2011 (4) TMI 260 - AT - Central Excise

Waiver of pre-deposit - As the appellants were under the impression that the activity of job-work is not excisable, they did not issue any tax-invoice on their job-work charges but the appellants were regularly filing their declaration before the department showing separately sales and job-work charges - Therefore, the allegation of suppression is not sustainable. Therefore, the show-cause notice for the period 2002 to 2006 issued by invoking the extended period of limitation in March, 2007 is not sustainable - Decided in favour of the assessee

Summary

Issues involved:
Interpretation of excise duty liability on job-work charges, suppression of facts, invocation of extended period of limitation.

Analysis:

Issue 1: Excise Duty Liability on Job-work Charges
The case involved a manufacturer of corrugated boxes who also undertook job-work, believing it was not excisable. The manufacturer did not issue tax invoices for job-work charges but regularly declared sales and job-work charges separately. A show-cause notice was issued for the period 2002-2006, alleging suppression of facts and demanding excise duty, interest, and penalties on job-work charges. The appellant argued they were not aware of the duty liability on job-work charges until 2006 and had been filing declarations since 1992 without being asked to pay excise duty on job-work. The Tribunal found that the appellant's belief in non-liability was bona fide, and suppression of facts was not established, citing a precedent where non-disclosure of actual clearance figures did not indicate mala fide intentions. The demand was held to be barred by limitation, and the impugned order was set aside.

Issue 2: Suppression of Facts
The Revenue contended that the appellant suppressed the adoption of job-work challan procedure from the department, justifying the invocation of the extended period of limitation. However, the Tribunal noted that the appellant had been transparent in declaring sales and job-work charges separately since 1992, and the sudden show-cause notice in 2007 was not supported by evidence of suppression. Relying on precedent, the Tribunal held that the allegation of suppression was unsustainable, and the demand was barred by limitation.

Conclusion:
The Tribunal allowed the appeals, finding that the demand for excise duty, interest, and penalties on job-work charges for the period 2002-2006 was unsustainable due to the absence of suppression of facts and the belief of the appellant in non-liability. The impugned order was set aside, providing consequential relief to the appellant.