2015 (9) TMI 1461 - AT - Central Excise

Whether, the Commissioner (A) is justified in setting aside the adjudication order and dropping the duty demand on the ground that extended period of limitation cannot be invoked - generation of unwanted material, namely, product i.e. waste alkaline water during the course of manufacture of Zirconium Carbonate and Zirconium Oxide - Held that - a perusal of the letter would reveal that the appellant had no intension in suppressing the facts from the Department with the motive of defrauding the Government Revenue. The said fact is evident from the letter itself, wherein the respondent had specifically mentioned while applying for the registration that the waste alkaline water were also generated during he course of manufacture of the final product, which cannot be stored because of pollution control norms and are disposed of as per mandates of the statute framed by the Government. Since the appellant in very categorical terms has intimated the Department regarding generation of the waste material and disposal of the same from the factory premises, the allegations levelled in the show cause notice and the duty demand confirmed in the adjudication order by invoking the extended period of limitation is not proper and justified. It is an admitted fact on record that the activities of the respondent were known to the Department in the month of September, 2004 and thereafter the SCN was issued on 07.08.2007, which is beyond the normal period of one year from such relevant date. Therefore, the proceedings initiated for confirmation of the demand is barred by limitation of time. - Decided against the Revenue

Summary

Issues:
1. Appeal against order setting aside duty and penalty on the ground of limitation.
2. Invocation of extended period of limitation for duty demand.
3. Interpretation of Section 11A of the Central Excise Act, 1944.
4. Consideration of facts known to the Department for invoking extended period of limitation.

Analysis:
1. The appeal was filed by the Revenue against an order setting aside duty and penalty due to limitation. The Commissioner (Appeals) relied on specific judgments to support the decision, including the case of Primella Sanitary Products vs. CCE and Oudh Sugar Mills vs. CCE. The appellant argued against dropping the demand based on limitation, citing cases like Union of India vs. Dharamendra Textile Processors and Madras Petro-chem Ltd. vs. Collector of Central Excise. The respondent's counsel contended that the Department was aware of the waste product generation since 1993, and the show cause notice issued in 2007 was time-barred. The advocate referenced the case of Pushpam Pharmaceuticals vs. Commissioner of Central Excise to support this argument.

2. The key question before the Tribunal was whether the Commissioner (Appeals) was justified in setting aside the adjudication order due to the non-invocation of the extended period of limitation. Section 11A of the Central Excise Act, 1944, governs the recovery of duties not levied or paid, specifying a one-year period for issuing show cause notices. The proviso allows for a five-year limitation period in cases of fraud, collusion, misstatement, or suppression of facts with intent to evade duty payment.

3. The Tribunal examined a crucial letter dated 18.02.2003, where the respondent informed the Department about waste alkaline water generation during manufacturing. The letter demonstrated the respondent's transparency in reporting waste disposal practices in compliance with pollution control laws. The Tribunal concluded that the respondent did not intend to defraud government revenue, as evident from the letter's content. Citing the case of Pushpam Pharmaceuticals, the Tribunal held that when facts are known to the Department, the extended period of limitation cannot be invoked.

4. The Tribunal distinguished the cited judgments by the Revenue's representative, noting that they pertained to penalties and record maintenance, unlike the present case focusing on the time limit for issuing show cause notices. Given that the Department was aware of the respondent's activities since September 2004 and issued the notice in 2007, exceeding the one-year limit, the Tribunal deemed the demand confirmation proceedings time-barred. Consequently, the Tribunal upheld the Commissioner (Appeals) decision and dismissed the Revenue's appeal.