2006 (7) TMI 458 - AT - Central Excise

Invocation of extended period of time limitation - suppression of facts - additional consideration was not disclosed - surrender of ALs by VSP against which AILs were issued to the Appellant - amounted to additional consideration or not - HELD THAT - In the present case there was no scope to invoke the longer period of limitation laid down in the proviso to Section 11A(1) and consequently the entire demand is time-barred. Appeal allowed.

Summary

Issues Involved:
1. Limitation period for the demand of duty.
2. Alleged additional consideration and suppression of facts.
3. Bona fide belief and its impact on the limitation period.
4. Revenue neutrality and its effect on the invocation of the extended limitation period.

Detailed Analysis:

1. Limitation Period for the Demand of Duty:
The primary issue is whether the longer period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944, is applicable. The Tribunal initially decided the case in favor of the assessee, but the Supreme Court remanded it to reconsider the limitation issue. The appellant argued that all relevant facts were disclosed to the Central Excise Authorities, and there was no suppression of facts or misstatement. The Tribunal found that the entire facts were fully and truly disclosed by the appellant, and there was no fraud, collusion, or willful misstatement to invoke the extended period of limitation.

2. Alleged Additional Consideration and Suppression of Facts:
The department alleged that the surrender of Advance Licences (ALs) by Visakhapatnam Steel Plant (VSP) against which Advance Intermediate Licences (AILs) were issued to the appellant amounted to additional consideration. The appellant contended that all relevant facts, including the issuance of AILs against VSP's ALs and the supplies made under the Duty Exemption Scheme, were disclosed to the Central Excise Authorities through various correspondences and documents. The Tribunal noted that the appellant had made full disclosure and there was no suppression of facts or misstatement.

3. Bona Fide Belief and Its Impact on the Limitation Period:
The appellant argued that they were under a bona fide belief that the AILs issued under the Export and Import Policy did not amount to additional consideration. The Tribunal agreed, noting that the issue was debatable and arguable, and the appellant's belief was on reasonable grounds. The Tribunal cited several Supreme Court judgments to support the view that mere failure to declare does not amount to willful suppression, and there must be a positive act to establish willful misstatement or suppression.

4. Revenue Neutrality and Its Effect on the Invocation of the Extended Limitation Period:
The appellant argued that since the entire excise duty paid was refundable under Para 122(c) of the Import Policy, the situation was revenue neutral, and the invocation of the longer period of limitation was not justified. The Tribunal supported this view, citing Supreme Court judgments that in revenue-neutral situations, the extended period of limitation should not be invoked.

Conclusion:
The Tribunal concluded that the longer period of limitation under the proviso to Section 11A(1) was not applicable in this case as there was no willful suppression of facts or misstatement by the appellant. The entire demand was held to be time-barred, and the appeal was allowed with consequential reliefs.