2010 (7) TMI 402 - HC - Central Excise

Demand limitation extended period product classified under 2614 - extended period of limitation is made available to the department for recovery of the amount of tax which escaped assessment - It is only in those cases where there is wilful and deliberate suppression of the fact, such extended period of limitation is available to the department - Supreme Court also opined that in order to invoke the extended period of limitation under the proviso to Section 11A(1) of the Act, there must be some positive act other than mere inaction or failure on the part of the manufacturer - opinion of the Chemical Analyst which made them to believe that the product of the respondent is not an ore but a concentrate - Appeal is dismissed

Summary

Issues:
1. Appeal by Revenue under Section 130 of the Customs Act, 1962 against an order in Appeal No. Excise/840/04.
2. Claim of complete exemption of duty under Notification No. 4/97-C.E. by the respondent Company.
3. Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act by the department.
4. Classification of the product of the respondent under Chapter 26, item 2614 as Titanium ores and concentrates.
5. Interpretation of the term 'ore' versus 'concentrate' and the reliance on the opinion of the Chemical Analyst.
6. Applicability of Supreme Court judgments on the extended period of limitation in cases of wilful suppression of facts.

Analysis:
1. The judgment pertains to an appeal by the Revenue challenging an order allowing complete duty exemption claimed by the respondent under Notification No. 4/97-C.E. The respondent cleared Synthetic Rutile to Domestic Tariff Area without duty payment, which was later disputed by the department.
2. The department invoked the extended period of limitation under Section 11A(1) of the Central Excise Act, alleging wilful misstatement by the respondent to evade duty payment. A show cause notice was issued, leading to recovery proceedings and imposition of penalty.
3. The classification of the respondent's product as Titanium ores and concentrates under Chapter 26, item 2614 was a key point of contention. The distinction between 'ore' and 'concentrate' was crucial in determining the eligibility for duty exemption.
4. The judgment highlighted the importance of expert opinion, specifically the analysis by the Chemical Analyst, in determining whether the product qualified as an 'ore' for exemption purposes. The change in the department's view further complicated the matter.
5. The court referred to relevant Supreme Court judgments emphasizing that the extended period of limitation is applicable only in cases of wilful suppression of facts with an element of deception or malpractice, not mere misinterpretation or differing expert opinions.
6. Ultimately, the court dismissed the Customs Appeal, stating that the respondent's interpretation of the exemption notification and the product classification did not amount to wilful suppression of facts, warranting the invocation of the extended period of limitation.