant case, duty is sought to be levied by the respondent by 
taking recourse to the extended period of limitation under Section 11 A of the 
Central Excises Act. 
B 
The plea of the appellant is that it was established as a research 
organisation and had even been importing goods from abroad and getting 
exemption from payment of customs duty on the basis that it was a research 
organisation. In reply to the show cause notice in paragraph 2.3 it has been 
specifically stated that the appellant was under a bona fide belief that the 
C goods emerged during the research and experiments were fully exempt from 
payment of duty and therefore, no further compliance with the provisions of 
Excise Law was called for. Mr. Lakshmikumaran submits that in view of this 
explanation, the provisions of Section 11 A proviso were not applicable and 
he further submits that in actual fact the products supplied by the appellant 
emerged out of their research activity and no excise duty was payable. 
D 
We are unable to agree with the learned counsel that what was supplied 
by the appellant would come within the meaning of the expression "that the 
goods are produced during the carrying out of experiments or research". It 
is quite obvious that the appellant had a technical expertise to manufacture 
E sophisticated equipment on the orders placed on it even though the appellant 
is a Research & Development Organisation. As a result of its research it had 
acquired sufficient acumen to be able to manufacture the equipment tailor-
made for the use of the purchaser. The equipment so manufactured in supply 
cannot be regarded as being a product of research. 
F 
We, however, agree with the learned counsel for the appellant that on 
the facts of the present case, the extended period of limitation would not 
apply. Our attention has been drawn to the fact that the main object as per 
the Memorandum of ~s.~ociat\on ~hereby the appellant was established, was 
to carry out research etc. Furthermore, by letter dated 12th July, 1988, the 
G Department of Electronics had recognised the appellant as a research and 
development unit. A similar recommendation was also made on 7th May, 
1991 by the Ministry of Science and Technology, Government of India. Such. 
recommendation entitled it to make imports from abroad without payment of 
customs duty. Under the circumstance, there is no reason to conclude that the 
appellant would not have believed that the goods manufactured by it and 
H supplied were not liable for payment of excise duty. There does not appear 
l 
CENTRAL FOR DEVEL OF ADVANCED COMP. v. COMMR. OF CENTRAL EXCISE J 05 
to be any tangible basis for the Department to come to the conclusion that A 
there was wilful suppression for 

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