2015 (4) TMI 209 - SC - Central Excise

Invocation of extended period of limitation - Suppression of facts - Assessee only disclosed that they would be clearing sewing thread without mentioning that it is in the form of hanks - Held that - Appellant has argued that the extended period could not be availed on the facts of this case, but has fairly stated that if the notes to Heading No. 55.08 are to be read, considering the fact that there was no support to the sewing thread manufactured by the appellant, it would not be covered by the exemption Notification which would only apply if goods manufactured fall within the particular Heading mentioned. As it is clear that the sewing thread is not put up on a support, CESTAT is clearly right on merits. Equally, we do not think that there is any ground for interference on the extended period of limitation being applicable inasmuch as CESTAT is again correct in saying that as the declaration and RT 12 returns being vital documents submitted by the respondent (appellant herein) did not mention the vital word hanks , they suppressed a material fact which, to their knowledge, would not bring their sewing thread within the exemption Notification. - No merit in appeal - Decided against assessee.

Summary

Issues:
1. Extended period of limitation for demand of duty.
2. Interpretation of exemption notification for sewing thread.

Extended period of limitation for demand of duty:
The case involved two appeals filed by the Commissioner of Central Excise against a company regarding sewing thread in hanks. The main issue was whether the extended period of limitation could be applied for the demand of duty. The Commissioner(Appeals) initially held that the extended period would not be available as there was no suppression of facts by the company. The company had filed necessary declarations and documents with the central excise department, and no objections were raised by the department for several years. However, the CESTAT set aside this decision, stating that the company had suppressed a vital fact by not disclosing that the sewing thread was in the form of hanks. Therefore, the extended period of limitation was deemed applicable for the demand of duty.

Interpretation of exemption notification for sewing thread:
The second issue revolved around the interpretation of Notification No. 4/97 and 25/97, which provided exemptions for certain products. The CESTAT found that the sewing thread manufactured by the company did not qualify for the exemption as it did not meet the specific criteria mentioned in the tariff heading. The sewing thread in hanks did not have any support, which was a requirement for the exemption to apply. The court agreed with this interpretation and upheld the decision of the CESTAT. The court concluded that the company had suppressed a material fact by not mentioning the word "hanks" in their declarations, which would have affected their eligibility for the exemption. Therefore, the appeals were dismissed, and no costs were awarded.

In summary, the Supreme Court upheld the decision of the CESTAT regarding the extended period of limitation for demand of duty and the interpretation of the exemption notification for sewing thread. The court found that the company had suppressed crucial information, leading to the application of the extended period of limitation. Additionally, the sewing thread in hanks did not meet the criteria for exemption, as it lacked the necessary support. Consequently, the appeals were dismissed, and no costs were awarded.