2017 (5) TMI 86 - AT - Central Excise

Extended period of limitation - whether extended period of limitation can be invoked in September 2008 to demand the duty on clearances made without payment of duty under invoices during the period November 2005 and reflected in the returns filed as part of clearances without payment of duty under due acknowledgment from the department? - Held that - the appellant cleared the goods under a bona fide belief that the clearances to EPCG licence holders can be made without payment of duty and in the invoices the appellant had mentioned the same and similarly, the appellant had also disclosed this fact in the ER-1 returns filed by him to the Department and the Department did not raise any objection and the Department also did not seek any clarification from them as to why they are clearing goods without payment of duty - Mere omission to give correct information is not a suppression of fact unless it was deliberate to stop the payment of duty - entire demand is time barred - appeal allowed - decided in favor of appellant.

Issues:
1. Appeal against rejection of appeal by Commissioner (A) and confirmation of Order-in-Original.
2. Allegations of clearing goods without payment of duty under EPCG license.
3. Invocation of extended period of limitation for demanding duty.
4. Bona fide belief of appellant regarding duty payment.
5. Departmental responsibilities in verifying duty assessment.
6. Burden of proof on Revenue for intention to evade duty.
7. Compliance with Circulars and Manuals in duty assessment.
8. Applicability of judicial precedents on suppression of facts.

Analysis:
1. The appeal challenged the rejection of the appellant's appeal by the Commissioner (A) and confirmation of the Order-in-Original, which demanded duty, interest, and penalty due to alleged clearance of goods without payment of duty under an EPCG license.

2. The issue revolved around the invocation of the extended period of limitation for demanding duty on clearances made without payment of duty under invoices dating back to November 2005, where the appellant had a genuine belief that duty-free clearances to EPCG license holders were permissible.

3. The appellant argued that the extended period could not be invoked as they had disclosed the duty-free clearances in their ER-1 returns, and the Department did not object or seek clarification, citing judicial precedents like Macleods Pharmaceuticals Ltd. The Tribunal found that the demand was time-barred due to lack of suppression of facts.

4. The appellant's bona fide belief in duty-free clearances to EPCG license holders was a key point of contention, supported by the disclosure in invoices and ER-1 returns. The Tribunal emphasized the importance of due diligence by Central Excise officers in verifying duty assessments.

5. The appellant highlighted the Department's responsibility, as per Circulars and Manuals, to scrutinize returns within a specified timeframe to ensure accurate duty payment. Failure to detect discrepancies during this scrutiny was seen as a lapse on the part of the Department.

6. The burden of proving intention to evade duty lay with the Revenue, and the appellant argued that mere allegations without specific facts suppressed were insufficient. The Tribunal referenced judicial decisions emphasizing the need for deliberate suppression to invoke extended period provisions.

7. Compliance with Circulars and Manuals governing duty assessment procedures was crucial, as highlighted by the appellant's reliance on various decisions to support their argument against the invocation of the extended period of limitation.

8. Considering the precedents and legal principles cited, the Tribunal concluded that the impugned order was unsustainable in law, setting aside the demand as time-barred. Consequently, interest and penalty were also dismissed due to the lack of a valid duty demand.

This detailed analysis of the judgment covers the various issues raised in the appeal, focusing on legal arguments, precedents, and procedural aspects surrounding the duty demand and the invocation of the extended period of limitation.

← Previous Next →