SPIE CAPAG S.A. Vs. CCE

JUDGEMENT

(1.) The brief facts of the case are that Bombay Municipal Corporation pursuant to global tenders awarded a contract to the appellants in connection with the construction work of providing and laying of RCC pipes at Bandra sewerage and Worli. An integral part of the project was construction of outfall i.e. 3000 meters long conduit from the land built into the sea. This conduit was required to be made of RCC pipes which were manufactured by the appellant at site. The appellant had undertook manufacture of 512 RCC pipes without intimating the Central Excise department and used them without payment of duty. This fact was noticed by the department in the year 1987, when a statement of the appellant's legal and fiscal advisor was recorded on 2.9.87 in which he informed about the execution of the above contract and admitted that about 500 RCC pipes were manufactured for which no excise licence was taken nor any duty was paid. Further inquiries were made from the Bombay Municipal Corporation who confirmed the above facts vide their letter dated 27.6.88. It also transpired that the total No. of pipes manufactured by then was 512 in number. A show cause notice was thereafter issued on 10.2.89 seeking to demand duty amounting to 32,40,595/ - along with interest and also proposing to impose penalty. Show cause notices were issued to both Bombay Municipal Corporation and to the appellant. The show cause notices were adjudicated by the Commissioner who confirmed the duty amounting to 34,02,624.35 and imposed a penalty of 2 lakhs under Rule 173Q. The proceedings against the Bombay Municipal Corporation were dropped.

(2.) The ld. Advocate for the appellant submitted that they are not seriously disputing the durability of pipes manufactured during the execution of the works contract and their whole argument is on limitation as the entire demand was time barred. It was his submission that the department has come to know of the manufacture of 500 RCC pipes, when the statement of its legal advisor was recorded on 2.9.87 and once the matter has come to their knowledge on 1.9.87, extended period after that cannot be invoked and since the show cause notice was issued on 10.2.1989 which was beyond a period of one year from the date of knowledge the same is time barred. In support thereof he referred to the decision of the tribunal in the case of JSL Industries, 1999 (109) ELT 316 (Tri.), wherein it was held that show cause notice issued long after knowledge was barred as invocation of extended period on account of suppression of facts is not sustainable. Similarly in Gammon India, 2002 (146) ELT 173 (Tribunal), it has, been held that delay in issuing show cause notice after completion of enquiry would not entitle the department to invoke extended period of limitation on account of suppression. It also further held that construction of bridge was before the general public and therefore no suppression could be alleged. This decision has been upheld by the Supreme Court as reported at, 2002 (146) ELT 8313. Reference was thereafter invited to the Supreme Court decision in the case of Nizam sugar Factory reported in : 2006 (197) ELT 465 (SC). In para 9 of this decision, the apex court has held that it is not open to the department to issue show cause notice alleging suppression of facts already known to them as is evident by the earlier show cause notice issued to the parties. It was submitted that the above decision, reverses the view of the larger bench of the tribunal in the matter of Nizam Sugar reported in holding that date of knowledge is immaterial, while issuing a demand notice alleging suppression of facts on the part of a manufacturer. The facts before the Supreme Court were the same as were before the Larger Bench of the Tribunal.

(3.) It was submitted that the Supreme Court decision is not restricted to barring the department from issuing subsequent show cause notice when it had issued show cause notice earlier as is being contended by the revenue. This is further clear from the question posed before the Larger Bench before whom the question was date on which knowledge is acquired by the department.