2010 (9) TMI 579 - HC - Central Excise

Evasion of duty - It appears that the learned Tribunal had allowed the matter and set aside the order impugned before it on the ground of limitation - In this case the show cause notice was issued on 6th November 1997 in relation to duty for the period from 20th December 1996 to 31st March 1997 - that on factual aspect when the Tribunal correctly held that there has been no suppression question of extended period of limitation as mentioned in the proviso does not and cannot apply - The principle of Section 3 of the Limitation Act is squarely applicable in this case and it has been rightly applied - Accordingly appeal is dismissed

Summary

Issues:
Interpretation of Section 11A of the Central Excise Act regarding the period of limitation for duty payment based on suppression of facts with intent to evade duty.

Analysis:
The matter involved a rehearing by the Tribunal following a Supreme Court order. The Supreme Court directed the Tribunal to rehear the case, applying the decision in a related case. The Tribunal subsequently allowed the appeal of the appellant based on the limitation issue. The appellant argued that the extended period of limitation under Section 11A of the Central Excise Act applied to their case.

The key provision in question, Section 11A, states that the extended period of limitation applies when duty has not been paid due to fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Act with intent to evade payment of duty. The provision allows for a period of five years for such cases.

The Court emphasized that for the extended period of limitation to apply, there must be suppression of facts by the assessee with the intent to evade duty. If no suppression is found, the ordinary one-year limitation period applies. In this case, a show cause notice was issued based on alleged suppression by the appellant regarding their manufacturing activity.

The Tribunal found that the revenue was aware of the appellant's manufacturing activity as early as September 1996. The appellant had provided explanations and obtained registration for the goods in question. The Court noted that the revenue officials had opportunities to investigate further if there were doubts about the appellant's activities but failed to do so.

Ultimately, the Court concluded that since there was no suppression of facts by the appellant, the extended period of limitation did not apply. The Court upheld the Tribunal's finding that there was no basis for invoking the extended limitation period. The Court also highlighted the applicability of the Limitation Act in such cases and dismissed the appeal, stating it was not a fit case for admission.

In conclusion, the Court dismissed the appeal, affirming the Tribunal's decision based on the lack of suppression of facts by the appellant and the consequent inapplicability of the extended period of limitation under Section 11A of the Central Excise Act.