2015 (10) TMI 444 - SC - Central Excise

Extended period of limitation - Classification of goods - Classification of PVC films/ sheets - Classification under Chapter Heading 4901 or Chapter Heading 3926.90 - Held that - impugned show cause notice was time barred and it was not a case where the Revenue could invoke the provisions of proviso to Section 11A of the Central Excise Act and take benefit of the extended period of limitation. From the facts noted above, it becomes clear that the Department had issued Show Cause Notice way back on 18.02.1994 asking the appellant to reclassify the goods under Chapter Heading 3920. Therefore, all relevant facts were within the knowledge/ notice of the Department. Not only this, after the appellant had filed the reply to the said Show Cause Notice and was heard in the matter, the proposed move in the said Show Cause Notice was even dropped - by no stretch of imagination, the appellant can be treated as a person who had misled the authorities or made any mis-statement / mis-declaration. The appeal is allowed on this ground itself without going into the issue of classification setting aside the impugned order. As a result, the impugned orders passed by the authorities below are set aside. - Decided in favour of assessee.

Summary

Issues:
Classification of goods under Chapter Heading 4901 or 3926.90, Time-barred Show Cause Notice, Mis-statement or mis-declaration by the appellant, Invocation of extended period of limitation under proviso to Section 11A of the Central Excise Act.

Classification of Goods:
The appellant, engaged in printing PVC films/sheets, classified goods under Chapter Heading 4901. Department issued Show Cause Notice in 1994 to reclassify under Chapter Heading 3926.90. Appellant contested, plea accepted, and goods cleared under Chapter Heading 4901 until another Show Cause Notice in 1999. Appellant argued goods rightly classified under Chapter 4901, but order-in-original demanded differential duty under Chapter 3926.90. CESTAT affirmed order-in-original. Appellant contended the 1999 Show Cause Notice was time-barred, but adjudicating authority rejected, alleging mis-declaration to mislead the department. CESTAT did not address the limitation issue, dismissing the appeal.

Time-barred Show Cause Notice:
Appellant argued the 1999 Show Cause Notice was time-barred, beyond six months, covering the period from 1995 to 1996. Revenue invoked extended limitation period, alleging deliberate mis-declaration by the appellant. Appellant challenged the order-in-original on limitation grounds, but CESTAT did not address this issue. Supreme Court held that the appeal should be allowed as the show cause notice was time-barred, and Revenue could not invoke the extended limitation period under proviso to Section 11A, as all relevant facts were known to the Department since the 1994 notice, which was dropped after appellant's reply.

Mis-statement or Mis-declaration:
The appellant contended that there was no mis-statement or mis-declaration on their part regarding the classification of goods. The adjudicating authority accused the appellant of deliberately mis-declaring the activity to mislead the department. However, the Supreme Court found that the appellant did not mislead or make any mis-statement, as all relevant facts were known to the Department since the 1994 notice. The appeal was allowed solely on the ground that the show cause notice was time-barred, without delving into the classification issue.

Invocation of Extended Period of Limitation:
The Revenue attempted to invoke the extended period of limitation under proviso to Section 11A of the Central Excise Act, alleging deliberate mis-declaration by the appellant. The Supreme Court held that since all relevant facts were known to the Department from the 1994 notice, the show cause notice issued in 1999 was time-barred. Therefore, the Revenue could not benefit from the extended limitation period, and the impugned orders were set aside solely on this ground, without addressing the classification issue.