2007 (7) TMI 142 - HC - Central Excise

Exemption availed by mis-declaration and further cleared products without payment of duty which were not really exempted Factual arguments raised for first time before HC can never be entertained Larger period for raising demand can be invoked in case of misstatement and misuse of exemption

Summary

Issues involved:
1. Legality of demand and duty raised by Revenue on Assessee under Section 11A of the Central Excise Act.
2. Misstatement of facts by Assessee leading to the misuse of exemption and evasion of excise duty.
3. Applicability of proviso to Section 11A for invoking extended period of limitation by Revenue.
4. Arguments made by Assessee regarding the treatment of manufactured goods and reliance on previous court decisions.

Detailed analysis:
1. The primary issue in this case revolves around the legality of the demand and duty of Rs. 8.5 lakh raised by Revenue on the Assessee for the period August 1995 to September 1996 under Section 11A of the Central Excise Act. The Tribunal upheld the demand, citing misstatement and suppression of facts by the Assessee, leading to a situation where the goods manufactured were not actually exempted from excise duty as claimed by the Assessee.

2. The case highlights a clear instance of misstatement of facts by the Assessee at the time of obtaining exemption, which was later found to be false. The Assessee, under the guise of exemption, sold goods that were excisable, thereby evading the payment of excise duty. This misuse of exemption led the Tribunal to affirm the demand and penalty imposed by Revenue, as the Assessee's conduct amounted to misstatement of fact, falling under the proviso to Section 11A.

3. The judgment emphasizes that when an Assessee gains illegal benefits through false declarations for exemption, the Revenue is entitled to invoke the powers conferred under proviso to Section 11A. This allows for the utilization of the extended period of limitation to recover duty and penalty. The court reasoned that the discrepancy between the declared goods and the actual manufactured goods constituted suppression of fact, justifying Revenue's actions under the Act.

4. The Assessee's arguments, including factual submissions about the treatment of manufactured goods and reliance on previous court decisions, were dismissed by the court. The court rejected the Assessee's contentions, stating that the facts of the present case differed from those in the cited decisions. The court emphasized that the misuse of exemption and evasion of excise duty in the current case distinguished it from previous cases where different circumstances were at play, thereby upholding the Tribunal's decision and dismissing the appeal.