2018 (7) TMI 1948 - AT - Central Excise

Supply of stores for consumption on board a vessel of the Indian Navy - benefit of N/N. 70/77 dated 07.05.77 (Upto 15.03.1995) and 64/95 dated 16.03.1995 - Time limitation - HELD THAT - There is no element of suppression of facts, mis-statement etc. with an intent to evade payment of duty. Reliance placed in the decision in the case of ASIAN PAINTS (I) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-III 2012 (12) TMI 350 - CESTAT, MUMBAI where it was held that As the revenue was aware that goods in question have been cleared to M/s Mazgaon Dock Ltd. by claiming the benefit of notification, hence, the allegation of suppression with intent to evade payment of duty is not sustainable in the present case. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of exemption Notifications 70/77 and 64/95 regarding Central Excise duty exemption on goods supplied to M/s Garden Reach Ship Builders & Engineering Ltd.
2. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944 read with Section 11AC of the Central Excise Act, 1944.
3. Applicability of extended period of limitation for invoking demand of duty.
4. Evaluation of evidence regarding suppression of facts or misrepresentation to evade payment of duty.

Interpretation of Exemption Notifications:
The appellant cleared goods to M/s Garden Reach Ship Builders & Engineering Ltd. under exemption Notifications 70/77 and 64/95. The issue revolved around whether the goods were for consumption on board a vessel of the Indian Navy, as per the exemption conditions. The appellant argued that the goods were for use as stores on board a vessel, supported by a Certificate from Naval Authority. The Tribunal noted that the exemption applied only to vessels already in existence, not for new ship manufacture. The Tribunal considered the Certificate's validity and the appellant's reliance on it, emphasizing the interpretation of the exemption Notification.

Imposition of Penalty:
The Adjudicating authority confirmed the duty demand and penalty under Rule 173Q of the Central Excise Rules, 1944. On appeal, the penalty was set aside by the ld. Commissioner (Appeals). The Tribunal upheld the setting aside of the penalty, indicating a lenient approach due to the absence of suppression of facts or misstatement to evade duty payment. The focus was on the appellant's bonafide actions and the issue of interpreting the Notification.

Extended Period of Limitation:
The Tribunal discussed the applicability of the extended period of limitation for invoking duty demand. Citing a previous Tribunal decision, it emphasized that the demand could be made under Section 11A of the Central Excise Act if there was suppression of material facts or misrepresentation with intent to evade duty payment. However, in this case, as the goods were cleared under statutory invoices with the benefit of exemption Notification and supported by a Certificate from the Indian Navy, the extended period was deemed not invocable. The Tribunal ruled the demand as time-barred, allowing the appeal with consequential relief.

Evaluation of Evidence on Suppression:
The Tribunal evaluated the evidence regarding suppression of facts or misrepresentation to evade duty payment. It noted that the revenue was aware of the goods clearance under the exemption Notification to M/s. Mazgaon Dock Ltd. The Tribunal concluded that the allegation of suppression with intent to evade duty payment was not sustainable in this case. The majority decision supported the view that the extended period of limitation was not invocable, leading to the appeal being allowed with consequential relief.