2017 (3) TMI 175 - AT - Central Excise

Additional duty of excise(GSI) - time limitation - Held that - the fact of non-payment of (GSI) were disclosed by the appellant to the department and the fact that the appellant in the various financial year had started paying Basic Excise Duty and (GSI) after the crossing of exemption limit of ₹ 1 crore has also been declared in the periodical return. Therefore, the entire facts related to non-payment of (GSI) was very much in the knowledge of the department and nothing prevented the department to issue SCN within the normal period of one year - appeal allowed on limitation.

Summary

Issues:
1. Applicability of exemption under SSI notification for Basic Excise Duty and Additional Duty of Excise.
2. Sustainability of demand on limitation grounds.

Analysis:
The case involved the appellant engaged in manufacturing interlining cloth, availing small-scale exemption under notification no. 8/2000 and subsequent notifications for the period 2000-01 to 2002-03. The appellant believed both Basic Excise Duty and Additional Duty of Excise were exempt under SSI exemption until crossing the exemption limit of ?1 crore. The adjudicating authority confirmed the demand of additional duty of excise, upheld by the Commissioner (Appeals), leading the appellants to appeal.

The appellant's counsel conceded no merit in their case but argued the demand was not sustainable on limitation grounds. It was highlighted that non-payment of duties was reflected in returns and communicated to authorities. Invoices explicitly showed duty heads with zero amounts under the SSI exemption limit, with duties paid after crossing the limit. The appellant maintained a bona fide belief that Additional Duty of Excise was not payable, with no intention to evade payment. The show-cause notice was issued after the normal one-year period, beyond the extended period under Section 11A(1).

The revenue authority reiterated the findings of the impugned order, emphasizing the demand's validity. However, the Tribunal noted the appellant's non-contestation of the demand on merit, acknowledging the liability for Additional Duty of Excise during the exemption period. The focus shifted to the limitation aspect.

Upon review of documents like sales invoices and returns, it was evident that non-payment of Additional Duty of Excise was disclosed to the department. The appellant began paying duties after crossing the exemption limit, a fact declared in returns. The Tribunal concluded that the department was aware of the non-payment, with no suppression of facts by the appellant. The demand, based on the proviso to Section 11A(1), was deemed legally incorrect due to the absence of suppression, leading to the appeal's allowance on limitation grounds. The impugned order was set aside in favor of the appellant.