2008 (7) TMI 642 - AT - Central Excise

Summary

Issues:
1. Limitation period for issuance of Show Cause Notice under Section 11A of the Central Excise Act, 1944.
2. Interpretation of Explanation to Section 11A regarding exclusion of the period of stay by a court.

Analysis:

Issue 1: Limitation period for issuance of Show Cause Notice under Section 11A:
The appeal before the Appellate Tribunal CESTAT, CHENNAI involved a dispute regarding the limitation period for issuing a Show Cause Notice under Section 11A of the Central Excise Act, 1944. The Commissioner (Appeals) had held that the Show Cause Notice initiating the proceedings was time-barred as it was issued beyond the normal period of six months. The original authority had demanded a sum under the Vegetable Oil Cess Act for a specific period. The respondents contended that the Notice was beyond the prescribed time limit, which the original authority rejected citing a stay by the High Court on the levy, not the Notice itself. The Commissioner (Appeals) upheld the limitation argument, leading to the appeal by the Revenue.

Issue 2: Interpretation of Explanation to Section 11A regarding exclusion of court-ordered stay period:
The key contention revolved around the interpretation of the Explanation to Section 11A, which excludes the period of stay by a court from the computation of the limitation period for issuing a Show Cause Notice. The respondent argued that since there was no stay on the Notice itself, the limitation period should not be extended. The consultant relied on a Supreme Court judgment to support this position. On the other hand, the Revenue contended that the period of stay on the operation of the Act by the High Court should be considered as a stay under the Explanation to Section 11A, thus extending the limitation period for issuing the Notice.

In the final analysis, the Tribunal found that there was no stay specifically on the issuance of the Show Cause Notice by the High Court. The stay granted pertained to the operation of the levy, not the Notice. As the Revenue did not establish any stay on the Notice itself, and it was undisputed that the Notice was otherwise time-barred, the Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue.

This judgment clarifies the importance of distinguishing between stays on the operation of a law and stays on specific legal actions, such as the issuance of a Show Cause Notice, in the context of computing the limitation period under Section 11A of the Central Excise Act, 1944.