2009 (9) TMI 848 - AT - Central Excise

Summary

Issues involved:
1. Dispensing with the condition of pre-deposit of duty amount and penalty.
2. Confirmation of demand against the appellant for the period Jan., 2001 to Sep., 2002.
3. Interpretation of time limitation under Section 11A of the Act and Rule 196 of the Central Excise Rules.

Detailed Analysis:
1. The appellant, a 100% EOU, sought to dispense with the condition of pre-deposit of duty amount of Rs. 14.38 Crores and penalty. The duty was confirmed due to alleged manipulation of records regarding duty-free procured raw materials. The adjudicating authority found that excess duty-free raw materials were procured and diverted illicitly. The appellant's request for stay was examined, and it was noted that the demand was beyond the extended period of limitation of five years.

2. The demand against the appellant for the period Jan., 2001 to Sep., 2002 was confirmed through a show cause notice issued on 5-2-2008. The Commissioner observed that the demand, raised under Section 11A, needed to be confirmed under Rule 192 read with Rule 196 of the Central Excise Rules, which do not specify a time limit. The Commissioner also stated that the demand would not be invalidated by incorrect citation of law provisions.

3. Reference was made to a judgment by the Hon'ble Allahabad High Court in a case involving UP State Cement Corporation Limited, emphasizing that Section 11A of the Act sets a limitation rule for excise authorities. The judgment highlighted that this limitation applies to Rule 196 as well. Further, decisions from the Tribunal were cited to support the argument that demands raised after a certain period under Rule 196 should be considered time-barred. In light of the legal precedents and the declaration of law by the Allahabad High Court upheld by the Supreme Court, the Tribunal concluded that demands raised beyond five years under Rule 196 cannot be upheld. Consequently, the condition of pre-deposit was dispensed with, and the stay petition was unconditionally allowed.

This judgment highlights the importance of adherence to time limitations in confirming demands under the Central Excise Rules and the significance of legal precedents in determining the validity of demands raised beyond the statutory period.