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CASE NO.: Appeal (civil)  5118 of 2002

PETITIONER: Commissioner of Central Excise,Chandigarh

RESPONDENT: M/s Pepsi Foods Ltd.

DATE OF JUDGMENT: 29/05/2007

BENCH: Dr. ARIJIT PASAYAT & LOKESHWAR SINGH PANTA

JUDGMENT:

J U D G M E N T  

Dr. ARIJIT PASAYAT, J.

1.      Challenge in this appeal is to the order passed by the  Customs Excise and Gold (Control) Appellate Tribunal, West  Block, New Delhi (in short ’CEGAT’) allowing the appeal of the  respondent (hereinafter referred to as the ’assessee’).   By the  impugned order, the CEGAT also held that the removal of  goods and payment of duty took place between July 1995 to  March 1996. The assessee had paid differential duty as  worked out by them also in November 1996.  In these  circumstances, there is no factual basis to the allegation that  the assessee suppressed any material facts.  Show-cause  notice dated 1.6.2000 was issued almost four years after the  payment of the differential duty by the assessee, well beyond  the normal period allowed for duty demands under Section  11A of the Central Excise Act, 1944 (in short ’the Act’).   Demand of duty for longer period upto 5 years is permissible  only if the short levy of duty is on account of suppression,  mis-declaration of facts, fraud etc. as provided in the proviso  to Section 11A of the Act.  These elements constituting  contumacious conduct by the assessee are entirely lacking in  the present case.  Therefore, the appeal was allowed on the  ground of time bar without going into the merits of the case.  It  was held that assessee was entitled to return of amount paid  by them over and above the differential duty of Rs.67,88,027/-  paid on 28.11.1996 2.      Background facts in a nutshell are as follows:- Assessee claimed certain deductions from the price  towards sales tax as their claim for exemption from the  sales tax was turn down by the sales tax authorities  including the Tribunal in 1995.  Duty was accordingly  assessed and paid on the value worked out after deducting  the sales tax payable from the price. While the dispute with  sales tax authorities was pending before the Punjab and  Haryana High Court assessee re-assessed the clearance by  including the sales tax element originally excluded from the  price. Assessee paid the differential duty of Rs.67,88,027/-  on 28.11.1996.  On 1.6.2000 Commissioner of Central  Excise issued show cause notice alleging that assessee had  evaded duty of Rs.95,03,238/- in regard to  Rs.2,37,58,095/- collected towards sales tax.  The demand  was confirmed by the order in original passed by the  Commissioner of Central Excise, Chandigarh II.  A demand

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for differential duty of Rs.27,15,211/- was made after  adjusting the payment made.  Penalty of Rs.10 lakhs was  also imposed.  Said order was challenged before the CEGAT  who held that the demand was barred by time as the period  of assessment was between July 1995 to March 1996 and  payment of differential duty was made on 28.11.1996 of  Rs.67,88,027/-. 3.      In support of the appeal, learned counsel for the  appellant submitted that the exemption was claimed under the  relevant sales tax laws but there was collection of sales tax as  was admitted by the accountant on 26.10.1999.  The assessee  also admitted about the collection on 10.11.1999. The amount  collected was Rs.2,37,58,095/-.  It has been fairly accepted by  the assessee that there was no intimation given about the  sales tax exemption or the deposit made to the range officer or  any other authority.   4.      It has been categorically found by the Commissioner that  there was no evidence of any intimation produced by the  assessee. It was only indicated in the reply to the show-cause  notice that the matter was pending.  The Commissioner  recorded the following finding: "3.6    In their reply dated 8.2.2001 to the show  cause notice, the Noticee accepted that the  amount collected by them towards sales tax  and not deposited with the sales tax  department would form part of the price of soft  drink concentrate.  They have further  contended that in such an event the duty  payable has to be deducted to arrive at the  assessable value in terms of Section 4(4)(d)(ii)  i.e. the total amount of duty payable has to be  deducted from cum-duty price to arrive at the  assessable value in order to calculate the total  duty payable.  In other words, the Noticee has  calculated Excise duty by considering the total  amount of sales tax collected as cum-duty  price and after taking into consideration the  provisions of Section 4(4)(d)(ii) calculated the  amount of duty payable and subsequently  deposited the Central Excise duty amounting  to Rs.67,88,027/-.  The Noticee has relied  upon the Hon’ble Tribunal’s judgment in the  case of Sri Chakra Tyres Ltd. vs. Collector of  Central Excise, Madras 1999 (108) ELT 361  (Tribunal).         The quoted judgment is not relevant in  this case as the Noticee has not collected the  disputed amount as wholesale price of the  goods, but has collected the same as amount  of sales tax payable.  In case sales tax had  been paid to the concerned department no  Central Excise duty would have been leviable  thereon."      5.      It is to be noted that the assessee submitted that the  sales tax authorities denied the exemption and the matter was  pending before the High Court. The deposit was made as there  was a dispute.  To a query made as to why the deposit was  made even there was nothing payable as claimed, the reply  was that it was paid due to pressure.  There was no averment  made at any stage taking such a plea. 6.      The extended period of limitation is applicable as (a) no  information was given regarding deposit and (b) no information  was given about the alleged claim of exemption and the  calculation.

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7.      In the aforesaid background, the CEGAT presently  known as Customs, Excise and Service Tax Tribunal has to  decide whether the benefit under Section 4(4)(d)(ii) is available  to be granted.  In that regard, we express no opinion.  It is  stated that the writ petition No.17685/94 is pending before  the Punjab and Haryana High Court.  It is for the Tribunal to  take note of the decision if any rendered in that petition. The  appeal is allowed to that extent. There will be no order as to  costs.