2015 (10) TMI 678 - HC - Central Excise

Benefit of Exemption Notification no.8/2000-CE dated 1.3.2000 - Invocation of extended period of limitation - Dutu demand u/s 11A - Held that - It is evident from the preceding discussion that the Tribunal accepted the Revenues plea but limited the scope of the show cause notice and the demands to the normal period. The logic which persuaded the Tribunal to hold as it did was that at that time, the assessee could reasonably contend that there was a view which supported its declaration. In other words, during the period which was sought to be covered by the show cause notice, the Larger Bench ruling in Prakash Industries (2000 (5) TMI 59 - CEGAT, COURT NO. III, NEW DELHI) was in force. As far as the merits were concerned, the Tribunal affirmed the findings of the lower authorities - decision in Kohinoor Elastics (2001 (9) TMI 1133 - CESTAT NEW DELHI) was subsequently overruled by the Supreme Court; yet the fact remains that when the exemption was sought, the assessee could legitimately contend that it was entitled to it on the basis of the prevailing understanding. We are also not persuaded by the submissions that the assessees actions or omissions, in any event fell, within the mischief of Section 11A. Prakash Industries (supra) itself was a case where independently marketable items, i.e., bagged cement was in issue - no substantial question of law arises - Decided against assessee.

Summary

Issues:
1. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.
2. Claim of benefit under Exemption Notification no.8/2000-CE.
3. Interpretation of previous judgments in Prakash Industries and Kohinoor Elastics cases.
4. Validity of invoking the extended period for demanding tax.
5. Legitimacy of the assessees actions under Section 11A.

Analysis:
1. The Revenue challenged a CESTAT order regarding the applicability of the extended period of limitation under Section 11A. The Tribunal, considering past judgments, limited the scope of the show cause notice and demands to the normal period, citing the prevailing understanding at the time of the exemption claim. The Court found no substantial question of law and dismissed the appeal.

2. The assessee claimed the benefit of Exemption Notification no.8/2000-CE for manufacturing sanitary items affixed with other brand names. The authorities issued a show cause notice demanding action for wrongly availing the exemption, invoking the extended period under Section 11A. Despite the appeal, the demand was confirmed by the Commissioner (Appeals).

3. The Tribunal referenced past judgments in Prakash Industries and Kohinoor Elastics cases, stating that fraud charges for invoking the extended period were not applicable solely for claiming exemption. The Revenue argued that the Kohinoor Elastics ruling was overruled by the Supreme Court, emphasizing the assessees willful exemption availing for marketable items.

4. The Court noted that the assessee could reasonably believe in the entitlement to the exemption based on the prevailing understanding during the period in question, despite subsequent overruling of the Kohinoor Elastics ruling. The Tribunal upheld the demands for the normal period, affirming the findings of the lower authorities.

5. The Court rejected the argument that the assessees actions fell within the purview of Section 11A, highlighting the case of Prakash Industries where independently marketable items were at issue. The appeal was dismissed, along with all pending applications, as no substantial question of law was found to arise from the case.