By Puloma Dalal, Bakul B. Mody, Chartered Accountants
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4. Settled principles for invocation of extended period
under Central Excise :
It is a very clearly laid-down principle that in cases where
the Central Excise Dept. wishes to invoke the extended time limit of 5 years for
issuing SCN, it can be done only if an assessee is guilty of willful mis-statement
or collusion or suppression of facts or contravention of any of the provisions
of Central Excise Rules, 2002 with the intent to evade payment of duty. The
elements of wilfulness, collusion and suppression of facts with an intent to
evade payment of duty, all belong to the domain of criminal jurisprudence having
an element of mens rea i.e., existence of guilty mind. Therefore, the
onus is on the Central Excise Dept. to prove that one or the other of these
elements is present, so as to justify the issue of SCN by availing the extended
time-limit. This is supported by a number of rulings of the Supreme Court,
relevant extracts from some of which are given below :
- In Tamil Nadu Housing Board v. CCE, 74 ELT 9 (SC), in the context of S.
11A of CEA, it was held that :
The proviso is in the nature of an exception to the
principal clause and its exercise is hedged on one side with the existence of
such situations by using strong expressions as fraud, collusion etc. and on
the other hand there should be an intention to evade the payment of duty. Both
must concur to enable the Excise Officer to invoke the exceptional power. The
initial burden is on the Department to prove that the situations visualised by
the proviso existed and to bring on record material to show that the appellant
was guilty of any of the situations visualised by the Section.
- In Pushpam Pharmaceuticals Company v. CCE, 78 ELT 401 (SC), it was held
that :
A perusal of proviso to S. 11A indicates that the
expression ‘suppression of fact’ has been used in company of such strong words
as fraud, collusion or wilful default. In fact it is the mildest expression
used in the proviso. Yet, considering the surroundings in which it has been
used, it has to be construed strictly. It does not mean any omission. The act
must be deliberate. In taxation, it can have only one meaning that the correct
information was not disclosed deliberately to escape from payment of duty,
where facts are known to both the parties; the omission by one to do what he
might have done and not that he must have done, does not render it
suppression.
- In Cosmic Dye Chemical v. CCE, 75 ELT 721 (SC), it was held that :
‘Intent to evade duty’ must be proved for invoking proviso
to S. 11A(1) of CEA for extended period of limitation. Intent to evade duty is
built into the expressions ‘fraud’ and ‘collusion’ but ‘mis-statement’ and
‘suppression’ are qualified by immediately preceding words willful
contravention of any of the provisions.
