CX - A mere non-disclosure of information, when there is no obligation in law to furnish same, will not amount to suppression: HC
By TIOL News Service
CHENNAI, JULY 10, 2017: THE CESTAT, while allowing the Revenue appeal had held thus –
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Central Excise – Small scale exemption - Brand name of another person – Evidence on record clearly brings out that the brand name “Micro”, belonging to another person, was used by the respondent, who was a newcomer in the market – Benefit of exemption is not admissible – Extended period is also upheld as the respondent did not disclose the use of such brand name in any intimation or declaration to the department.
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We reported this order dated 10.05.2011 as 2011-TIOL-1339-CESTAT-MAD.
Aggrieved, the assessee had filed an appeal before the Madras High Court.
This appeal was admitted on 01.11.2011, when the following question of law was framed for consideration by this Court -
"Whether the Tribunal is correct in dismissing the cross-objection filed by the appellant raising the question of limitation for the Revenue to make a demand?"
The appellant submitted that the issue on merits, at this point in time, appears to be covered in favour of the Revenue, by virtue of the judgment of the Supreme Court rendered in the matter of Grasim Industries Ltd. - 2005-TIOL-69-SC-CX-LB.
However, in view of paragraph 4 of the circular No.52/52/94-CX, it is submitted that since, none other than the Assessee had claimed ownership in the brand name, "Micro" , it cannot be said that there was any violation of the exemption Notification(s).
The counsel for the Revenue negated the submissions made by the appellant and took support of the decisions in Vora Products - 2007-TIOL-240-SC-CX and Ramply (India) Ltd. - 2009-TIOL-414-HC-MUM-CX
Taking a view that the Bombay High Court decision in Ramply (India) Ltd. is not applicable to the facts of the present case since in that case the Assessee had failed to disclose the factum of use of brand name of another person on its product in the classification list filed with the Excise Authorities, the judgments relied by Tribunal were held to be clearly distinguishable.
The High Court also extracted the findings of the adjudicating as well as the lower appellate authority given in favour of the appellant and after noting the findings of the apex court in the case of Grasim Industries Ltd. inter alia observed thus on the issue of limitation -
++ Assessee was not registered with the Central Excise Authorities on account of the fact that its clearances were below the monetary limit, specified in various Notifications, issued from time to time.
++ The limit of exempted clearances, increased, in this period, from Rs.30.00 lakhs to Rs.50.00 lakhs. The Assessee, therefore, in our view, was entitled to contend that there was no occasion, for it, to disclose the fact that the subject goods were being cleared under the brand name "Micro", (which was also the brand name used by another family/sister concern), since, it had no occasion to file a classification list.
The High Court further held –
“13.1. In our view, this cannot be construed as suppression of fact, within the meaning of Section 11A(1) of the 1944 Act. Mere non-disclosure of facts, in such like circumstances, cannot constitute suppression of facts. Given the way the Section is framed, the expression "suppression of fact" , appears in the company of words and expressions, such as, fraud, collusion, wilful misstatement. Therefore, the expression "suppression of facts" has to take colour from the words whose company, it appears in. A mere non-disclosure of information, when there is no obligation in law to furnish the same, will not amount to, in our opinion, fraud or collusion or even, wilful misstatement and, hence, trigger the extended period of limitation…”
The question of law was answered in favour of the Assessee and against the Revenue. The order of the Tribunal was set aside. The demand was upheld for the normal period of limitation viz. 6 months prior to the date of issuance of SCN. No penalty imposable u/s 11AC of the CEA, 1944, held the High Court.
The Civil Miscellaneous Appeal was disposed of.
(See 2017-TIOL-1274-HC-MAD-CX)
