2016 (12) TMI 1112 - AT - Central Excise

Extended period of limitation - Held that - It is observed that said clause 4.0 of the contract dated 4/8/95, relied upon by the appellant, is a general clause & also covers situations where duty is also payable. It is not correct on the part of the appellant to say that when wagons are supplied to oil companies also, the same shall stand exempted. It has been rightly pointed out by Learned AR that there are clauses which convey that the impugned wagons were meant for Oil Companies. Appellant never reflected in their returns that such wagons are intended for Oil companies. Even after coming to know that said exemption is not applicable appellant did not brought to the notice of the department & also did not pay the duty liability. In view of the existing factual matrix applicability of extended period has been correctly upheld by the Adjudicating authority - appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand of central excise duty against the appellant along with interest and penalties.
2. Applicability of extended period for imposing penalty and demanding duty.
3. Interpretation of contract clauses regarding the exemption of wagons from duty.
4. Failure to disclose crucial facts leading to the imposition of penalties.

Analysis:
1. The appeal was filed against the order passed by the Adjudicating authority imposing a demand of ?1,60,69,544 against the appellant, along with interest and penalties under Rule-173 Q of the Central Excise Rules 1944 & Sec 11 AC of the Central Excise Act 1944.

2. The appellant argued that the extended period should not be invoked for penalty and duty as they believed in good faith that the wagons supplied to Indian Railways were exempt from duty under Notification No. 60/93-CC dated 28/02/93. The appellant relied on a contract clause and a Supreme Court decision to support their argument against the applicability of the extended period.

3. The Revenue contended that the wagons were actually intended for Oil companies as per the contract and that this crucial fact was not disclosed to the department. The Revenue argued that the extended period should apply due to the suppression of crucial facts and the failure to pay the duty liability even after knowing the actual usage of the wagons.

4. The Tribunal observed that the contract clause relied upon by the appellant was a general clause that did not automatically exempt the wagons from duty. It was noted that the appellant did not disclose the actual usage of the wagons for Oil companies to the department, even after becoming aware that the exemption claimed was not applicable. The Tribunal upheld the applicability of the extended period and penalties based on the failure to disclose crucial facts and the detection of the case by the Anti Evasion Unit.

5. The Tribunal dismissed the appeal, stating that the extended period for demanding duty and imposing penalties was justified based on the factual matrix of the case and the failure to disclose crucial information to the department.