Holding

The extended five‑year limitation under the proviso to Section 11‑A(1) is not available as there was no suppression of facts; the demand is limited to six months prior to the notice.

Summary

Anand Nishikawa Co. Ltd., a manufacturer of rubber profiles, classified its products under sub‑heading 4008.29 of the Central Excise Tariff, attracting nil duty. The Revenue re‑classified them under sub‑heading 4016.19, alleging that the company had not disclosed post‑forming processes (notching, drilling, slitting) which constituted further working, and issued a show‑cause notice invoking the proviso to Section 11‑A(1) for recovery of duty for a period of five years. The Court examined whether the extended limitation period could be invoked, i.e., whether there was "suppression of facts". It held that the department had inspected the factory, collected samples, approved the classification list and was aware of the post‑forming processes through a flow‑chart submitted by the assessee; there was no deliberate or willful omission to evade duty. Consequently, the proviso did not apply and the Revenue’s demand was limited to six months prior to the notice. The appeal was allowed, setting aside the CEGAT order and restoring the Commissioner’s order.

Issues considered

Whether the proviso to Section 11‑A(1) of the Central Excise Act, which extends the limitation period to five years, is applicable in the present case.
Whether the assessee committed "suppression of facts" by not disclosing the post‑forming processes of the rubber profiles.

Legislation cited

Central Excise Act, 1944s. 11-A(1) proviso
Central Excise Ruless. Rule 10
Central Excise Tariff Act, 1985
Finance Act, 2000

Subjects

Central ExciseSection 11-ASuppression of factsExtended limitation periodClassification of goodsRubber profilesShow‑cause noticeAmendment 2000

Judgment

M/S. ANAND NISHIKAWA CO. LTD. A
v.
COMMISSIONER OF CENTRAL EXCISE, MEERUT

SEPTEMBER 23, 2005

[S.N. VARIAVA AND TARUN CHATTERJEE, JJ.] B

Excise:

Central Excise Act, 1944:
c
Section 11-A(1) proviso (as it stood after 2000 amendment but prior to
12-5-2000)-Limitation-Extended period of limitation-Applicability of-
"Suppression offacts"-Assessee manufactured rubber profiles which product
after extrusion was subjected to notching or drilling ofa few holes or slilling-
Assessee classified such extruded rubber profiles under Sub-heading 4008.29 D
which al/racted 'Nil' rate of duty-But the Revenue sought to classify the said
product under Sub-heading 4016.19 on the ground that the assessee had not
disclosed the process of notching, slilling etc.-Revenue, accordingly, invoked
the extended period of limitation and raised a demand-Validity of-Held:
Department had inspected the assessee 's factory and collected and inspected
samples of the product before granting approval lo the classification- E
Moreover, flow-chart submitted to the Department clearly showed the post-
forming process-Under such circumstances, there was no deliberate
suppression of facts-Hence, demand restricted to six months prior to the
issue of notice instead of five years.

Section 11-A(1)-Amendment made in WOO-Object of-Held: To negate F
certain decisions of Supreme Court and also the High Courts saying that it
would not be open to the Central Excise Officer to initiate a recovery proceeding
under Section 11-A of the Act if the classification lists supplied by the assessee
were approved by the department from time to time-Hence, the view taken
in such decisions is no longer a valid law. G
Central Excise Tariff Act, 1985:

Rubber profiles-Classificplion list-Sub-heading 4008.29 or 4016.19-
Applicability-Rubber profiles after extrusion was subjected to notching or
413 H
,.
\

414 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A drilling of a few holes or slitting-Classification of-Held: Question left open.
Words & Phrases:

"Suppression offacts"-Meaning of-in the context ofproviso to S. 11-
A(J) of the Central Excise Act, 1944.
B
The appellant-assessee was a manufacturer of rubber profiles which
product after extrusion was subjected to n~ tching or drilling of a few holes
or slitting. The appellant had classified such extruded rubber profiles
under Sub-heading 4008.29 of the Central Excise Tariff Act, 1985 which
attracted 'Nil' rate of duty. The Revenue, however, classified the same
C under Sub-heading 4016.19.

A show-cause notice was issued in October, 1995 demanding duty
for the period from September, 1990 to February, 1994 under the proviso
to Section 11-A(I) of the Central Excise Act, 1944. The Revenue alleged
that the appellant had never disclosed to it that it was carrying on the
D process of notching, slitting, punching, slotting etc. on rubber profiles and
if it had done so it would have amounted to "further working" thereby
rendering the products classifiable under Sub-heading 4016.19 and not
classifiable under the Sub-heading 4008.29. It was also the case of the
Revenue that the said operations came to the knowledge of the Revenue
E only when an investigation was carried out.

The Commissioner of Central Excise (Appeals) held that that there
was no "suppression of facts" on the part of the appellant and, therefore,
the extended period of limitation under the proviso to Section 11-A(I) of
the Act was not applicable. In appeal, the Customs, Excise and Gold
..
F (Control) Appellate Tribunal, however, reversed this finding of the CCE
(Appeals) and found "suppression of facts" from the materials on record
and held that the Revenue could invoke the proviso to Section 11-A(l) of
the Act. But the matter was sent back to the CCE (Appeals) for a decision
on the question of classification and availability of MODVAT credit etc.
G Against this order of remand the present appeal was filed under Section
35(L) of the Act.

The following question arose before the Court:-

Whether the extended period of limitation under proviso to Section
H 11-A(l) of the Central Excise Act, 1944 would be available or not?
ANAND NISHIKAWA CO.LTD. v. COMMR. OF CENTRAL EXCISE, MEER UT
415
Allowing the appeal, the Court A
HELD: 1.1. From the materials on record which were produced
before the authorities and also from the orders of the Customs, Excise and
Gold (Control) Appellate Tribunal (CEGAT) and the Commissioner of
Central Excise (Appeals), it can be seen that the department had the
opportunity to inspect the products of the appellant and, in fact, the B
factory of the appellant was inspected by the department. It may be true
that the appellant might not have disclosed the post-forming process in
detail but from the correspondence and other materials on record,
admittedly, samples were collected by the Department and even after the
samples were collected and inspected, classification as supplied by the C
appellant in respect of the products in question were approved by the
Department. [425-D-El

1.2. Furthermore, it is also evident from the record that the flow-
chart of the manufacturing process which was submitted to the
Superintendent of Central Excise clearly mentioned the fact of post- D
forming process on the rubber. (425-F-G]

1.3. There was no deliberate intention on the part of the appellant
not to disclose the correct information or to evade payment of duty and,
therefore, it was not open to the Central Excise Officer to proceed to
recover duties in the manner indicated in proviso to Section 11-A(l) of E
the Central Excise Act, 1944. Where facts were known to both the parties,
as in the instant case, it was not open to CEGA T to come to a conclusion
that the appellant was guilty of "suppression of facts". Therefore, the
demand of the Revenue must be restricted to six months prior to the issue
of notice instead of five years. [427-A-B; 428-B] F
Tata Iron & Steel Co. Ltd. v. Union of India, (1988) 35 ELT 605 (SC),
Pushpam Pharmaceutical Co. v. CCE, [1995) Supp. 3 SCC 462, Densons
Pultertaknik v. CCE, (2003] l l SCC 390, CCE v. Dabur (India) Ltd., (2005)
121 ECR 129 and O.K. Play (India) Ltd. v. CCE (2005) 66 RLT 657 (SC),
relied on. G
2. It is, therefore, not necessary to consider the question of
applicability of classification lists, namely, Sub-heading 4008.29 and Sub-
heading 4016.19 of the Central Excise Tariff Act, 1985 and the question
of MODY AT facilities. (428-B-CI
H
I
\

416 SUPREME COURT REPORTS [2005) SUPP. 3 S.C.R.

A 3. The amendment to Section 11-A(l) of the Act in the year 2000
was brought in order to negate certain decisions of this Court and also
the High Courts in India saying that it would not be open to the Central
Excise Officer to initiate a recovery proceeding under Section 11-A(l) of
the Act if the classification lists supplied by the assessee were approved
by the department from time to time. Therefore, the view taken in Cotspun
B Ltd's case that classification already settled due to attaining of finality
cannot be disturbed is no longer a valid law. [422-C-D; 423-D-E]

CCE v. Cotspun Ltd., (1999) 113 ELT 353 (SC), no longer a valid law
on this point.
c Easland Combines v. CCE., [2003] 3 SCC 410 and ITW Signode (India)
Ltd. v. Collector of Central Excise, (2004) 3 SCC 48, referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3158 of2000.

From the Judgment and Order dated 21.12.99 of the Customs, Excise
D and Gold (Control) Appellate Tribunal, New Delhi in F.O. No. 1057/99-C in
A. No. E/2095 of 1997-C.

V. Sridharan; Alok Yadav and M.P. Devanath for the Appellant.

E Mohan Parasaran, Additional Solicitor General, Aarohi Bhalla and P.
Parmeswarart with him for the Respondent.

The Judgment of the Court was delivered by

TARUN CHATTERJEE J. Appellant Mis. Anand Nishikawa Co. Ltd.
is a manufacturer of rubber profiles which product after extrusion is subject
F to notching or drilling of a few holes or slitting. The appellant had classified
such extruded rubber profiles under sub-heading 4008.29 of the Central Excise
Tariff which attracted Nil rate of duty. The Revenue, however, classified
such rubber under heading 4016 .19.

G According to Revenue, the operations like notching, drilling and slitting
are "further working" and in view of Note 9 to Chapter 40, these goods fall
outside Heading 40.08. Accordingly, a show cause notice was issued in
October, 1995 demanding duty of over Rs. 2.18 crores for the period from
September 1990 to February, 1994 under the proviso to Section I IA of the
Central Excise Act, 1944 (hereinafter referred to as 'the Act'). The
H Commissioner by his order dated 2nd August 1996 discharged the show
ANANDNlSHJKAWACO. LTD.''· COMMR. OF CENTRAL EXCISE, MEERUT[TARUNCHATTERJEE,J.) 4 J7

cause notice, inter-a/ia; on the ground that proviso to Section I IA of the Act A
was inapplicable in the facts of the case. In his order, the Commissioner
observed that the authority had knowledge of the manufacturing process of
the appellant and was seized of the matter from the very beginning and on
few occasions, the department officers visited the factory for collection of
samples and study etc. Adverse inference was also drawn by the Commissioner B
in his order dated 2nd August, 1996 against the department as show cause
notice did not deal with the correspondence exchanged between the appellant
and the department on the issue of classification from the year 1988. An
appeal was carried by the Department against the aforesaid order of the
Commissioner before the Customs, Excise and Gold (Control) Appellate
Tribunal, (hereinafter referred to as "CEGAT") New Delhi which was allowed C
by the CEGAT on the issue of limitation that is to say extended period of
limitation under proviso to Section I IA of the Act would be available in the
facts of this case. However, the matter was sent back to the Commissioner
for a decision on the question of classification and availability of MODY AT
credit etc. Against this order of remand, passed by the CEGA T, this appeal
has been filed under section 35(L) of the Act in this Court which, on admission, D
was listed for final disposal.

We have heard Mr. Y. Sridharan, learned counsel appearing for the
Assessee/Appellant and Mr. Mohan Parasaran, the learned Additional Solicitor
General for the Revenue. We have carefully examined the show cause notice, E
the order of the Commissioner discharging the show cause notice and the
order of the CEGA T holding that the authority was entitled to invoke proviso
to Section I IA of the Act in the facts of the case but remanding the case, as
noted herein before, to the Commissioner for a fresh decision on the question
which of the classifications, namely 4008.29 or 4016.19 of the Central Excise
Tariff in respect of the product in question, would be attracted in the facts F
of this case and also whether MODY AT facilities would be available or not.

The only question that needs to be decided in this appeal is whether the
extended period of limitation under proviso to Section 11-A of the Act would
be available or not. Before we take up, for our consideration, this question,
involved in this appeal, it would be fit and proper to refer to erstwhi'~ Rule G
I 0 of the Central Excise Rules and section 11 A of the Act prior to and after
its amendment in 2000. On the question of recovery of duties not levied or
not paid or short-levied or not paid in full or erroneously refunded, erstwhile
Rule I 0 of the Central Excise Rules as it read at the relevant point of time
and so far as it is relevant for our purposes is set out as under : H
\_

418 SUPREME COURT REPORTS (2005] SUPP. 3 S.C.R.

A "Rule I 0. Recovery of duties not levied or not paid, sort-levied or not
paid in full or erroneously refunded - (I) Where any duty has not
been levied or paid or has been short-levied or erroneously refunded
or any duty assessed has not been paid in full, the proper officer may,
within six months from the relevant date, serve notice on the person
chargeable with a duty which has not been levied or paid, or which
B has been short-levied or to whom the refund has erroneously been
made, or which has not been paid in full, requiring him to show cause
why he should not pay the amount specified in the notice:"
Provided that -
C (a) where any duty has not been levied or paid, has been short-
levied or has not been paid in full, by reason of fraud, collusion
or any willful mis-statement or suppression of facts by such
person or his agent, or
(b) where any person or his agent, contravenes any of the provisions
of these rules with intent to evade payment of duty and has not
D
paid the duty in full, or
(c) where any duty has been erron~ously refunded by reason of
collusion or any willful mis-statement or suppression of facts by
such person or his agent, the provisions of this sub-section shall,
in any of the cases referred to above, have effect as if for the
E words "six months", the words "five years" were substituted.
Proviso to this Rule I 0 as noted hereinabove, however, increases a
period of six months to five years where there has been "suppression of
facts" or the like on the part of the Assessee. Section I IA of the Act was
introduced by Act No. 25 of 1978 w.e.f. 17 .11.1980 in substitution of Rule
F 10 which was omitted. Section I IA of the Act was as under :-

"11-A. Recovery of duties not levied or not paid or short-levied or
short-paid or erroneously refunded. - (I) When any duty of excise
has not been levied or paid or has been short-levied or short-paid or
erroneously refunded, a Central Excise Officer may, within six months
G from the relevant date, serve notice on the person chargeable with the
duty which has not been levied or paid or which has been short-
levied or short-paid or to whom the refund has erroneously been
made, requiring him to show cause why he should not pay the amount
specified in the notice:
H Provided that where any duty of excise has not been levied or
ANAND NISHIKAWA CO.LTD.'· COMM. OF CENTRAL EXCISE, MEERIJT [TAR UN CHATTERJEE, J] 4 J9

paid or has been short-levied or short-paid or erroneously refunded A
by reason of fraud, collusion or any willful misstatement or suppression
of facts, or contravention of any of the provisions of this Act or of
the rules made thereunder with inte,nJ to evade payment of duty, by
such person or his agent, the provisions of this sub-section shall
have effect, as if, for the words "six months", the words "five years" B
were substituted."

Section 11-A was further amended in the year 2000 and the amended
provision runs as under:-

11-A. Recovery of duties not levied or not paid or short-levied
or short-paid or erroneously refunded. - (I) When any duty of excise C
has not been levied or paid or has been short-levied or short-paid or
erroneously refunded whether or not such non-levy or non-payment,
short-levy or short-payment or erroneous refund, as the case may be,
was on the basis of any approval, acceptance or assessment relating
to the rate of duty on or valuation of excisable goods under any other D
provisions of this Act or the Rules made thereunder, a Central Excise
Officer may, within one year from the relevant date, serve notice on
the person chargeable with the duty which has not been levied or paid
or which has been short-levied or short-paid or to whom the refund
has erroneously been made, requiring him to show cause why he
should not pay the amount specified in the notice: E
Provided that where any duty of excise has not been levied or
paid or has been short-levied or short-paid or erroneously refunded
by reason of fraud, collusion or any willful misstatement or suppression
of facts, or contravention of any of the provisions of this Act or of
the rules made thereunder with intent to evade payment of duty, by F
such person or his agent, the provisions of this sub-section shall
have effect, as if, for the words "one year", the words "five years"
were substituted."

We have carefully examined the erstwhile Rule 10 of the Central Excise
Rules, section 11 A of the Act as introduced in the year 1980 and section 11- G
A of the Act after the amendment in the year 2000. From a plain reading of
Rule 10 of Central Excise Rules, we find that the proper officer is conferred
with power to recover duties not levied or not paid or short-levied or not paid
in full or erroneously refunded to initiate recovery proceedings within six
months from the relevant date. However, Rule I0 of the Central Excise Rules H
420 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A and Section 11-A of the Act prior to the 2000 amendment, did not say that
recovery of duties not levied or not paid or short-levied or not paid in full
or erroneously refunded could be done even where the classification of the
goods was approved by \he Department.
. i1:

Section I IA of.the"Act as it stands today, however, confers powers not
B on the 'proper officer'· ·but on a Central Excise Officer to initiate recovery
proceedings when any duty of excise has not been levied or not paid or has
not been short-levied or not paid in full or erroneously refunded whether or
not such non-levy or non-payment or short-levy or short-payment or
erroneous refund, as the case maybe, was on the basis of any approval etc.,
C relating to the rate of duty on or valuation of excise goods within one year
from the relevant date.

Again, from a comparative reading of erstwhile Rule I 0 of the Central
Excise Rules, section 11-A prior to its amendment of the year 2000, it is
pellucid that by the introduction of section I IA of the Act in the year 1980,
D a central excise officer, instead of proper officer as indicated in erstwhile Rule
I0, has been conferred with power to initiate proceedings for recovery of duty
which has not been levied or paid or short-levied or not paid in full or has
been erroneously refunded. The conferment of power to initiate a recovery
proceeding on the Central Excise Officer instead of proper officer was vested
only on the introduction of Section I IA of the Act. No substantial change
E was made by the Legislature from Rule 10 excepting the changes already
noticed above.

By the 2000 amendment in section 11-A of the Act Legislature thought
it fit to extend the power of the Central Excise Officer to initiate proceedings
F under section 11-A of the Act even where any duty of excise has not been
levied or paid or has been short-levied or short-paid or erroneously refunded
whether or not such non-levy or non-payment, short-levy or short-payment
or errone:ms refund, as the case may be, was on the basis of approval of the
classification list supplied by the assessee from time to time. That apart, the
present section 11-A of the Act also fixes the period of limitation for initiating
G a recovery proceeding within one year from the relevant date which was six
months under the erstwhile Rule I 0 of the Central Excise Rules and section
11-A prior to the 2000 amendment. However, the amendment with respect to
change in limitation period from "six months" to "one year" was made effective
from 12.5.2000. Therefore, this amendment is not relevant for the purpose of
this case.
H
ANAND NISHIKAWA CO. LTD.'· COMM. OF CENTRAL EXCISE, MEERUT {TARUN CHATTERJEE, J.) 42 J

Let us now look into the proviso of Section 11 A of the Act as it stands A
now. It clearly says that where any duty of excise has not been levied or paid
or has been short-levied or short-paid or erroneously refunded by reasons of
fraud, collusion or any willful misstatement or suppression of facts or
contravention of any of the provisions of this Act or of the Rules made
thereunder with intent to evade payment of duty by such person, the provisions B
of this sub-section shall have effect as if for the words 'one year' the words
'five years' were substituted.

A bare reading of the provisions made under Section 11-A( I) together
with the proviso to it, it is abundantly clear that ordinarily notice to show
cause has to be issued within one year from the relevant date. However, in C
order to attract proviso to section 11-A of the Act, that is to say, for extended
period of limitation within 5 years from the relevant date, it is necessary to
be satisfied that the non-levy, short-levy, or erroneous refund has occurred
on account of either of the following:-

(I) fraud, D
(2) collusion,
(3) willful misstatement or suppression of facts,

(4) contravention of the Excise Act or Rules with an intent to evade
payment of duty. E
So far as the present case is concerned, we shall keep it in our mind
that the present case concerns only with "suppression of facts". Statement
of Objects and Reasons for amending Section 11-A would be necessary to
refer at this stage which is as follows:

"Clause I 06 seeks to validate certain action taken under section 11- F
A of the Central Excise Act with retrospective effect from 17th
November 1980, so as to prescribe that the notices issued under the
said section for non-recovery or short-recovery or erroneous refund
of duties for a period of six months or five years in certain situations
will prevail notwithstanding any approval, acceptance or assessment G
of duty under the provisions of the Central Excise Rules."

If we read the statement of Objects and Reasons for such amendment,
1t 1s again abundantly clear that the amendment was to be ipade with
retrospective effect from 17th November 1980 so as to prescrille that the
notices issued under the said section for non-recovery or short-recovery or H
422 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A erroneous refund of duties for a period of 6 months or 5 years in certain
situations will prevail notwithstanding any approval under the provisions of
the Central Excise Rules. As noted herein earlier, the amendment with respect
to change in limitation period from "six months" to "one year" was made
effective only from 12.5.2000.

B As discussed herein earlier, the changes made by the Legislature through
the amendment in section 11-A of the Act was to confer power on the Central
Excise Officer to initiate a recovery proceeding under section 11-A of the Act
irrespective of the fact that the department had approved the classification
list supplied by the assessee from time to time. This amendment was brought
C in order to negate certain decisions of this Court and also High Courts in
India saying that it would not be open to the Central Excise Officer to initiate
a recovery proceeding under section 11-A of the Act, if the classification lists
supplied by the assessee were approved by the department from time to time.

As noted herein earlier, the erstwhile Rule 10 of the Central Excise Rules
D and section 11-A prior to the 2000 amendment did not postulate that, in cases
of approval by the Department, a proceeding for recovery of duties, for non-
levy or non-payment, short-levy or short-payment or erroneous refund, could
be initiated within six months or one year or five years, as the case may be,
from the relevant date but it is evident that by the amendment in section 11 A
of the Act in the year 2000, in cases of approval also of the classification lists
E supplied by the assessee and accepted by the department from time to time,
it would be open to the Central Excise Officer to initiate a recovery proceeding
against the assessee under section I IA of the Act within six months or one
year or five years, as the case may be, from the relevant date. That being the
position, we are, therefore, of the view that in spite of some decisions of this
p Court or other High Courts of India holding that a recovery proceeding under
section 11 A of the Act could not be initiated for recovery of duties when the
classification lists supplied by the Assessee were approved by the Department
from time to time, due to the 2000 amendment in section 11-A, recovery
proceedings can now be initiated even when the classification lists supplied
by the assesset were approved by the department from time to time. In the
G case of Collector of Central Excise, Baroda v. Cotspun Ltd, (1999) 113 ELT
353 SC] it was held that the levy of excise duty on the basis of an approved
classification list is not a short-levy and therefore, differential duty cannot be
recovered on the ground that it was a short levy and therefore, the erstwhile
Rule 10 of the Central Excise Rules or section 11-A of the Act (prior to the
H 2000 amendment) had no application. This Constitution Bench decision of
ANAND NISHIKAWA CO LTD.'· COMM. OF CENTRAL EXCISE, MEERUT [TARUN CHATTERJEE, Jj 423

this Court was, however, concerned with the erstwhile Rule I 0 of the Central A
Excise Rules and section 11-A of the Act prior to the 2000 amendment. After
the amendment in section 11-A in 2000, it can be said that the approval of
the classification list supplied by the assessee cannot take away the
conferment of right on the Central Excise Officer to initiate a proceeding for
recovery of duties not-levied or paid or short-levied or short-paid or B
erroneously refunded within six months or one year or five years, as the case
may be, from the relevant date.

In Cotspun Ltd., (supra), we also find that this Court held that when the
classification list had been approved by the Department, it remained valid and
correct until its approval was challenged. If differential duty had to be recovered C
upon such successful challenge to classification by the Department, the
demand would be prospective from the date of show cause notice. It is further
evident from Cotspun Ltd's case (supra) that there was no retrospectivity to
the revision of classification list. By the time, this landmark decision was
rendered by this Court, the classification list system had changed to
classification declaration system where approval was no longer required. D
Subsequently, in the Finance Act, 2000, the Parliament retrospectively validated
actions taken under section I IA of the Act so as to overcome the decision
insofar as past and concluded proceedings w~re concerned. Therefore,
consequent to the retrospective amendment, the view that classification already
settled due to attaining of finality cannot be disturbed is no longer valid law. E
In view of the decision in Cotspun Ltd's case (supra) Section 11-A by
Act No. I 0 of 2000 was amended with retrospective effect from 17.11.1980.
The vires of the aforesaid amendment was, however, challenged. In a recent
decision by this Court in the case of Eas/and Combines, Coimbatore v.
Collector of Central Excise, Coimbatore, [2003] 3 SCC 410, this Court has p
upheld the validity of the amendment and also held that on account of such
amendment, the decision in Cotspun Ltd's case (supra) has ceased to be a
good law. However, another two-Judges Bench decision of this Court took a
contrary view and held that the amendment had not altered the basis of the
judgment in Cotspun Ltd's case (supra) and on a reference from that Bench,
the matter came up for consideration in the case of !TW Signode India Ltd., G
v. Collector of Central Excise, [2004] 3 SCC 48, before a three-Judge Bench.
In that decision, the amendment was not found to be ultra vires of the
Constitution and it held that the amended section I IA of the Act is a valid
piece of legislation.
H
424 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A On behalf of the Appellant, learned counsel Shri V. Sridharan had drawn
our attention to proviso to section 11 A of the Act which has already been
noted herein earlier and contended that extended period of limitation as
mentioned in proviso to· section l IA of the Act in the facts of this case could
not be attracted and the Central Excise Officer could not invoke proviso to
section I IA of the Act. Before we examine this submission of the learned
B counsel for the appellant, we must note that the CEGAT in the impugned
order held that the Central Excise Officer in the facts of this case was entitled
to invoke extended period of limitation within the meaning of section 11 A of
the Act as there was "suppression of facts" while supplying the classification
list. As noted herein earlier, proviso to section 1lA clearly shows that where
C any duty of excise has not been levied or paid or has been short-levied or
short-paid or erroneously refunded by reason of fraud, collusion or any willful
misstatement or suppression of facts or contravention of any of the provisions
of the Act or of the Rules made thereunder, as the case may be, to evade
payment of duty by such person, the Central Excise Officer would be entitled
to invoke proviso to section 1lA of the Act, that is to say, extended period
D of limitation can be taken advantage of by him.
As noted herein earlier, from the facts of the present case, we find that
the only question that arose before the CEGAT or the Commissioner was
whether there was any "suppression of facts" for which the authorities were
E entitled to invoke proviso to Section 11 A of the Act.

As noted herein earlier, the Commissioner while adjudicating the show
cause notice confirmed the duty demand on goods found short and also
imposed a penalty of Rs. I0,000 on the assessee but he dropped the rest of
the proceedings on the ground that there was no "suppression of facts" on
p the part of the appellant herein and accordingly extended period of limitation
was found by him not to be available to the department under the proviso
to section 1lA of the Act. In appeal, CEGAT, however, as noted herein earlier,
reversed this finding of the Commissioner and found "suppression of facts"
from the materials on record. If CEGA Twas justified in holding that there was
"suppression of facts" by the appellant either regarding their method of
G process of the product in question and applicability of different classification
lists, then certainly CEGAT was correct in holding that extended period of
limitation under proviso to section 11-A of the Act could be applied in the
facts and circumstances of the case. In that event, this Court would not be
in a position to interfere with the order impugned in this appeal.
H
ANAND NISHIKAWA CO. LTD."· COMM. OF CENTRAL EXCISE. MEERUT [TARUN CHATTERJEE. I.) 425

Therefore, let us now examine whether CEGAT was justified in holding A
that there was "suppression of facts" in the matter of disclosure of
·manufacturing process or applicability of the classification lists supplied by
the appellant or not. It is seen that Revenue alleged that the appellant had
never disclosed to it that they were carrying on process of notching, slitting,
punching, slotting etc. on rubber profiles and if they had done so it would
amount to "further working" thereby rendering the products classifiable under B
sub-heading 4016.19 and not classifiable under sub-heading 4008.29. It was
also the case of the Revenue that these operations came to the knowledge
of the Revenue only when an investigation commenced in the present matter
by the Directorate General of Anti Evasion which resulted in the issue of the
show-cause notice dated 19th October, 1995. C
In the impugned order, CEGAT on perusal of the correspondence between
the appellant and the department was unable to find any disclosure in writing
by the appellant with respect to post-forming processes like notching, drilling
etc. From the materials on record which were produced before the authorities
and also from the orders of the CEGAT and the Commissioner, it can be seen D
that the department had the opportunity to inspect the products of the
appellants and in fact, the factory of the appellants was inspected by them.
It may be true that the appellants might not have disclosed the post-forming
process in detail but from the correspondence and other materials on record,
it cannot be conceived that the authorities were not aware of the facts as, we E
gather from the materials on record, admittedly, samples were collected by the
Department and even after the samples were collected and inspected,
classification as supplied by the appellant in respect of the products in
question was approved by them.

Further more, it is also evident from the record that the flow-chart of p
manufacturing process which was submitted to the Superintendent of Central
Excise, Rampur on 17.5.1990 clearly mentioned the fact of post forming process
on the rubber [See page 15 of the Order of CEGA T]. The CEGA T in its order
has also recognized the fact of collection of some relevant samples by the
excise authorities on 25.9.1985 and 22.1.1988. [See paragraphs 7.1 & Page 14
of the Order of CEGAT]. G
In this view of the matter, we are unable to persuade ourselves to agree
with the finding of the CEGAT as admittedly, the products of the appellant
were inspected from time to time and the department was aware of the
manufacturing process of the products although the appellant might not have H
426 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A disclosed the post fonning process in detail.

In Tata Iron & Steel Co. Ltd. v. Union of India and Ors., (1988) 35 ELT
605 SC, this Court held that when the classification list continued to have
been approved regularly by the department, it could not be said that the
manufacturer was guilty of"suppression of facts". As noted herein earlier, we
B have also concluded that the classification lists supplied by the appellant
were duly approved from time to time regularly by the excise authorities and
only in the year 1995, the department found that there was "suppression of
facts" in the matter of post forming manufacturing process of the products
in question. Further more, in view of our discussion made herein earlier, that
C the department has had the opportunities to inspect the products of the
appellant from time to time and, in fact, had inspected the products of the
appellant. Classification lists supplied by the appelJant were duly approved
and in view of the admitted fact that the flow-chart of manufacturing process
submitted to the Superintendent of Central Excise on 17.5.1990 clearly
mentioned the fact of post-forming process on the rubber, the finding on
D "suppression of facts" of the CEGAT cannot be approved by us. This Court
in the case of Pushpam Pharmaceutical Company v. Collector of Central
Excise, Bombay, (1995] Supp 3 SCC 462, while dealing with the meaning of
the expression "suppression of facts" in proviso to section I IA of the Act
held that the tenn must be construed strictly, it does not mean any omission
E and the act must be deliberate and willful to evade payment of duty. The
Court, further, held : -

"In taxation, it ("suppression of facts") can have only one meaning
that the correct information was not disclosed deliberately to escape
payment of duty. Where facts are known to both the parties the
F omission by one to do what he might have done and not that he must
have done, does not render it suppression. "

Relying on the aforesaid observations of this Court in the case of
Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay, (1995]
Suppl. 3 SCC 462, we find that "suppression of facts" can have only one
G meaning that the .correct information was not disclosed deliberately to evade
payment of duty, when facts were known to both the parties, the omission
by one to do what he might have done not that he must have done would
not render it suppression. It is settled law that mere failure to declare does
not amount to willful suppression. There must be some positive act from the
side of the assessee to find willful suppression. Therefore, in view of our
H
ANAND NISHIKAWA CO.LTD. '· COMM OF CENTRAL EXCISE, MEERUT [TA RUN CHATTERJEE. J.) 427

findings made herein above that there was no deliberate intention on the part A
of the appellant not to disclose the correct information or to evade payment
of duty, it was not open to the Central Excise Officer to proceed to recover
duties in the manner indicated in proviso to section I IA of the Act. We are,
therefore, of the firm opinion that where facts were known to both the parties,
as in the instant case, it was not open to the CEGAT to come to a conclusion B
that the appellant was guilty of "suppression of facts". In Densons
Pultretaknik v. Collector of Central Excise, (2003] 11 SCC 390, this Court
held that mere classification under a different sub-heading by the manufacturer
cannot be said to be willful misstatement or ·~suppression of facts". This view
was also reiterated by this Court in Collector of Central Excise, Baroda, v.
LMP Precision Engg. Co. Ltd., (2004] 9 SCC 703. C
However, in the case of LMP Precision Engg. Co. ltd, (supra), this
Court came to the conclusion that the manufacturer was guilty of"suppression
of facts". In that decision, manufacturer did not make any attempt to describe
the products while seeking an approval of cl11ssification list and in that
background of facts, it was held that it amounted to "suppression of facts" D
and therefore, excise authorities were entitled to invoke proviso to section
11 A of the Act. It also appears from that decision that this Court also held
that if any classification was due to mis-interpretation of the classification list,
suppression of facts could not be alleged. From this judgment, it is therefore
clear that since the excise authorities had collected samples of the products E
manufactured by the appellant and inspected the products and the relevant
facis were very much in the know ledge of the excise authorities and nothing
could be shown by the excise authorities that there was any deliberate
attempt of non-disclosure to escape duty, no claim as to "suppression of
facts" could be entertained for the purpose of invoking the extended period
of limitation within the meaning of proviso to section l JA of the Act F
Similarly, in the case of Collector Central Excise, Jamshedpur v. Dabur
India ltd., (2005) 121 ECR 129 SC, this Court held that the extended period
of limitation was not available to the Department as classification lists filed
by the Assessee were duly approved by the authorities from time to time. In
that decision this Court followed its earlier judgment in O.K. Play (India) ltd., G
v. Collector of Central Excise, Delhi-Ill, (Gurgaon) (2005) 66 RL T 657 SC,
held that in cases where classification lists filed by the Assessee were duly
approved, the extended period of limitation would not be available to the
Department.
H
428 SUPREME COURT REPORTS [2005] SUPP. 3 S.C.R.

A For the reasons aforesaid, we are of the view that the CEGAT was not
justified in holding that the extended period of limitation would be available
to the Department for initiating the recovery proceedings under section 11 A
of the Act on a finding that there was suppression of facts by the appellant.
Accordingly, it was not open to the excise authorities to invoke proviso to
section I IA of the Act and therefore, the demand of the Revenue must be
B restricted to six months prior to the issue of notice dated 19.10.1995 instead
of five years. In view of this conclusion, it is not necessary for us to consider
the question of applicability of the classification lists namely of 4008.29 and
4016.19 and the question ofMODVAT facilities. Accordingly, in our opinion,
CEGAT came to a wrong conclusion for wrong reasons and therefore, we
C allow this appeal and set aside the judgment and order of the CEGAi and
restore the order of the Commissioner.

There will be no order as to costs in this appeal.

v.s.s. Appeal allowed.