2011 (5) TMI 208 - AT - Central Excise

Demand - Time barred - Show Cause Notice was issued only on 15.2.05 demanding dues from 2000-2001 onwards - The assessee declared the goods on the basis of their belief of the interpretation of the provisions of the law that the exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time - It is significant that when the audit report was made available, submission of copies of invoices was not mandatory - Held that there is no justification for invoking the extended period under the provisions of Section 11A resulting in making demands barred by limitation - Decided in favour of the assessee

Summary

Issues:
1. Whether the demand for Central Excise duty is barred by limitation.
2. Whether there was suppression of facts or mis-declaration justifying the extended period for recovery.
3. Applicability of case laws in determining the issue of limitation.
4. Interpretation of legal provisions regarding suppression of facts.
5. Compliance with filing requirements and submission of documents.

Analysis:

Issue 1:
The appeal filed by the Revenue was against the Order-in-Appeal passed by the Commissioner(Appeals) regarding the demand for Central Excise duty. The main contention was the invocation of the extended period of 5 years for recovery, which the Revenue argued was justifiable due to alleged suppression of facts and mis-declaration. However, the Tribunal focused solely on the question of limitation based on various facts and evidence presented in the case.

Issue 2:
The Tribunal examined whether there was any suppression of facts by the assessee justifying the extended period for recovery. It was noted that the Show Cause Notice demanding dues from 2000-2001 onwards was issued in 2005, despite the availability of the audit report in 2002 and timely filing of required returns by the respondents. The Tribunal emphasized the need for specific evidence of suppression to support the invocation of the extended period.

Issue 3:
The Revenue contended that certain judgments, including those in the cases of P.B. Pharmaceuticals (P) Ltd. and Chemphar Drugs & Liniments, were not applicable to the present case without providing sufficient reasons for their assertion. The Tribunal acknowledged these arguments but highlighted the importance of establishing fraud, collusion, wilful misstatement, or suppression of facts to justify the extended recovery period.

Issue 4:
The Tribunal referenced the judgment in the Chemphar Drugs & Liniments case, emphasizing the requirement for positive evidence of fraud or suppression before extending the recovery period. The judgment highlighted that mere omission of information does not constitute suppression unless it was deliberate to evade duty payment. The Tribunal emphasized the importance of deliberate intent in determining suppression of facts.

Issue 5:
The Tribunal observed that the respondents were compliant with filing requirements and submission of documents, as evidenced by the timely filing of returns and submission of relevant documents to the audit. The Tribunal also noted that certain notifications did not mandate the submission of invoices when the audit report was available, questioning the justification for invoking Section 11A for extended recovery.

In conclusion, the Tribunal found no justification for invoking the extended recovery period under Section 11A, leading to demands being barred by limitation. Consequently, the imposition of penalty and demand of interest was deemed unsustainable, and the appeal filed by the Revenue was rejected, upholding the Order-in-Appeal passed by the Commissioner(Appeals).