2018 (2) TMI 8 - AT - Central Excise

Validity of SCN - Time limitation - Held that - the SCN was issued by the department on 19.8.2011. It is an admitted fact on record that the show cause notice has not been issued in this case within the normal period of one year provided under Section 11A of the CEA, 1944. Since, between the period of conducting such audit in August, 2008 and issuance of the show cause notice in August, 2011, the department has not gathered any additional information for initiation of the show cause proceedings, it cannot be said that the SCN issued in August 2011, is sustainable on the ground of limitation - there are no merits in the impugned order so far as it adjudicated the matter, beyond the normal period of limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Barred by limitation of time
2. Clandestine removal and penalty imposition

Analysis:
1. Barred by limitation of time:
The case involves a dispute regarding the limitation period for initiating proceedings against the appellant. The appellant argued that the proceedings were time-barred as the facts of excess stock were known to the department in 2008, and the show cause notice was issued in 2011. The appellant relied on a judgment from the Allahabad High Court to support this contention. On the other hand, the Revenue contended that since the excess stock was detected in 2008 and the notice was issued within five years, it was within the limitation period. The Tribunal examined the timeline of events and noted that the notice was issued after a significant gap from the audit, which did not provide any new information. Citing the Allahabad High Court judgment, the Tribunal emphasized that mere suppression without deliberate intent to evade duty does not warrant invoking the limitation provision. Ultimately, the Tribunal held that the notice issued in 2011 was time-barred, following the precedent set by the Allahabad High Court.

2. Clandestine removal and penalty imposition:
The case also involved allegations of clandestine removal and imposition of penalties against the appellant. The Central Excise department conducted an audit that revealed discrepancies in stock records, leading to show cause proceedings against the appellant. The Commissioner (Appeals) upheld the duty demand and penalties imposed on the appellant. However, the Tribunal did not delve into the merits of the case beyond the limitation issue. As the Tribunal found the notice to be time-barred, it allowed the appeal solely on the ground of limitation, without expressing any opinion on the substantive aspects of clandestine removal or penalty imposition. Thus, the Tribunal's decision focused primarily on the procedural aspect of limitation, setting aside the impugned order based on this ground.

In conclusion, the Tribunal's decision in this case primarily revolved around the issue of limitation of time for initiating proceedings against the appellant. By following the precedent set by the Allahabad High Court and emphasizing the lack of new information between the audit and the notice issuance, the Tribunal ruled in favor of the appellant on the grounds of limitation alone, without delving into the substantive allegations of clandestine removal and penalty imposition.