2013 (5) TMI 545 - AT - Central Excise

Extended period of limitation - Waiver of pre-deposit of penalty - appellant states that the duty is demanded in respect of invoice issued on 05.04.2004 and the show cause notice is issued on 24.04.2009 and therefore the duty is time barred - Held that - Armature Shafts supplied under invoice dated 05.04.2004 are tailor made and they were as per drawing and specification of M/s. Chittaranjan Locomotive Works. The applicants have explained that the said goods were purchased by them from M/s. Primax Pipes i.e. their sister concern. It is evident in this case that their sister unit is not having any manufacturing facility. Besides Shri Shyamal Kr. Mukherjee has categorically admitted in his statement that the excise duty was not paid at the time of clearance of the said goods thus the clearance under trading invoicing were made with intention to evade duty. As decided in Commissioner of C.Ex., Visakhapatnam Vs. Mehta & Co. (2011 (2) TMI 2 - SUPREME COURT OF INDIA) in cases of intention to evade duty relevant date for computation of extended period for show cause is the date of knowledge. Accordingly show cause notice in this case is not time barred. Against assessee.

Summary

Issues: Waiver of pre-deposit of penalty under section 11AC of the Central Excise Act, time-barred duty demand, intention to evade duty

Waiver of pre-deposit of penalty under section 11AC of the Central Excise Act:
The appellant filed an application seeking waiver of pre-deposit of penalty amounting to Rs.25,376 imposed under section 11AC of the Central Excise Act, along with the interest. The appellant argued that since they had already paid the duty in full, the pre-deposit should be waived, and the appeal could be conclusively resolved. The Appellate Tribunal, with the consent of both parties, stayed the pre-deposit and proceeded to dispose of the appeal finally. However, the Tribunal noted discrepancies in the appellant's case regarding the duty payment against the goods cleared under the invoice, leading to a further analysis of the situation.

Time-barred duty demand:
The appellant contended that the duty demand related to an invoice issued on 05.04.2004, and since the show cause notice was issued on 24.04.2009, the duty demand was time-barred. They also highlighted that the goods in question were purchased from their sister units and duty was promptly paid upon audit scrutiny on 23.08.2007. However, the Assistant Registrar pointed out statements from the appellant's accountant admitting the non-payment of duty against goods cleared under the mentioned invoice. The Tribunal, after careful consideration, found that the duty demand was not time-barred due to the intention to evade duty, as established by the circumstances of the case and the admission of non-payment by the appellant's representative.

Intention to evade duty:
The Tribunal observed that the Armature Shafts supplied under the disputed invoice were tailor-made as per the specifications of another entity. The appellant claimed to have purchased these goods from their sister concern, but it was revealed that the sister unit lacked manufacturing facilities. Moreover, the appellant's accountant admitted to the non-payment of excise duty at the time of clearance, indicating an intention to evade duty. Citing a precedent set by the Honorable Supreme Court, the Tribunal held that the relevant date for the computation of the extended period for show cause in cases of intention to evade duty is the date of knowledge. Consequently, the Tribunal upheld the Commissioner (Appeals)'s order, dismissing the appeal and disposing of the stay petition accordingly.

This comprehensive analysis of the judgment delves into the issues of waiver of pre-deposit of penalty, time-barred duty demand, and the crucial aspect of intention to evade duty, providing a detailed overview of the legal proceedings and the Tribunal's decision.