2014 (2) TMI 444 - HC - Central Excise

Duty demand - Invocation of extended period of limitation - suppression of facts - Held that - The material on record would clearly show that there is suppression of fact as it clear from the order passed by the adjudicating authority and the appellate authority that there was no manufacturing activity involved in refurbishing and modification of the 3 washing machines, despite the same, Cenvat credit was claimed and though duty of Rs. 2,61,760/- was collected, the said fact was suppressed and therefore availed extended period of limitation. Non-disclosure of receipt of such amount at the time of assessment extended period of 5 years applicable and Rule 10(1)(C) of the Central Excise Rules, 1944, corresponding to Section 11A of the Central Excises and Salt Act, 1944. Thus extended period was applicable. Hence, the show cause notice issued after one year was not barred by limitation under Central Excises and Salt Rules wherein provision is identical to the provisions under the Central Excise Act. Tribunal has not at all considered the reasoning assigned by the adjudicating authority and the appellate authority in holding that there is no suppression of material facts and thus has proceeded to set aside the order passed by the appellate authority and by holding that there is no suppression of fact which is baseless and based on conjuncture and surmises and not based upon the material on record - The order is set aside and the matter is remitted to CESTAT for consideration of the appeal - Decided in favour of Revenue.

Summary

Issues:
1. Whether the extended period of limitation could be invoked by the Revenue under Section 11A of the Act due to suppression of facts.
2. Whether the CESTAT was justified in holding that the issuance of the show cause notice was barred by limitation.
3. Whether the assessee wilfully suppressed material facts to avail Cenvat credit.
4. Whether the order passed by the Tribunal was sustainable.

Analysis:

1. The appeal was filed by the Revenue against the order passed by the Customs, Excise and Service Tax Appellate Tribunal, wherein it was held that there was no suppression of fact, and thus the extended period of limitation could not be invoked by the Revenue under Section 11A of the Act. The Tribunal allowed the appeal filed by the assessee, setting aside the orders passed by the appellate and adjudicating authorities.

2. The substantial question of law raised was whether the CESTAT was justified in holding that the issuance of the show cause notice was barred by limitation. The Tribunal found that there was no suppression of facts by the assessee regarding the clearance of goods, and thus, the show cause notice issued after a considerable time lapse was deemed barred by limitation.

3. The material facts revealed that the assessee had availed Cenvat credit on industrial washing machines meant for refurbishing and modification. The Revenue alleged that the assessee wilfully suppressed material facts to avail Cenvat credit irregularly, leading to the issuance of a show cause notice for recovery of the credit amount and duty. The assessee contended that there was no suppression of facts and no intention to evade payment of duty.

4. The Tribunal, in its order, held that since there was no suppression of facts and the goods were cleared on payment of duty, the invoking of Section 11A by the Revenue was barred by time. The Tribunal allowed the appeal, stating that the confirmation of value addition was not sustainable due to the absence of suppression of fact. However, the High Court, upon careful consideration, found that there was indeed suppression of fact as per the orders of the adjudicating and appellate authorities. Therefore, the High Court set aside the Tribunal's order and remitted the matter for further consideration.

This detailed analysis of the judgment provides insights into the legal issues, arguments presented, and the final decision rendered by the High Court in this case.