AFCONS PAULING JOINT VENTURE Vs. CCE

JUDGEMENT

(1.) M /s. Afcons Pauling Joint Venture have filed this appeal against Order -in -Original No. 18/2003 dated 1.4.2003 passed by the Commissioner, Central Excise on remand by the Tribunal, vide Final order No. 1049/99 -D dated 16.12.1999. Sh. L.P. Dhir, learned Advocate, mentioned that the appellants, as construction firm, were entrusted by the Punjab Government with the construction of roads and bridges for four laning of National High Way No. 1 from Khanna to Jalandhar carried out during the period March, 1989 to February, 1994; that a show cause notice dated 31.3.1994 was issued to them for (i) demanding Central Excise duty on the Websols and crushed stones manufactured by them, (ii) confiscating websols and crushed stones and (iii) imposing penalty under Rule 9(2), 173Q and 226 of the Central Excise Rules, 1944; that the Collector, Central Excise, under Order -in -Original No. 85/CE/94 dated 25.10.1994 confiscated the seized goods, confirmed the demand of duty in respect of websols and crushed stones and imposed personal penalty of Rs. 20 lakh; that the Appellate Tribunal, vide Final Order No. 1049/99 -D dated 16.12.1999 remanded the case as the (a) Collector had failed to discuss the fact about Superintendent, Central Excise having enquired from them in April, 1991 about the details of activities of manufacture of websols and crushed stone before justifying the invocation of (sic) extended period of limitation; and (b) he did not examine the applicability of Notification No. 59/90 -CE dated 20.3.1990; that the Commissioner now, under the impugned order, has

(2.) THE learned Advocate submitted that the extended period of limitation is not invokable as there is no allegation, not even a whisper, in the show cause notice that there is suppression of facts with an intent to evade payment of duty; that it has been held by the Supreme Court in Associated Cement Co. Ltd. v. CC : (2001) 4 SCC 593 :, 2001 (95) ECR 6 (SC) that the words "intent to evade payment of duty" was essential before Proviso could be invoked; that the appellants bona fidely believed that the activity of making stone aggregate for home consumption was not dutiable being related to construction of immovable properties; that it has been held by the Supreme Court in Jaiprakash Industries Ltd. v. CCE, Chandigarh,, 2002 (146) ELT 481 (SC) that "mere failure CL negligence on the part of the manufacturer in not taking out a licence and in not paying duty does not attract the extended period of limitation. This court has held that there must be evidence to show that the manufacturer knew that the goods were liable to duty and that he was required to take out a licence..... This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or wilful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation. He, further, submitted that the Supreme Court in Jaiprakash Industries Ltd. case, in similar situation, has held that in view of the divergent views of the various High Courts on the question whether crushing of bigger stones or boulders into smaller pieces amounts to manufacture or not, there was bona fide doubt at that point. The learned advocate also mentioned that the Commissioner's finding that the letter dated 11.4.1991 of the Superintendent was only in respect of websols and not in respect of crushed stones and so extended period of limitation is invokable is not correct in view of these bona fide belief and the finding of the Tribunal in the earlier order that the Department knew that the appellants were making use of the websols and crushed stones in the construction of bridges and the roads on the highways.

(3.) COUNTERING the arguments, Sh. O.P. Arora, learned S.D.R., submitted that the extended period of limitation is invocable as in the letter dated 11.4.1991, the Superintendent had mentioned that the appellants were the manufacturers of articles of cement, concrete, etc. and they were requested to supply the information; that articles of cement, concrete are nothing but websols only; that thus the enquiry was never made in respect of crushed stones and accordingly the Department was not aware about the activity of the appellants regarding manufacture of crushed stones; that the appellants did not care to provide he necessary information to the Department about their manufacturing crushed stones. He, further, submitted that the Tribunal, vide Final Order dated 16.12.1999, had remanded the matter for de novo adjudication on specific aspects mentioned in the Final Order and the question whether the process undertaken by them amounts to manufacture was not remanded; that the Adjudicating Authority is bound by the directions contained in the Remand Order and it cannot go beyond those specific directions; that accordingly ratio of the decision in R.K. Traders is not applicable to the facts of the present matter he, however, contended that the process of crushing of stones into small stones amounts to manufacture as has been held by the Appellate Tribunal in the case of Hindustan Construction Co. Ltd. v. CCE, Chandigarh,, 1997 (89) ELT 123 (T). Reliance has also been placed on the decision in Larsen & Toubro Ltd. v. CCE., Raipur,, 2000 (115) ELT 172 (T) wherein the Tribunal has held that crushing of boulders into stones amounts to manufacture as it brings into existence a new excisable commodity and that crushed gitties are classifiable under subheading 2505.90 of the Schedule to the Central Excise Tariff Act. On reply, the learned Advocate submitted that even in Hindustan Construction case, the Tribunal has specifically held that "longer period of limitation would not be applicable as the issue cannot be said to have been free from doubt."; that the decision in the case of Larsen & Toubro also helps the case of the appellants on demand being time barred.