M/S. TAMIL NADU HOUSING BOARD versus THE COLLECTOR OF CENTRAL EXCISE, MADRAS AND ANR.

Citation: [1994] SUPP. 4 S.C.R. 62 · Decided: 28-09-1994 · Supreme Court of India · Bench: R.M. SAHAI, N. VENKATACHALA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIS. TAMIL NADU HOUSING BOARD 
v. 
THE COLLECTOR OF CENTRAL EXCISE, MADRAS AND ANR. 
SEPTEMBER 28, 1994 
B 
[R.M. SAHA! AND N. VENKATACHALA, JJ.] 
Central Excises and Salt Act. 1944 : 
Proviso to S.JJA-,Scope of-Exception to principal clause-Existence 
C of situations visualised such as fraud, collision coupled and intention to 
evade payment of duty-Both must concur with invoking the exceptional 
power under the proviso-Initial burden on the depanment-Once material is 
brought in by the Department to show assessee's guilt onus shifts on the 
assessee. 
D 
The appellant Board, a statutory body, obtained registration under 
the Factories Act for a c11ncrete unit and a .wood unit, both manufacturing 
rmished products. Whit~ the items manufactured in the Wood working unit 
were exclusively used in the buildings constructed by the Board, the 
finished products manufactured in the concrete unit were sold to out-
E siders. Licence was obtained for the concrete unit and not for the Wood 
Unit, as allegedly the appellant was advised that no licence was needed for 
it. 
The officers of the Central Excise Department visited the premises 
and issued a show cause notice. In reply the appellant stated that there 
F was no suppression orfacts nor there was an intention to evade payment 
of ·duty. This was rejected. In appeal the Customs, Excise and Gold 
(Control) Appellant Tribunal held that even though the manufacture of 
wood products was for captive consumption yet the claim of the appellant 
that it was not required to take any licence, was not correct as it was 
G carrying on manufacturing activity. The plea of honest belief on the basis 
of alleged consultation with the Excise authorities was rejected. It also 
drew an inference that though the appellant was non- profit making body, 
it could not be held that it did not intend to evade payment of duty. 
Against the Tribunal's order, the Board preferred the present ap-
H peal. 
62 
-
• 
T.N. HSG. BD. v. COLLECTOR OF CEN1RAL EXCISE 
63 
Allowing the appeal, this Court 
HELD: 1. A bare reading of the proviso to Section HA of the Central 
Excises and Salt Act, 1944 indicates that it is in nature of an exception to 
A 
the principal clause. Therefore, its exercise is hedged on one hand with 
existence of such situations as have been visualised by the proviso by using B 
snch strong expression as fraud, collusion etc. and on the other hand it 
should have been with intention to evade payment of duty. Both must 
concur to enable the Excise Officer to proceed under this proviso and 
invoke the exceptional power. Since the proviso extends the period of 
limitation from six months to live years it has to be construed strictly. The 
initial burden is on the Department to prove that the situations visualised C 
by the proviso existed. But once the Department is able to bring on record 
material to show that the appellant was guilty of any of those situations 
which are 'isualised by the Section, the burden shifts and then ap-
plicability of the proviso has to be construed liberally. [65-F, GJ 
2. When the law requires an intention to evade payment of duty then D 
it is not mere failure to pay duty. It must be something more. That is, the 
assessee must be aware that the duty was leviable and it must deliberately 
avoid paying it. The word 'evade' in the context means defeating the 
provision of law of paying duty. It is made more stringent by use of the 
word 'intent'. [65-H, 66AJ 
E 
Padmini Products v. Collector of Central Excise, (1989) 43 EL.T. 195 
relied on. 
3. In the instant case, it would have been better if the appellant 
examined the officer who was advised not to take licence. But mere non-
F 
examination of the officer could not give rise to an inference that the 
appellant was intentionally evading payment of duty. When t!te appellant 
was found not to have been making any profit and it had taken out licence 
for concrete unit then in the absence of any other material to prove any 
deliberate act of the appellant the presumption of reasonable doubt of the G 
appellant cannot be said to have been successfully rebutted. The finding 
of the Tribunal that there was an intention on the part of the appellant to 
evade payment of duty, is not based on any material. It was an inference 
drawn for which there was no basis. [66-C, DJ 
CIVIL APPELLATE JURISDICTION 
Civil Appeal No. H 
64 
SUPREME COURT REPORTS (1994) SUPP. 4 S.C.R. 
A 2081(NM) of 1986. 
From the Judgment and Orde

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