2012 (5) TMI 223 - HC - Central Excise

Duty evasion - Appellant has submitted that the Tribunal while holding that the requirements of Section 11AC of the Central Excise Act, 1944 had been met, merely observed that the allegation of the Department that the assessee had contravened various provision of the Rules with an intent to evade the payment of duty was not successfully contested by the assessee Held that - Tribunal has not addressed itself to the question as to whether the fundamental requirement of an intent to evade the payment of duty was duly established so as to attract the extended period of limitation, defence of the assessee was that there was no intent to evade the payment of duty, matter remanded to Tribunal

Summary

Issues: Allegation of contravention of Central Excise Rules, 1944 regarding loan basis clearance of goods, confirmation of demand by Adjudicating Authority, compliance with Section 11AC of Central Excise Act, 1944, consideration of intent to evade payment of duty.

In this case, the appellant received a notice to show cause in 2004 for allegedly clearing goods on a loan basis to another unit, contravening Rule 57F(3) of the Central Excise Rules, 1944. The Deputy Commissioner held that the appellant's failure to pay the duty amount until discovered by the department implied an intent to evade duty, justifying the extended limitation period. The Commissioner (Appeals) and Tribunal upheld this decision, despite the appellant voluntarily paying the duty. The Tribunal's order was challenged on the grounds that it did not consider the appellant's defense that there was no intent to evade duty, as stated in their reply to the notice.

The appellant had argued in their reply that the duty amount was immediately available to the related company, indicating no intent to evade payment. The Tribunal, however, only noted that the department's allegation of contravention was not contested without delving into the crucial issue of intent to evade duty. The court found that the Tribunal failed to address this fundamental aspect, necessitating a remand for proper determination.

Ultimately, the High Court set aside the Tribunal's order, restoring the appeal for fresh determination, emphasizing the importance of establishing intent to evade duty for invoking the extended limitation period. The judgment highlights the significance of considering all aspects of a case, especially the crucial element of intent, in excise duty matters to ensure fair adjudication.