2011 (2) TMI 705 - AT - Central Excise

Demand - Limitation - obtained raw materials orange 533 of 1,700 Kgs and Comp. 941468 of 1800 Kgs under CT 3 certificates - It is the submission of the appellants that some goods was returned since it was unfit for use - find that admittedly the goods were sent after obtaining permission from the Assistant Commissioner and rewarehousing of certificates as required were produced and the only suppression is regarding the declaration that goods were found to be defective - find that even if the goods were not defective as claimed by the Revenue, extended time limit is not available since the officers of the Revenue were aware that goods had been sent back in terms of para 6.18 of exim policy and they were to be replaced by the supplier or proof of destruction has to be produced - Therefore, The impugned order is accordingly set aside and appeal allowed on limitation.

Summary

Issues:
1. Time-barred show cause notice regarding the return of raw materials.
2. Mis-declaration by the appellants on the quality of returned goods.
3. Applicability of extended period for demand due to mis-declaration.

Analysis:

1. The case revolved around the contention of the appellants that the show cause notice issued regarding the return of raw materials was time-barred. The appellants had obtained raw materials under CT 3 certificates from their DTA unit without duty payment, used a portion for production, and returned the rest as unfit. The Revenue argued that the goods were not defective as claimed by the appellants. The show cause notice was issued significantly later than the return of goods, raising the issue of time limitation.

2. The mis-declaration by the appellants regarding the quality of the returned goods was a crucial point of debate. The Revenue contended that the goods conformed to specifications and were not defective, contrary to the appellants' claim. The appellants argued that the transactions were conducted with Revenue's knowledge and that the extended period for demand was not applicable. The mis-declaration on the quality of goods played a significant role in determining the applicability of the extended period for demand.

3. The issue of whether the extended period for demand was applicable due to the mis-declaration by the appellants was a key aspect of the judgment. The Tribunal found that even if the goods were not defective as claimed by the Revenue, the extended time limit was not applicable. The officers of the Revenue were aware of the return of goods as per the policy, which required replacement or proof of destruction. Therefore, the demand was held to be barred by limitation, and the impugned order was set aside, allowing the appeal on the grounds of limitation.

In conclusion, the judgment focused on the time-barred show cause notice, the mis-declaration of goods' quality, and the applicability of the extended period for demand. The Tribunal ruled in favor of the appellants, holding that the demand was barred by limitation due to the Revenue's awareness of the return of goods as per the policy requirements.