2018 (1) TMI 1206 - AT - Central Excise

Validity of second SCN - Extended period of limitation - Held that - Since the SCN was issued on 5/7/2001 and served on 9/7/2001 on the appellant, the normal period of limitation should commence from 1st July, 2000. Accordingly, the demand for the period April to June, 2000 cannot be confirmed against the appellant - In context with applicability of the extended period of limitation, the Hon ble Supreme Court in the case of Nizam Sugar Factory 2006 (4) TMI 127 - SUPREME COURT OF INDIA held that when all relevant facts are in the knowledge of the Department, when the first show cause notice was issued, while issuing subsequent show cause notices, the suppression of facts cannot be alleged again. Interest - penalty - Held that - interest under Section 11AB of the Act can be imposed only under the circumstances, where short levy or short paid duty is by reason of fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of the Act or the Rules made therein - also, the provisions of Section 11AC of the Act is also applicable in case of mis-statement, suppression of facts etc., which are admittedly absent in this case - interest and penalty set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
Limitation aspect not considered by the adjudicating authority, applicability of extended period of limitation, liability for interest and penalty under Sections 11AB and 11AC of the Central Excise Act, 1944.

Limitation Aspect:
The Tribunal directed the adjudicating authority to consider the limitation aspect in a case remanded for de novo adjudication. The appellant argued that the normal limitation period should commence from July 2000 to March 2001, excluding the period from April to June 2000. The Tribunal found that the demand for the period April to June 2000 cannot be confirmed against the appellant, as the Show Cause Notice was served in July 2001, and the normal limitation period should commence from July 2000. The Tribunal relied on the Supreme Court's decision in the Nizam Sugar Factory case to support this stance.

Extended Period of Limitation:
The Tribunal clarified that when all relevant facts are known to the department at the time of issuing the first show cause notice, subsequent notices cannot allege suppression of facts again. Therefore, the original authority was directed to compute the actual duty liability within the normal period, which the appellant should pay.

Liability for Interest and Penalty:
Sections 11AB and 11AC of the Central Excise Act, 1944 deal with interest on delayed payment of duty and penalty for short levy or non-levy of duty. The Tribunal noted that the appellant did not engage in fraud, collusion, or suppression to evade duty payment, as confirmed in a previous order. As the department did not appeal against the earlier order, its findings could not be challenged. Consequently, the appellant could not be held liable for interest and penalty. The Tribunal set aside the interest and penalty confirmed in the adjudication order.

In conclusion, the Tribunal remanded the matter to the Adjudicating Authority for quantification of the actual duty demand within the normal period and allowed the appeal by setting aside the interest and penalty confirmed in the adjudication order.