2013 (1) TMI 616 - SUPREME COURT

Levy of customs duty on the import of furnace oil - also the penalty u/s 112 - assessee contested aginst demand of the duty along with the penalty being barred by limitation - Held that:- Not convinced by the reasoning of the Tribunal on arriving at the conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts. If that were to be true, failure to understand which form of non-payment would amount to ordinary default? Construing mere non-payment as any of the three categories contemplated by the proviso would leave no situation for which, a limitation period of six months may apply. The main body of the Section, in fact, contemplates ordinary default in payment of duties and leaves cases of collusion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso.

As decided in Pushpam Pharmaceuticals Company Vs. Collector of Central Excise, Bombay [1995 (3) TMI 100 - SUPREME COURT OF INDIA] Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression. Extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty.

Section 28 of the Act clearly contemplates two situations, viz. inadvertent non-payment and deliberate default. The former is canvassed in the main body of Section 28 of the Act and is met with a limitation period of six months, whereas the latter, finds abode in the proviso to the section and faces a limitation period of five years. For the operation of the proviso, the intention to deliberately default is a mandatory prerequisite.

Hence, on account of the fact that the burden of proof of proving mala fide conduct under the proviso to Section 28 lies with the Revenue; that in furtherance of the same, no specific averments find a mention in the show cause notice which is a mandatory requirement for commencement of action under the said proviso, and that nothing on record displays a willful default on the part of the appellant, we hold that the extended period of limitation under the said provision could not be invoked against the appellant - in favour of assessee.