2008 (11) TMI 173 - AT - Central Excise

Demand u/s 11D collection an amount representing excise duty period of limitation - The provisions of Section 11D as amended with effect from 20-09-1991 among others provided that the person liable to pay any amount under that Section should be issued with a show-cause notice before a demand is ordered in terms of that Section. There is no dispute that the demand relating to the period 1998-2000 was proposed to be confirmed against the party in a show-cause notice dated 22-06-2005 and that the show-cause notice was issued beyond the five years time prescribed under Section 11A of the Act. Considering the limitation provided under-Section 11A is applicable also to Section 11D as held by the Hon ble High Court of Madras the impugned demand is hopelessly barred by limitation. In the circumstances the impugned order is set aside and this appeal is allowed.

Summary

Issues:
1. Appeal against demand under Section 11D of the Central Excise Act.
2. Barred by limitation - demand made in 2005 for amounts collected during 1998-2000.
3. Interpretation of Section 11D - time limit for raising a demand.
4. Divergent views on the scope of Section 11D.
5. Need for reference to a Larger Bench.

Analysis:
1. The appeal challenged a demand of Rs. 7,05,592/- under Section 11D of the Central Excise Act by M/s. Tamilnadu Asbestos (Pipes) for not remitting the excise duty collected from buyers during 1998-2000. The Commissioner (Appeals) confirmed the demand but vacated the interest component.

2. The main argument in the appeal was that the demand made in 2005 for amounts collected during 1998-2000 was barred by limitation. The appellant cited various case laws to support this contention, emphasizing the absence of a prescribed limitation period in Section 11D. The Tribunal noted conflicting decisions on this issue and the need for clarity.

3. The absence of a specific limitation period in Section 11D was a key point of contention. The Tribunal considered the impact of the Eternit Everest case and subsequent amendments to Section 11D. It was observed that the demand notice issued in 2005, beyond the five-year limit prescribed under Section 11A, rendered the demand time-barred. The Tribunal aligned with the interpretation that the limitation under Section 11A also applies to Section 11D.

4. The Tribunal acknowledged the divergent views on the interpretation of Section 11D, especially regarding the time limit for issuing demand notices. The case highlighted the need for consistency and clarity in understanding the scope and application of Section 11D. The Tribunal's decision to set aside the impugned order and allow the appeal underscored the importance of adhering to statutory limitations.

5. Given the conflicting views and the evolving interpretation of Section 11D, the Tribunal emphasized the necessity of referring the matter to a Larger Bench for a comprehensive review and clarification. The case raised broader questions about the application of statutory provisions and the need for uniformity in legal interpretation to ensure fairness and consistency in tax matters.