2013 (9) TMI 207 - AT - Central Excise

Non-discharge of Duty Liability Period of Limitation - The products manufactured by the appellant were covered under Chapter 68 of the First Schedule to the Central Excise Tariff Act, 1985 and they were availing benefit of cenvat credit under Cenvat Credit Rules, 2004 - Non-discharge of duty liability on the collection of sales promotion expenses from dealers/distributors, cost of the packing materials separately collected from the buyers and cost of the packing supplied by customers free of cost - Held that - The adjudicating authority as well as the first appellate authority had not considered the point of limitation - the first appellate authority had only observed that because the details were worked out from the balance sheet, department could not be deprived of invoking extended period of limitation as the balance sheet would be available only by October or November, 2006 - there was no ground for the details or otherwise available in the balance sheets of the previous years - all the details of the transactions which were disputed by the audit party was available in the statutory records like RG-23 Part-I and II, RG-I invoices and monthly returns. Collector of Central Excise v. H.M.M. Ltd. 1995 (1) TMI 70 - SUPREME COURT OF INDIA - The lower authorities in the show cause notice should put the assessee on charge as to various commissions and omissions and then only invoke the extended period - the entire show cause notice issued to the appellant, there was not a murmur as to what were the various commissions and omissions, on the part of appellant in order to invoke in the first proviso to Section 11A(1) of Central Excise Act, 1944 - surprisingly it was also curious to note that the show cause notice specifically stated that the statement of the employee of the appellant was recorded only for invokement of five years i.e. extended period - This itself indicates that there was no commission or omission which warranted invocation of extended period in this case - The order to the extent it holds against the assessee and challenged by the assessee was liable to be set aside on limitation Decided in favour of Assessee.

Summary

Issues:
Non-discharge of duty liability on various items, including sales promotion expenses, packing materials, and cenvat credit. Limitation period for invoking demands.

Analysis:
The case involved an appeal against an Order-in-Appeal regarding duty liability on certain items by a manufacturing company. The appellant, engaged in manufacturing grinding mills, was found to have not discharged duty liability on dust powder, sales promotion expenses, and various other items. The show cause notice was issued for the period 2001-2002 to 2004-2005 based on an audit of the appellant's records. The adjudicating authority confirmed the demands, penalties, and interest. The first appellate authority partially allowed the appeal but upheld the duty liability on specific issues, leading to the current appeal.

The appellant argued primarily on the issue of limitation, contending that the demands were beyond the prescribed period. The appellant claimed that the details were available in statutory records and not the balance sheet for the year 2005-2006, as considered by the first appellate authority. The appellant relied on Supreme Court judgments emphasizing the necessity of intention to evade duty for invoking extended periods of limitation.

The Revenue, on the other hand, argued that the appellant, under self-assessment, should have included the values in question. The issue of limitation was crucial in this case, with the first appellate authority basing its decision on the availability of data in the balance sheet for 2005-2006, which the appellant contested as irrelevant to the period under consideration.

The Tribunal analyzed the submissions and show cause notice, noting that the period involved was up to September 2004. The show cause notice only mentioned the recording of a statement for invoking an extended period, without alleging suppression of facts or intent to evade duty. The Tribunal found the first appellate authority's findings on limitation misdirected and not in line with the facts of the case. Referring to relevant Supreme Court judgments, the Tribunal held that the show cause notice did not specify the commissions or omissions justifying the extended period, ultimately setting aside the impugned order on the grounds of limitation.

In conclusion, the Tribunal allowed the appeal on the issue of limitation, setting aside the impugned order to that extent. The judgment highlighted the importance of specific allegations and intentions to evade duty when invoking extended periods of limitation, emphasizing the need for clarity in show cause notices.