2008 (8) TMI 643 - AT - Central Excise

Demand - Time Limitation - Clandestine removal - whether in a case of clandestine removal, 5 years period is available to the Revenue for issuance of show cause notice?

Summary

Issues:
1. Limitation period for issuance of show cause notice in a case of clandestine removal.

Analysis:

Issue 1: Limitation period for issuance of show cause notice in a case of clandestine removal

The case involved the appellant, engaged in fabric processing, facing shortages detected during a visit by Central Excise officers. A show cause notice was issued proposing demand of duty and penalties, which was upheld by the original adjudicating authority and the Commissioner (Appeals). The appellant challenged the order on the grounds of limitation, arguing that the notice issued after a significant period was time-barred. The appellant relied on various Tribunal decisions to support their contention.

The Revenue, on the other hand, argued that the case involved clandestine removal, allowing a 5-year period for the issuance of a show cause notice. They cited a Supreme Court decision in the case of Mathania Fabrics to support their stance that the period for issuing the notice should be reckoned from the date of admission of suppression.

The Tribunal examined the completion of investigations by December 2003, when the last statement of the Director was recorded. Referring to precedent decisions, the Tribunal highlighted that a notice issued after a lapse of more than six months from the officers' visit to the factory is considered time-barred. Notably, decisions such as Lovely Food Industries and Jetex Carburrettors Pvt. Ltd. emphasized the importance of timely issuance of notices after completion of investigations.

Ultimately, the Tribunal set aside the impugned order on the grounds of limitation, disagreeing with the reliance placed on the Larger Bench decision and the Supreme Court decision cited by the Revenue. The Tribunal clarified that the 5-year period mentioned in the Supreme Court decision was specific to cases of admitted suppression, not applicable to the present scenario. Consequently, the appeals were allowed based on the limitation issue, providing relief to the appellants.

In conclusion, the Tribunal's detailed analysis of the limitation period for issuing show cause notices in cases of clandestine removal, supported by relevant legal precedents, led to the setting aside of the impugned order and the allowance of the appeals on the limitation issue.

*(Pronounced in the open Court on 26-8-2008)*