THE COMMISSIONER OF CENTRAL EXCISE, AURANGABAD versus M/S. BAJAJ AUTO LTD., WALUJ, AURANGABAD, THROUGH ITS VICE PRESIDENT (MATERIALS) AND ORS.

Citation: [2010] 14 S.C.R. 184 · Decided: 12-11-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2010] 14 (ADDL.) S.C.R. 184 
A 
THE COMMISSIONER OF CENTRAL EXCISE, 
AURANGABAD 
v. 
M/S. BAJAJ AUTO LTD., WALUJ, AURANGABAD, 
THROUGH ITS VICE PRESIDENT (MATERIALS) AND 
B 
ORS. 
c 
(Civil Appeal No. 3860 of 2006) 
NOVEMBER 12, 2010 
[D.K. JAIN AND H.L. DATTU, JJ.] 
Central Excise Act, 1944: s.11A, proviso - Recovery of 
duty short paid - Invocation of the proviso - Held: Proviso to 
s. 11 A can be invoked when there is a conscious act of either 
fraud, collusion, wilful mis-statement, suppression of fact, or 
D contravention of the provisions of the Act or any of the rules 
made thereunder on the part of the assessee, with the intent 
to evade payment of duty - Since the proviso extends the 
period of limitation from six months to five years, it needs to 
be construed strictly - The initial burden is on the revenue to 
E prove that the situation visualized by the proviso exists - But 
the burden shifts on the assessee once the revenue is a(Jle 
to produce material to show that the appellant is guilty of any 
of those situations visualized in the section - In the instant 
case, the Tribunal held that the proviso was attracted since 
F the two assessee were situated under the jurisdiction of the 
same division of the revenue and, therefore, revenue was 
aware of the transactions - Tribunal erred in holding so, since 
this ground is not envisaged under the proviso to s. 11 A(1) -
The other issues are all disputed facts which are required to 
be re-examined by the Tribunal, since under the statute it is 
G the final fact finding authority - Matter remitted to Tribunal for 
reconsideration -
Interpretation of statutes -
Strict 
construction - Evidence - Burden to prove suppression of 
facts. 
H 
184 
COMMNR. OF CENTRAL EXCISE v. BAJAJ AUTO 
185 
LTD., WALUJ, AURANGABAD 
The assessee-respondent no.1 was engaged in the 
manufacture of motor vehicles. For the said purpose, it 
purchased the aluminum ingots from open market and 
supplied them to respondent no.4. Respondent no.4 used 
the aluminum "ingots to manufacture the aluminum 
castings and supplied them to the assessee. The revenue 
issued a show cause notice on 5.3.2001 alleging that 
during the period 2.6.1998 to 30.9.1999, the assessee 
supplied the inputs to respondent no.4 at under-valued 
landed cost as the expenses on account of sales tax, 
octroi, freight, insurance, loading and unloading charges 
were not included in the landed cost and by such 
business arrangement, the assessee compensated 
respondent no.4 for depressed prices of finished goods 
supplied to the assessee. The assessee replied that the 
demand notice was time barred and the extended period 
of limitation as per the proviso to Section 11 A of Central 
Excise Act, 1944 was not invokable since both the units 
were situated under the jurisdiction of the same division 
and, therefore, the jurisdictional officer of the revenue 
were fully aware of the facts. The adjudicating authority 
held the assessee liable to pay duty and penalty. The 
CESTAT reversed the order of the adjudicating authority. 
The revenue filed the instant appeal. 
Allowing the appeal and remitting the matter to the 
Tribunal for reconsideration, the Court 
A 
B 
c 
D 
E 
F 
HELD: 1. The CESTAT while considering and 
deciding the issue of the limitation had overlooked the 
language employed in the statute. Section 11 A of the 
Central Excise Act empowers the central excise officer to 
G 
initiate proceedings where duty has not been levied or 
short levied within six months from the relevant date. But 
the proviso to Section 11 A(1) provides an extended 
period of limitation if there is fraud, collusion or any wilful 
mis-statement or suppression of facts, or contravention 
H 
186 
SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R. 
A of any of the provisions of the Act or of the rules made 
thereunder with an intent to evade payment of duty. The 
extended period so provided is of five years instead of 
six months. Since the proviso extends the period of 
limitation from six months to five years, it needs to be 
B construed strictly. The initial burden is on the revenue to 
prove that the situation visualized by the proviso existed. 
But the burden shifts on the assessee once the revenue 
is able to produce material to show that the assessee is 
guilty of any of those situations visualized in the Section. 
c In the instant case, the Tribunal while considering this 
issue did not state whether or not there were any such 
circumstance

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