1996 (6) TMI 296 - AT - Central Excise

Summary

Issues:
Limitation of demand based on wilful suppression of facts.

Analysis:
The judgment revolves around the issue of whether the demand of duty, amounting to Rs. 30,23,883 for the period from 18-10-88 to 30-8-90, is barred by limitation due to wilful suppression of facts by the appellant. The appellant contended that the demand is time-barred as the suppression allegations were not clearly made in the show cause notice (SCN) as per the requirements set by the Hon'ble Supreme Court. The SCN alleged wilful suppression on two counts: non-disclosure of the cancellation of Small Scale Industries (SSI) registration and failure to inform about DGTD recognition.

The Tribunal analyzed the evidence presented, including letters from the Industries Commissioner, to determine whether the appellant wilfully suppressed any facts regarding DGTD recognition. It was established that the appellant was not registered with DGTD but was eligible for SSI certification. The correspondence indicated that the appellant acted in good faith based on the information received from the authorities. The appellant was paying duty at the standard rate even after the SSI registration was canceled, further supporting the argument of bona fide conduct.

Additionally, the Tribunal referred to a press note allowing a grace period of two years for SSI units to transition to DGTD recognition, emphasizing that the appellant's actions were in line with regulatory provisions. The appellant was only informed about the cancellation of SSI registration on 28-3-90, and there was no evidence of wilful suppression to evade duty payment. The Tribunal cited a Supreme Court case to highlight that failure to pay duty or mention a fact does not necessarily imply wilful suppression.

Based on the analysis, the Tribunal concluded that the demand was indeed barred by limitation due to the lack of wilful suppression on the part of the appellant. As the demand itself was time-barred, the impugned orders were set aside, providing consequential relief to the appellant without delving into the merits of the case.

In summary, the judgment focused on the crucial issue of whether the demand for duty was time-barred due to wilful suppression of facts by the appellant. Through a detailed analysis of the evidence and legal precedents, the Tribunal determined that the demand was indeed barred by limitation as there was no evidence of wilful suppression to evade duty payment. The decision highlights the importance of clear allegations in show cause notices and the need for a deliberate intent to evade payment for the invocation of an extended period for demand.