The Commissioner, Central Excise and Customs and Another vs M/s Reliance Industries Ltd.

HELD: 1.1 The format of the ER-1/RT-12 return which the assessee was required to file on a monthly basis for intimating to the department the value of clearances effected and the amounts of duties paid thereon. There is no separate column or requirement in these forms for declaring the value and other details of clearances effected to the deemed export buyers i.e. holders of advance licenses. Note 4 under Form ER–1 does require separate details to be mentioned for exports under bond. Indisputedly clearance made to domestic buyers even if they are considered deemed exports are not clearances for “exports under bond” for which category of clearances alone requirement existed for separate disclosure in the ER-1/RT-12 returns. In the absence of any specific column or note similar to note 4, requiring separate disclosure of the value of deemed export clearances, there is no merit in the findings of the adjudicating authority that there was suppression of facts as a consequence of assessee’s failure to separately disclose the value of deemed export clearances. An accusation of non–disclosure can only be made if there is in the first instance a requirement to disclose. [Para 20][1297-B-D]

1.2 Note 4 to Form ER-1 requires separate details of clearances to be mentioned for exports under Bond. There is no reference in the said notes to deemed exports or supplies made to holders of advance licenses. The submissions that the assessee was never required to separately furnish details of clearances made to holders of advance licenses is accepted. Neither the show cause notice nor the civil appeal filed by the Revenue before this Court contain any reference to the wrongful clubbing of deemed export clearances under the details meant for domestic clearances. Also the order of the tribunal does not contain any reference to this particular aspect which was the main thrust of the oral arguments made by the Counsel for the Revenue before this Court. The Revenue cannot be permitted to argue its matters by going beyond the written pleadings filed by it before this Court. The mere fact that the oral arguments are supported by findings of the adjudicating authority, which is not the order impugned before this Court, does not entitle the Revenue to resurrect a point which though made at the original stage, was never pressed before the tribunal or even incorporated in the memo of appeal filed before this Court. [Para 21][1297-E-H; 1298-A]

1.3 The submission of the Revenue that the tribunal’s order in the case of IFGL Refractories could not have constituted a valid basis for the belief entertained by the assessee in view of the fact that the relevant valuation provisions had undergone amendments in the year 2000 cannot be accepted. Firstly, this contention too has not been urged in the Civil Appeal filed by the Revenue and has been urged only during the course of the hearing before this Court; and secondly, the submission is diametrically opposite to what the Revenue itself has been contending on merits right from the Show cause notice till the appeal filed before this Court. On merits, the Revenue’s case throughout had been that the issue of valuation is covered against the assessee by the judgement of this Court in the case of IL Refractories. Even in the order of the CESTAT under challenge the tribunal proceeded on the basis that the principle of valuation laid down by this Court in the case of IFGL Refractories holds good and remains valid even under the amended valuation provisions for the period post July 2000. It is strange that for the purposes of justifying its case on limitation, the Revenue wishes to take a position exactly contrary to what it has taken in the Show Cause Notice on merits. The Revenue cannot be allowed to blow hot and cold in the same breath by relying upon IL’s case on merits while at the same time arguing that the same had no relevance for the purposes of examining the plea for a bonafide belief. [Para 22][1298-B-F]

1.4 The finding of the tribunal that during the period in dispute it was holding a bonafide belief that it was correctly discharging its duty liability is concurred with. The mere fact that the belief was ultimately found to be wrong by the judgment of this Court does not render such belief of the assessee a malafide belief particularly when such a belief was emanating from the view taken by a division bench of tribunal. The issue of valuation involved in this particular matter is indeed one where two plausible views could co-exist. In such cases of disputes of interpretation of legal provisions, it would be totally unjustified to invoke the extended period of limitation by considering the assessee’s view to be lacking bonafides. In any scheme of self–assessment it becomes the responsibility of the assessee to determine his liability of duty correctly. This determination is required to be made on the basis of his own judgment and in a bonafide manner. [Para 23][1298-G-H; 1299-A-B]

1.5. The extent of disclosure that an assessee makes is also linked to his belief as to the requirements of law. In the instant case, the assessee who was required to self–assess his liability determined the assessable value on the basis of an interpretation given by CESTAT. It could not have foreseen that the view taken by CESTAT would be upset and overturned by the Supreme Court as it happened on 9.8.2005. The assessee’s conduct during the material period, between 2000 to 2005 cannot be considered to be malafide when it merely followed the view taken by the tribunal in IFGL’s case. On the question of disclosure of facts, the assessee had disclosed to the department its pricing policy by giving separate letters. It is also not disputed that the returns which were required to be filed were indeed filed. In these returns, there was no separate column for disclosing details of the deemed export clearances. Separate disclosures were required to be made only for exports under bond and not for deemed exports, which are a class of domestic clearances, entitled to certain benefits available otherwise on exports. There was thus, nothing wrong with the assessee’s action of including the value of deemed exports within the value of domestic clearances. [Para 24][1299-B-E]

1.6. In the show cause notice itself it has been accepted by the revenue that the self–assesment procedure did not require an assessee to submit copies of all contracts, agreements and invoices. This being the admitted position in the notice there is no basis for agreeing with the findings of the Commissioner that certain relevant documents had not been filed and thereby suppressed from the scrutiny of the revenue officers. An assessee can be accused for suppressing only such facts which it was otherwise required to be disclosed under the law. The counsel for the Revenue has, while pleading that facts was suppressed been unable to show the provision or rule which required the assessee in this case to make additional disclosures of documents or facts. The assertion that there was suppression of facts is therefore clearly not tenable. [Para 25][1299-F-H]

1.7. The Show Cause Notice in CA No. 5744/2011 pertains to a different plant of the assessee and sought to invoke the extended period of limitation by making similar allegations as in CA No. 6033 of 2009. The conclusions with regard to CA No. 6033 of 2009 apply equally to this appeal. The demands are time barred. [Para 26][1300-A-C]

Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay (1995) Supp 3 SCC 462;

Collector of Central Excise, Hyderabad Vs. M/s. Chemphar Drugs and Liniments, Hyderabad (1989) 2 SCC 127 : [1989] 1 SCR 711; IFGL Refractories Ltd. [2001 (134) ELT 230] – referred to.