2010 (12) TMI 446 - HC - Central Excise

Appeal u/s 35G - Demand - Time barred - whether or not there is any suppression of facts on the part of the respondent is always a question of fact - when such a plea was raised before the Tribunal, before concluding that extended period of limitation cannot be invoked the Tribunal was required to record findings of fact as to whether or not there was any suppression on the part of the assessee - Tribunal in its quest for easy disposals has lost sight of the fact that an easy disposal for the Tribunal translates into extra work for the High Court - notice was required to be issued to the assessee who needlessly had to bear the expenditure of having the case defended - Tribunal is not expected to write a lengthy thesis, but at least the bare minimum facts and reasons are required to be recorded - The appeal is dismissed

Issues Involved:
1. Whether the demand raised for the period April 2000 to March 2003 by show cause notice issued in April 2004 is barred by limitation.
2. Whether the Tribunal erred in applying the decision in the case of M/s. Mafatlal Industries regarding the limitation period.
3. Whether the Department validly invoked the extended period of limitation in issuing the show cause notice to the respondent.

Detailed Analysis:

1. Barred by Limitation:
The Tribunal allowed the respondent's appeal by holding that the demand raised for the period April 2000 to March 2003 by the show cause notice issued in April 2004 is barred by limitation, except for the period which falls within the limitation. The Tribunal relied on its earlier decision in the case of M/s. Mafatlal Industries and concluded that the demand was time-barred.

2. Application of Mafatlal Industries Decision:
The appellant argued that the Tribunal applied the ratio of the decision in the case of M/s. Mafatlal Industries without considering the specific facts of the present case. The Tribunal did not record any reasons as to why the findings of the Adjudicating Authority regarding suppression were not justified. The appellant contended that suppression is a question of fact and that the Tribunal, being the last fact-finding authority, should have recorded its findings on the issue of suppression.

3. Validity of Extended Period of Limitation:
The respondent-assessee argued that at the relevant time, the legal position regarding the main controversy was not clear, and there were decisions in favor of the assessee. The assessee believed in good faith that it was not required to maintain separate accounts for the fuel supplied to its sister concern. The respondent also pointed out that all relevant facts were known to the Department, and hence, there was no suppression of facts to justify the invocation of the extended period of limitation.

The High Court noted that the Tribunal's order consisted of three paragraphs, with the second paragraph merely reproducing a part of the Tribunal's order in the case of Mafatlal Industries. The Tribunal did not record any specific findings on the issue of suppression, which was necessary to decide whether the extended period of limitation could be invoked.

The High Court examined the findings of the Adjudicating Authority, which were based on the assumption that the assessee was required to maintain separate accounts under the relevant rules. However, the assessee contended that it used LDO as fuel and that inputs used as fuel were excluded from the purview of the rules. The High Court found that the evidence on record did not substantiate the findings of the Adjudicating Authority regarding suppression.

The High Court concluded that no useful purpose would be served by remitting the matter back to the Tribunal, as the respondent had made out a case that there was no suppression on its part, and thus, the extended period of limitation could not have been invoked.

Conclusion:
The High Court dismissed the appeal, stating that the impugned order of the Tribunal did not give rise to any substantial question of law. The Court emphasized that the Tribunal should support its findings with reasons and record the basic facts and reasons for its decisions.

← Previous Next →