2006 (7) TMI 401 - AT - Customs

Summary

Issues Involved:
1. Applicability of the Amnesty Scheme.
2. Eligibility for exemption under Notification No. 203/1992-Cus.
3. Limitation period for issuing the show-cause notice.
4. Allegation of wilful mis-statement/suppression of facts.

Detailed Analysis:

1. Applicability of the Amnesty Scheme:
The appellants argued that the Amnesty Scheme was not applicable to them as they had reversed the entire amount of Modvat credit as demanded by the Assistant Commissioner before the scheme's deadline. The adjudicating authority, however, denied the benefit of exemption on the ground that no interest was paid on the reversed Modvat credit. The Tribunal referred to the Supreme Court's judgment in Bharti Telecom Ltd., which held that the Amnesty Scheme recognized already reversed Modvat credits, and the credit reversals made in 1994 had to be treated at par with those made after the scheme's introduction. Therefore, the Tribunal concluded that the appellants' reversal of Modvat credit without interest did not exempt them from the Amnesty Scheme's requirements.

2. Eligibility for Exemption under Notification No. 203/1992-Cus:
The appellants contended that they were eligible for exemption as they had reversed the Modvat credit as per the Assistant Commissioner's demand notice. However, the Tribunal held that the appellants were not eligible for exemption under Notification No. 203/1992-Cus because they did not pay interest on the Modvat credit amount before the deadline set by the Amnesty Scheme. The Tribunal relied on the Supreme Court's decision in Bharti Telecom Ltd. and the Tribunal's own decision in MRF Ltd., which established that the benefit of the notification was contingent on the payment of interest on reversed Modvat credits.

3. Limitation Period for Issuing the Show-Cause Notice:
The appellants challenged the demand of duty on the ground of limitation, arguing that the larger period of limitation under the proviso to Section 28(1) of the Customs Act was invoked without stating any valid ground. The Tribunal agreed with the appellants, noting that the show-cause notice did not specify which facts were wilfully mis-stated or suppressed. The Tribunal cited several judgments, including those of the Supreme Court and Calcutta High Court, to support the view that the larger period of limitation could only be invoked with specific allegations of collusion, wilful mis-statement, or suppression of facts.

4. Allegation of Wilful Mis-Statement/Suppression of Facts:
The show-cause notice alleged "wilful mis-statement/suppression of facts" but did not specify the details. The Tribunal found that the required particulars of the allegation were not furnished to the appellants, rendering the invocation of the larger period of limitation unjustifiable. The Tribunal referred to the Supreme Court's ruling in H.M.M. Ltd., which held that the show-cause notice must specifically state the allegations to extend the limitation period. Consequently, the Tribunal concluded that the larger period of limitation under the proviso to Section 28(1) of the Customs Act was invoked without any basis, making the entire demand time-barred.

Conclusion:
The Tribunal held that while the appellants were not eligible for exemption under Notification No. 203/1992-Cus due to non-payment of interest on reversed Modvat credits, the demand for duty was time-barred due to the improper invocation of the larger period of limitation. The appeal succeeded on the ground of limitation, and the demand along with the penalty was set aside.

(Pronounced in Open Court on 24-7-2006)