2016 (12) TMI 847 - HC - Central Excise

Erroneous understanding of the Tribunal with regard to the applicability of Section 11A of the Central Excise Act, 1944 - the concessional rate of duty in terms of serial No.3 of Notification No.23/2003Central Excise, dated 3132003 - wilful misstatement and until the evasion was discovered, it was not possible for the Revenue to proceed - extended period of limitation - substantial questions of law. Held that - The Tribunal found and as a matter of fact that whatever may be the procedure adopted and if it contravenes the law, the Department should have taken prompt action. The Department though in the know of things on 1462004, allowed the assessee to avail of the benefit of the above Notification. The Tribunal found that the returns were filed in which the assessee indicated that it effected advance Domestic Tariff Area clearances under Notification No.23/2003. Thus the fact was known to the Department and hence issuing a show cause notice dated 372009 covering a period April, 2004 to March, 2006 was barred. These very facts were, therefore, appreciated by the Tribunal and in arriving at the conclusion that the show cause notice and the proceedings in pursuance thereof were barred by limitation. It may be that the Tribunal dealt with an incidental contention of the Revenue. Merely because that incidental question has been dealt with, we cannot loose sight and shift the focus from the main question. The main question was the applicability of Section 11A and invocation of the extended period thereunder. The extended period could not have been invoked in the absence of the requisite ingredients and to be found in Clauses (a) to (e) of subsection (4) of Section 11A of the Central Excise Act, 1944. This is clearly a finding of fact and reached in the backdrop of the assessee s peculiar case. We do not think that such findings raise any substantial question of law. The Tribunal s view cannot be said to be perverse - appeal being devoid of merits, dismissed.

Summary

Issues:
1. Applicability of Section 11A of the Central Excise Act, 1944
2. Concessional rate of duty under Notification No.23/2003Central Excise
3. Barred show cause notice dated 372009
4. Invocation of extended period of limitation

Analysis:
1. The appellant argued that the questions proposed were substantial questions of law arising from the Tribunal's erroneous understanding of the applicability of Section 11A of the Central Excise Act, 1944 and the concessional rate of duty under Notification No.23/2003Central Excise. The appellant contended that the extended period of limitation was rightly invoked due to wilful misstatement by the assessee and the discovery of evasion after the show cause notice was issued. However, the High Court disagreed with the appellant's submission.

2. Upon reviewing the Tribunal's order, the High Court found that the Department failed to take prompt action despite being aware of the facts since 1462004. The Tribunal observed that the assessee had indicated in their returns about availing benefits under Notification No.23/2003, which was known to the Department. Consequently, the show cause notice issued on 372009, covering the period from April 2004 to March 2006, was considered barred by limitation by the Tribunal.

3. The High Court emphasized that the Tribunal's appreciation of the facts led to the conclusion that the show cause notice and subsequent proceedings were indeed barred by limitation. The Tribunal's decision was based on the main question of the applicability of Section 11A and the invocation of the extended period, which required specific ingredients as outlined in the relevant clauses of the Act. The High Court noted that the Tribunal's findings were factual and specific to the peculiar circumstances of the case, and did not raise any substantial question of law.

4. In conclusion, the High Court dismissed the appeal, stating that the Tribunal's view was not perverse but a possible interpretation of the matter. The High Court found the appeal to be devoid of merits, as the Tribunal's decision regarding the applicability of Section 11A and the extended period of limitation was upheld based on the specific facts and legal provisions applicable to the case.