LexM/S. GOPAL ZARDA UDYOG AND ORS. versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI
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MIS. GOPAL ZARDA UDYOG AND ORS. A v. COMMISSIONER OF CENTRAL EXCISE, NEW DELHI SEPTEMBER 30, 2005 [S.N. VARIA VA, DR. AR. LAKSHMANAN AND S.H. KAPADIA, JJ.] B Central Excise Act, I944: Section I I-A(J) proviso. Chewing Tobacco-Tariff sub-heading 2404.4912404.40--"Additive mixture "-Excisability of-Extended period of limitation-Invoking of- C Demand of duty-Assessee was engaged in manufacture of Chewing Tobacco (Final Product) falling under sub-heading 2404.40 of Tariff Act-In the manufacture of the final product, the assessee was using an intermediate product known as 'additive mixture '-It was alleged that the assessee clandestinely manufactured and cleared 'additive mixture' falling under sub- D heading 2404.40 in contravention of provisions of the Act and the Rules with intention to evade duty/assessment-It was found that the 'additive mixture' was a kimam, which was manufactured by mixing sada kimam with spices, menthol, aromatic chemical and perfumes-It was found that the said kimam was marketable as a distinct identifiable product-Held: For invoking the extended period of limitation, duty should not have been paid or short-levied E or erroneously refunded on account of fraud, collusion or willful suppression or misstatement of facts or willful contravention of the Act or the Rules with the intention to evade payment of duty-Jn the present case, the assessee had no intention to evade payment of duty-Hence, the extended period of limitation cannot be invoked under the proviso to S. I I-A(J)-However, the F 'additive mixture' (kimam) was excisable and classifiable under sub-heading 2404.4912404.40 of the Tariff Act-Central Excise Tariff Act, I985-Central Excise Rules, 1944. The appellants-assessees were engaged in the manufacture of Chewing Tobacco (Final Product) falling under sub-heading 2404.40 of the Central G Tariff Act, 1985. In the manufacture of the said final product, the appellants were using an intermediate product known as 'additive mixture'. It was alleged that the appellants were clandestinely manufacturing and clearing 'additive mixture' falling under sub-heading 2404.49 (up to 22.7.1996) and falling 829 H 830 SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R. A under sub-heading 2404.40 after 22.7.1996, in contravention of the provisions of the Central Excise Act, 1944 and Central Excise Rules, 1944 with intention to evade duty/assessment. On the question of excisability, the Commissioner found that the 'additive mixture' was a kimam, which was manufactured by mixing sada B kimam with spices, menthol, aromatic chemical and perfumes etc. Further, the Commissioner found that the said kimam was marketable as a distinct identifiable product. Accordingly, demand of duty was raised on the appellants and the department also invoked the extended period of limitation under the proviso to Section 11-A(l) of the Excise Act. C The appellants filed an appeal before the Central Excise and Gold (Control) Appellate Tribunal which held that the said 'additive mixture' was a kimam and that it was excisable under sub-heading 2404.49/2404.40 of the Tariff Act. The Tribunal also held that the department rightly invoked the extended period oflimitation under the proviso to Section 11-A(l) of the Excise D Act. Hence the appeal. The following question arose before the Court:- Whether in the facts and circumstances of the case, the Tribunal was justified in holding that the 'additive mixture' processed by the three appellants was excisable and classifiable under Chapter sub-heading 2404.49 E of the Central Excise Tariff Act, 1985 and that the department was right in invoking the extended period oflimitation under the proviso to Section 11- A(l) of the Central Excise Act, 1944? Allowing the appeal in part, the Court F HELD: 1.1. For invoking the extended period oflimitation, duty should not have been paid or short-levied or erroneously refunded on account of fraud, collusion or willful suppression or misstatement of facts or willful contravention of the Central Excise Act, 1944 or the Central Excise Rules, 1944 with the intention to evade payment of duty. These ingredients postulate a positive act, therefore, failure to pay duty or to take out a licence is not G necessary due to fraud, collusion etc. Likewise, suppression of facts is not a failure to disclose the legal consequences of a certain provision. 1836-G-H; 837-AI Dharampal Satyapal v. CCE, (2005) EL T 2
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