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2016 (5) TMI 1123 - AT - Central ExcisePeriod of limitation - extended period of limitation - whether no willful misstatement/ suppression of facts and therefore the extended period was not invokable and the SCN was issued beyond the normal period of one year? - Held that - Supreme Court in the case of Continental Foundation (2007 (8) TMI 11 - SUPREME COURT OF INDIA ) has observed that when there was scope for entertaining a bonafide doubt the extended period of limitation was not available. At this juncture, it is pertinent to mention that the suppression of facts/ willful misstatement is a combined question of facts and law, and therefore, precedential value of various judgments on this issue has to be determined in the context of the facts of each case. In case of CCE Vs. Chemphar Drugs Liniments 1989 (2) TMI 116 - SUPREME COURT OF INDIA , the Supreme Court held that something positive other than mere inaction or failure on the assessee s part or conscious withholding of information when assessee knew otherwise is required for invoking extended period . In the light of the foregoing analysis, the allegation of willful misstatement/ suppression of facts is not sustainable against the respondent. Consequently, we hold that the Commissioner was justified in dropping the impugned demand as time barred. - Decided in favour of assessee.
Issues:
- Time bar for demand raised by Revenue - Willful misstatement/suppression of facts by the Respondent - Invocation of extended period for demand raised Analysis: 1. Time bar for demand raised by Revenue: The Revenue appealed against an order dropping a demand of ?1,59,78,303 raised for the period September 1999 to February 2002, citing time bar due to no willful misstatement/suppression of facts. The adjudicating authority supported this by referencing an earlier SCN issued on 2.5.2003, making the subsequent SCN dated 24.09.2004 time-barred. This argument was further reinforced by various judgments, including the case of Bhor Industries Ltd., emphasizing that the issuance of an earlier SCN for a normal period does not preclude invoking the extended period for a subsequent period if there was willful misstatement/suppression of facts. 2. Willful misstatement/suppression of facts by the Respondent: The Respondent contended that there was no willful misstatement/suppression of facts, as they had informed the Revenue about the practice of bringing pumps from outside in letters dated 20.07.1999 and 20.09.1999. The Respondent argued that the demand pertained to a period after the Revenue was informed of their practices, citing judgments such as Nizam Sugar Factory vs Collector of Central Excise and Gujarat Ambuja Exports Ltd. The Respondent also highlighted the ambiguity in classification, supported by CBEC Circular No. 224/58/96, and emphasized that the extended period cannot be invoked in case of bonafide doubt, as observed in the case of Continental Foundation. 3. Invocation of extended period for demand raised: The Tribunal analyzed the contentions of both sides and the records. It was noted that the Respondent had unambiguously informed the department about their practices, and there was no willful misstatement/suppression of facts. The Tribunal referred to the Supreme Court's observation in CCE Vs. Chemphar Drugs Liniments, emphasizing the need for something positive other than mere inaction or conscious withholding of information to invoke the extended period. Consequently, the Tribunal upheld the dropping of the demand as time-barred, dismissing the Revenue's appeal. In conclusion, the Tribunal found in favor of the Respondent, ruling that there was no willful misstatement/suppression of facts and that the demand raised by the Revenue was time-barred. The judgment highlighted the importance of clear communication between the assessee and the department, along with the necessity of positive actions to invoke the extended period for demands.
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