2011 (7) TMI 854 - HC - Central Excise

Demand - Willful suppression and evasion of duty - Tribunal below by relying upon the decision of the Hon ble Supreme Court in the case of Padmini Products v. Collector of Central Excise, reported in 1989 (8) TMI 80 - SUPREME COURT OF INDIA held that mere failure or negligence on the part of the manufacturer to take out licence or pay duty when there was scope of doubt as to whether the licence was required to be taken and there was a scope of doubt whether the goods were dutiable or not, would not attract the provision of Section 11A of the Act - Decided in favor of the assessee Regarding clubbing of clearance - Held that Tribunal was quite justified in holding that demand by clubbing the clearance of other units without issuing any show cause notice was not sustainable - Appeal is dismissed

Issues involved:
Extension of limitation period under Section 11A of the Central Excise Act based on fraud allegation; Validity of demand for the period 2000-01 to 2003-04; Interpretation of "manufacturing process"; Clubbing of clearances without issuing show cause notice.

Extension of limitation period under Section 11A:
The appeal dealt with the question of whether the limitation period of six months under Section 11A of the Central Excise Act could be extended by alleging fraud. The case involved a situation where a subsequent decision by a Larger Bench of the Tribunal classified an importer's act as a "manufacturing process," which was different from the law applicable during the relevant period of 2001-04. The Tribunal found that the act of the importer could not be considered as wilful suppression with intent to evade payment of duty, as there was doubt regarding the requirement of a license and the dutiability of the goods. The Tribunal's decision was based on the precedent set by the Hon'ble Supreme Court in the case of Padmini Products v. Collector of Central Excise.

Validity of demand for the period 2000-01 to 2003-04:
The demand in question was for the period 2000-01 to 2003-04, with a show cause notice issued in 2005 alleging suppression with intent to evade payment of duty. The Tribunal's decision was influenced by a previous ruling in the case of Mahindra and Mahindra, where it was established that the process in dispute amounted to a manufacturing process. The Tribunal correctly applied the law and concluded that the importer's actions did not amount to wilful suppression to evade duty payment.

Interpretation of "manufacturing process":
The Tribunal considered the interpretation of the term "manufacturing process" in light of the decision in the Mahindra and Mahindra case. It was established that the process in dispute was indeed a manufacturing process, leading to the conclusion that the importer's actions did not constitute wilful suppression to evade duty payment.

Clubbing of clearances without issuing show cause notice:
Another issue addressed in the appeal was the clubbing of clearances from two other units with the importer's clearance without issuing any show cause notice to the other units. The Tribunal found that the demand based on clubbing clearances without issuing show cause notices to the other units was not sustainable. The Tribunal's decision was based on the lack of notice to the other units regarding the clubbing of clearances, leading to the dismissal of the demand.

In conclusion, the High Court dismissed the appeal, finding no substantial question of law involved in the issues raised. The Tribunal's decisions regarding the extension of the limitation period, the validity of the demand for the specified period, the interpretation of "manufacturing process," and the clubbing of clearances were upheld, leading to the summarily dismissal of the appeal.

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