Holding

The extended period of limitation could not be invoked because the alleged suppression was not specifically pleaded and the facts were already known to the department, and the appellant’s bona‑fide claim was not rejected.

Summary

Larsen & Tubro Ltd entered into a bridge‑construction contract for the Konkan Railway and manufactured pre‑stressed concrete (PSC) girders without registering under the Central Excise Act. A first show‑cause notice (SCN) issued under Section 11IA demanding excise duty for March 1993‑December 1994 was later withdrawn without alleging any suppression of facts. A second SCN, issued on 1 May 1996, invoked the extended five‑year period of limitation on the ground that the appellant had suppressed the fact that the girders were excisable articles. The Commissioner held that the manufacture of PSC girders attracted excise duty, the girders were not immovable property, and the extended limitation was justified. The Tribunal dismissed the appeal. The Supreme Court held that the revenue had not specifically pleaded suppression in the first SCN, the alleged facts were already known to the department, and the appellant had pleaded bona‑fide. Consequently, the extended period of limitation could not be invoked and the Tribunal’s order was set aside.

Issues considered

Whether the manufacture of PSC girders for bridge construction constitutes 'manufacture' attracting excise duty under the Central Excise Act, 1944.
Whether the PSC girders are immovable property and thus exempt from confiscation.
Whether the extended period of limitation under the proviso to Section 11IA can be invoked when the first SCN did not allege suppression and was withdrawn.
Whether the revenue must specifically plead suppression of facts in the SCN for the extended limitation to apply.
Whether the appellant's plea of bona‑fide negates the imposition of penalty and the invocation of the extended limitation.

Legislation cited

Central Excise Act, 1944s. 11A, s. 11IA
Central Excise Rules, 1944s. Rule 173Q, s. Rule 209A, s. Rule 226, s. Rule 49(1)

Subjects

Central ExciseExtended period of limitationSuppression of factsManufactureImmovable propertyBona fideShow cause noticePenaltyExcise duty

Judgment

MIS. LARSEN AND TUBRO LTD. A
' v.
THE COMMISSIONER OF CENTRAL EXCISE, PUNE-II

MAY2, 2007

[S.B. SINHAANDMARKANDEYKATJU,JJ.] B

1 Central Excise Act, 1944-s. I IA-Extended period of limitation-
' /nvocation of, in the second show cause notice on the ground of suppression
of facts-When original show cause notice demanding excise duty was C
withdrawn, where allegation of suppression was not made-Held: Extended
period of limitation cannot be invoked subsequently as the facts alleged to
have been suppressed by assessee were known to the Revenue-Also the
assessee had pleaded bonafide.

Appellant undertook a contract for constructioir of bridges for Public D
Sector Undertaking. Appellant manufactured PSC Girders and used to
transport them to the site of construction of bridges of the Railways. It did
not register itself with the authorities of the Central Excise. Show Cause
Notice was issued to the appellants alleging that it was involved in the
manufacturing activity but did not pay any excise duty and the said notice was
withdrawn. Another show cause notice was issued and extended period of E
limitation was invoked alleging suppression of fact on the part of the appellant.
Commissioner of Central Excise held that the manufacturer of PSC Girders
would come within the purview of construction of the bridges and the same
would not be immovable property; and that the longer period oflimitation has
rightly been invoked as the appellant had suppressed the fact from the F
department that the goods were excisable articles. Appellant filed appeal which
was dismissed. Hence the present appeal.

Allowing the appeal, the Court

HELD: 1.1. It was not a case where element of suppression extended to G
apply to extended period of limitation. It is also not a case where the appellant
did not plead bona fide. It is furthermore not a case where the Tribunal and
consequently this Court, could have arrived at a finding that the appellant
took recourse to suppressio veri. (Para 13] (1146-E, F]

1141 H
1142 SUPREME COURT REPORTS [2007] 5 S.C.R.

A 1.2. Acts of fraud or suppression, must be specifically pleaded. The
allegations in regard to suppression of facts must be clear and explicit so as
to enable the notice to reply thereto effectively. It was not the case of the
Revenue that the activities of the appellant were not known to it.
(Para 14) (1146-GJ

B 1.3. Admittedly, when the first show cause notice was issued, the
extended period of limitation was not resorted to. A notice should ordinarily
be issued within a period of six months (as the law then stood) i.e. within the
prescribed period of limitation but only in exceptional cases, the said period
could be extended to 5 years. When in the original notice, such an allegation
C had not been made, that the same could not have been made subsequently as
the facts alleged to have been suppressed by the appellant were known to them.
[Para 151 (1146-G; 1147-AJ
1.4. Extension of the period of limitation entails both civil and criminal
consequences and, therefore, must be specifically stated in the show cause
D notice, in absence whereof the Court would be entitled to raise an inference
that the case was not one where the extended period of limitation could be
invoked. [Para 191 [1149-B, q
1.5. Appellant as also the Public Sector Undertaking raised a definite
plea of bona fide which had not been rejected. As a matter of fact, while
E considering imposition of penalty under s. 11 A of the Central Excise Act,
1944 the Commissioner has refused to impose any penalty upon the appellant
on the premise that it was not guilty of any act of mala fide. Therefore, in
view of the facts and circumstances of this case, the impugned judgment cannot
be sustained and is set aside. The Revenue was not justified in invoking the
extended period oflimitation in the instant case. [Para 20) [1149-D, El
F
P & B Pharmaceuticals (P) Ltd v. Collector of Central Excise, (2003)
153 ELT 14 SC; Nizam Sugar Factory v. Collector of Central Excise, A.P.
(2006[ 197 ELT 465 SC; ECE Industries Limited v. Commissioner ofCentral
Excise, (2004[ 13 SCC 719 = (2004[ 164 ELT 236; Commissioner a/Central
Excise, Chandigarh v. Mis. Punjab Laminates Pvt. Ltd, [2006[ 7 SCC 431,
G referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2990 of2006.
From the Final Order No. A/329/WZB/06/C-Ill/EB dated 16.02.2006 in
Appeal No. E/3634/98-Mum passed by the Customs, Excise and Service Tax
H Appellate Tribunal, West Zonal Bench at Mumbai.
LARSEN AND TIJBRO LTD. 1•. COMMNR. OF CENTRAL EXCISE, PUNE-ll [S.B. SINHA, J.] 1143

N. Venkataraman, S. Nanda Kumar, Satish Kumar, Mayil Samy, A
Anandaselvam, Renuga Devi and V.N. Raghupathy for the Appellant.

Gopal Subramaniam, ASG., Asheesh Jain and B.K. Prasad for the
Respondent.

The Judgment of the Court was delivered by B
S.B. SINHA, J. I. An order dated 16.2.2006 passed by the Customs,
Excise and Service Tax Appellate Tribunal (CESTAD in Appeal No.E/3634/98-
Mum., is in question before us. The appellant is a company incorporated
under the Companies Act. It undertook a contract for construction of bridges
for Mis. Konkan Railway Corporation Ltd. ('Konkan Railway', for short), C
which is a public sector undertaking. Appellant manufactured Pre Stressed
Concrete Girders (PSC Girders). It used to transport them to the site of
construction of bridges of the Railways. It did not register itself with the
authorities of the Central Excise.

2. Alleging that the appellant, for the period March 1993 and December D
1994, although was involved in the manufacturing activity, by undertaking
manufacture of 75 PSC Girders, but did not pay any excise duty thereupon.

3. A notice was issued to the appellant directing it to show cause as
to why Central Excise duty to the tune of Rs.32,35,575/- should not be E
demanded and recovered from them in terms of the proviso appended to Rule
49(1) of the Central Excise Rules, 1944 (Rules) read with Section I IA of the
Central Excise and Salt Act, 1944 (Act) and as to why penalty should not be
imposed on them and the plant & machinery and the manufactured goods
should not be confiscated. Cause was shown by the appellant inter alia
stating that no excise duty was payable. The said notice was withdrawn F
stating:

"The said Show Cause Notice has been issued without obtaining
approval of the proper authority or by the proper officer. Accordingly,
Show Cause Notice dated 27.1.94 hereby withdrawn.
G
The withdrawal of the Show Cause Notice is without prejudice to
any action including issue of fresh Show Cause Notice which may be
taken against M/s. Konkan Railway Corporation Ltd., Ratnagiri (North),
Lanjekar Compound, Phansi Baug, Udyamnagar, Ratnagiri of Central
Excise Law or any other law of the time being is force."
H
I 144 SUPREME COURT REPORTS [2007] 5 S.C.R.

A 4. After a long time, namely, on 1.5.1996, another show cause notice was
issued on the same premise for the period March 1993 and December, 1994.
The extended period of limitation was invoked alleging suppression of fact
on the part of the appellant. Appellant herein filed a show cause wherein inter
alia the question of applicability of the extended p~riod of limitation as
contained in the proviso appended to Section 1lA of the Act was specifically
B raised. The Commissioner of Central Excise, Pune, in his judgment opined that
basically following four issues were involved:

"(i} Whether a process of 'manufacture' is involved?

(iQ Whether the girders can be considered as immovable property or
c not?
(iii} Whether the girders can be considered as marketable or not and
whether exemption under Notification No.59/90 can be extended?
(iv) Whether there was suppression offacts on the part of the noticees
so as to invoke extended period?"
D
5. It was held that as construction of the bridges consists of many
things, including foundation and super structure, manufacture of PSC Girders
would come within the purview thereof; and the same would not be immoveable
property. It was further held that the longer period of limitation has rightly
E been invoked as the appellant had suppressed the fact from the department
that the goods in question were excisable articles. It was opined:

"12. As regards penalty on KRCL under Rule 209A, since the
manufacturing activity was undertaken by M/s. L & T and there is no
evidence of their mala tides in the matter, further they have also
alerted the contracting party about discharge of central taxes etc. as
F )
seen from clause 47 of contract, I refrain from imposing any penalty
on them.

13. As regards confiscation of 75 Nos. of PSC Girders, though Mis.
L & T were given a notice in writing informing them the grounds on
which it is proposed to confiscate the goods and they were also given
G
an opportunity of making a representation within reasonable time
against the said proposed confiscation and a reasonable opportunity
of being heard in the matter, they only stated that these were not
liable for confiscation being permanently embedded in the earth, thus
immoveable property. As already held since girders at the earth, they
H came into existence were not embedded to the earth, they cannot be
LARSENANDlUBROLID.1•.COMMNR.OFCENTRALEXCISE,PUNE-U[S.B.SINHA.J.) 1145
considered as immoveable property and therefore I hold these 75 Nos. A
of PSC girders liable for confiscation under Rule 173Q read with Rule
226 ofCER, 1944."

6. The appeal preferred thereagainst by the appellant, as noticed
hereinbefore, was dismissed by the Tribunal.
B
7. Mr. Venkataraman, learned senior counsel appearing on behalf of the
appellant would raise two contentions in support of this appeal:

(i) That earlier notice having been withdrawn wherein no allegation
of suppression had been made, the same could not have been made
in the second notice dated 1.5 .1996. C
(ii) In any event, the question as to whether the activities of the
appellant would attract excise duty or not having been decided for the
first time by a larger Bench of the Tribunal in Asian Techs Ltd. v.
Commissioner of Central Excise, Pune-11, (2005) 189 ELT 420 it was
not a case where the extended period of limitation should have been D
invoked.

8. Mr. Gopal Subramanium, learned Additional Solicitor General appearing
on behalf of the Union of India, on the other hand, would submit:

(i) For construction of the notice dated 27.1.1994, the allegations E
made therein as a whole must be taken into consideration for the
purpose of arriving at a conclusion as to whether a case for suppression
had been made out or not.

(ii) Withdrawal of the first notice per se would not disentitle the
Department from issuing another notice as the same had been issued F
by an officer who had no authority in relation thereto.

(iii) As the appellant had been seeking exemption from payment
of excise duty, suppression of fact on its part must be inferred as it
did not get itself registered for the purpose of payment of excise duty.
G
9. Whether the activities carried out by the appellant would amount to
> manufacture or not was a debatable issue. Our attention has been drawn to
several decisions of the Tribunal, namely, Asian Techs Ltd. (supra), Rajeswari
Enterprises (Constructions) Pvt. Ltd. v. CCE, Madurai, (2005) 180 ELT 66
(Tri. - Chennai), Tecco v. CCE, Madurai, (2002) 149 ELT 133 (Tri.- Chennai);
Delhi Tourism and Transportation Development Corporation v. C.C.E., (1999) H
1146 SUPREME COURT REPORTS [2007] 5 S.C.R.

A 114 ELT 421 (Tri.-Delhi)]; M Ramachandra Rao v. CCE. Guntur, (2005) 186
ELT 353 (Tr.-Bangalore); Raglnmath Ramachandra Shanbag v. CCE, Mumbai-
VII, (2004) 178 ELT 488 (Tr.-Mumbai); and Gammon India ltd v. CCE, Goa,
(2002) 146 EL T 173, which held the field at the relevant point of time.

I0. Questions involving similar cases came for consideration before the
B Tribunal at different points of time. They were answered differently by different
Benches.

I l. The Tribunal in its order dated 25.4.2003, in the case of Mis. B.E.
Billimoria & Co. Pvt. Ltd. opined that similar goods manufactured by others
C do not attract the provisions of the Central Excise Act. It is stated that the
same bench of the Tribunal in its judgment dated 10.5.2004, in Ragunath
Ramchandra Shanbhag (supra), came to a similar conclusion.

12. During the period in question being 1993-94, no direct decision on
the point involved was available. It was noticed that different benches of the
D Tribunal in different cases had rendering their decisions differently. In the
case of Billimoria (supra), it was categorically held that manufacture of PSC
Girders would not attract the provisions of Central Excise Act, 1944.

13. Correctness of Billimoria (supra) was questioned by another Bench
of the Tribunal and the matter was referred to a larger Bench. The larger
E Bench in Asian Techs Ltd. (supra) relying upon or on the basis of a large
number of decisions of this Court opined that the excise duty was payable
and the principles of works contract would not be applicable in a case of this
nature. We, therefore, accept the contention of the learned counsel that it was
not a case where element of suppression extended to apply to extended
period of limitation. It is also not a case where the appellant did not plead
F bona fide. It is furthermore not a case where the Tribunal and consequently
this Court, could have arrived at a finding that the appellant took recourse
to suppressio veri.

14. Acts of fraud or suppression, it is well settled, must be specifically
G pleaded. The allegations in regard to suppression of facts must be clear and
explicit so as to enable the noticee to reply thereto effectively. It was not the
case of the revenue that the activities of the appellant were not known to it.

15. Admittedly, when the first show cause notice was issued, the extended
period of limitation was not resorted to. A notice should ordinarily be issued
-
H within a period of six months (as the law then stood) i.e. within the prescribed
LARSEN ANDlUBROLTD.1•. COMMNR. OF CENTRAL EXCISE, PUNE-11 [S.B. SINHA,J.J 1147
period of limitation but only in exceptional cases, the said period could be A
extended to 5 years. When in the original notice, such an allegation had not
been made, we are of the opinion that the same could not have been made
subsequently as the facts alleged to have been suppressed by the appellant
were known to them.

16. In P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise, B
(2003) 153 EL T 14 SC, this Court held as under:

"19. However, Mr. Jaideep Gupta submits that the Tribunal did not
accept that here has been assignment of logo in favour of the assessee.
We are unable to accept the comention of the learned counsel. The
tenor of the order, 'the assessee had produced certain documents C
such as registration form, trade mark authorities assigning the trade
mark to them but the fact remains that there was material evidence by
way of seizure of goods manufactured by Mis. P & B Laboratories
bearing the same logo much after the alleged transfer of trade mark
to the appellants" discloses that the Tribunal accepted that there has D
been an assignment but proceeded to deal with the case of
inapplicability of the exemption under the notification on the ground
that the logo was being used by Mis. P & B Laboratories also. We
have already indicated above that use of logo of the manufacturer by
third parties is alien for purposes of denial of exemption on the
strength of para 7 of the notification. In this view of the matter, we E
are unable to uphold the order of the Tribunal denying the exemption
to the assessee.

20. In any event, the ground that the assessee has suppressed the
fact that M/s. P & B Laboratories was also using the logo for availing
1.
the benefit under the notification cannot be a valid reason to invoke F
the proviso to Section I IA of the Act. There is no obligation on the
owner of a logo to make a roving enquiry to ascertain whether any
other person is also using his logo and disclose it to the authorities
to avert a possible allegation of suppression of fact for purposes of

-
invoking the proviso." G
17. Yet again in Nizam Sugar Factory v. Collector of Central Excise,
A.P., (2006) 197 ELT 465 SC the ratio rendered in P & B Pharmaceuticals Ltd.
(supra) has been reiterated stating:

"Allegation of suppression of facts against the appellant cannot be H
1148 SUPREME COURT REPORTS (2007] 5 S.C.R.

A sustained. When the first SCN was issued all the relevant facts were
in the knowledge of the authorities. Later on, while issuing the second
and third show cause notices the same/similar facts could not be
taken as suppression of facts on the part of the assessee as these
facts were already in the knowledge of the authorities. We agree with
the view taken in the aforesaid judgments and respectfully following
B the same, hold that there was no suppression of facts on the part of
the assessee/appellant."

18. In the said decision, this Court followed the earlier judgment of the
i
Division Bench of this Court in ECE Industries Limited v. Commissioner of
Central Excise, [2004] 13 SCC 719 = (2004) 164 ELT 236, wherein it was
c categorically stated:

"6. Appellant was served with a second SCN by the Collector on
16.7.1987 alleging that the appellant was supplying carbon dioxide to
another unit as per agreement dated 19.3.1983; that they had not taken
D necessary licence; had not followed the procedure prescribed under
the rules; and had not discharged duty liability. The said SCN covered
the period of assessment years 1982-83 to 1986-87. Appellant responded
to the second SCN and took the plea that the SCN under consideration
was practically a repetition of the allegations contained in the SCN
dated 28.2.1984 and for the period April, 1982 to September, 1982 the
E department had raised demands under two different SCNs. It was
pointed out that carbon dioxide in the impure form was not marketable
as it also contained carbon monoxide in lethal proportions. It was
contended that they were under bona fide belief that since such
impure carbon dioxide was not exigible to payment of duty, they were
not requir.ed to file either Classification List or the Price List or take
F
out licence. It was submitted that resorting to extended period of
limitation under Section 11A(1) was not justified in the circumstances
of the case. Appellant was served with the third SCN on 12.9.1988 for
the period 16.3.1988 to 27.6.1988 on the same allegations. Assessee
filed its reply in terms of the earlier replies i.e. reply to SCN dated
G 16.7.1987. The adjudicating authority did not accept the appellant's
contention and the demands raised in the SCN were confirmed.

JOO( JOO( JOO(
• -
8. Without going into the question regarding Classification and
H marketability and leaving the same open, we intend to dispose of the
LARSEN AND TUBRO LTD.''- COMMNR. OF CENTRAL EXCISE, PUNE-II (S.B. SINHA, J.] 1149

appeals on the point of limitation only. This Court in the case of P A
& B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported,
in [2003] 3 SCC 599 = (2003) 153 ELT 14 (SC) has taken the view that
in a case in which a show cause notice has been issued for the earlier
period on certain set of facts, then, on the same set of facts another
SCN based on the same/similar set of facts invoking the extended B
period of limitation on the plea of suppression of facts by the assess'!e
cannot be issued as the facts were already in the knowledge of the
department. ........"

19. Furthermore, extension of the period oflimitation entails both civil
and criminal consequences and, therefore, must be specifically stated in the C
show cause notice, in absence whereof the Court would be entitled to raise:
an inference that the case was not one where the extended period of limitation
could be invoked.

(See Commissioner of Central Excise, Chandigarh v. Mis. Punjab Laminates
Pvt. Ltd., [2006] 7 sec 431 J D
20. Another aspect of the matter cannot also be lost sight of. Appellant
as also the Konkan Railawy raised a definite plea of bona fide. Such a plea
had not been rejected. As a matter of fact, while considering imposition of
penalty under Section 11 A of the Act, the Commissioner has refused to E
impose any penalty upon the appellant on the premise that it was not guilty
of any act of ma/a fide. We, therefore, keeping in view the facts and
circumstances of this case, are of the considered view that the impugned
judgment cannot be sustained. It is set aside accordingly. We hold that the
Revenue was not justified in invoking the extended period of limitation in the
instant case. F
21. For the reasons aforementioned, the impugned judgment cannot be
sustained and it is set aside accordingly. The appeal is allowed. However, in
the facts and circumstances of the case, there shall be no order as to costs.

N.J. Appeal allowed.