2009 (10) TMI 694 - AT - Central Excise

Summary

Issues:
1. Whether the assessee, engaged in manufacturing RCC Cement Pipes and collars for a government project, is eligible for exemption from central excise duty.
2. Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 can be invoked due to alleged suppression of facts by the assessee.

Issue 1: Exemption Eligibility
The assessee, part of a government project, manufactured RCC Cement Pipes and collars for irrigation schemes. Initially, they paid central excise duty for clearances. However, after a relevant notification, they claimed exemption meant for government-owned factories. The Superintendent later demanded duty payment, stating the factory lost its government undertaking status. The Tribunal considered the contention that a government undertaking, even if autonomous or a limited company, cannot be equated to the government. Citing precedents, the Tribunal noted that the assessee's factory, despite a change in status, continued its activities as before, indicating no intent to evade duty. The Tribunal held that the extended period of limitation was inapplicable, as there was no deliberate suppression to evade duty, and the appeal was allowed on the ground of limitation.

Issue 2: Extended Period of Limitation
The Order-in-Original confirmed duty demand against the assessee, invoking the extended period of limitation under Section 11A of the Central Excise Act, 1944. The department alleged that the assessee suppressed the change in its government undertaking status to claim exemption. The respondent argued that being a statutory body engaged in socio-economic activities, the assessee lacked the intent to evade duty. They cited legal precedents to support their argument that penalty should not be imposed without proof of contumacious behavior. The Tribunal agreed that the change in status, notified through the Official Gazette, did not amount to suppression of facts. They emphasized that the change did not indicate an intention to evade duty. Consequently, the Tribunal held that the extended period of limitation was not applicable, ruling in favor of the assessee based on the limitation issue.

This judgment clarifies the eligibility for exemption from central excise duty for entities involved in government projects and highlights the importance of proving intent to evade duty when invoking the extended period of limitation under the Central Excise Act. The decision underscores the significance of factual transparency and the legal implications of changes in an entity's status, particularly in relation to tax obligations.