2018 (2) TMI 1438 - AT - Central Excise

Extended period of limitation - It is appellant s case that department was put to knowledge about manufacture on job work basis - Held that - apart from the raw materials supplied by M/s CPSML which were delivered through challans and accounted, the appellant was receiving raw materials from other sources like M/s Parthiv Spinning Mills without invoices which was unaccounted. Investigation revealed that appellant procured raw material in different names and this unaccounted raw material was used to clear finished product clandestinely without payment on duty. The mahazar establishes that there were discrepancies in the registers maintained for stock of raw material, stock of finished product. Physical verification of stock showed shortage of both. The appellant is guilty of suppression of facts with intent to evade payment of duty. The ingredients of the proviso to section 11AC is strongly established - the extended period has been rightly invoked - appeal dismissed - decided against appellant.

Issues Involved:
1. Invocation of the extended period of limitation.
2. Allegations of suppression of facts with intent to evade duty.
3. Adequacy of evidence and procedural fairness, including cross-examination and verification of records.

Issue-wise Detailed Analysis:

1. Invocation of the Extended Period of Limitation:
The Hon’ble High Court remanded the matter to the Tribunal specifically to consider the issue of limitation. The Tribunal was directed not to enter into the merits of the case but to limit adjudication to the issue of limitation. The Tribunal noted that the appellant argued the demand is time-barred, stating the department was aware of the job worker declaration and the intention to avail Notification No. 214/86. The appellant contended that the department's knowledge of their role as a job worker should prevent the invocation of the extended period. However, the Tribunal found that the appellant was receiving unaccounted raw materials and clearing finished products clandestinely, which justified the invocation of the extended period under Section 11A of the Central Excise Act. The Tribunal concluded that the extended period was rightly invoked due to the appellant's suppression of facts with intent to evade duty.

2. Allegations of Suppression of Facts with Intent to Evade Duty:
The Tribunal examined evidence indicating that the appellant received raw materials without invoices and cleared finished products without accounting for them. The mahazar recorded during the search showed discrepancies in the stock of raw materials and finished products, which were not satisfactorily explained by the appellant. Statements from employees and the presence of packing materials with other company names suggested that the appellant was engaged in clandestine removal of goods. The Tribunal held that these actions amounted to suppression of facts with intent to evade duty, thus justifying the extended period of limitation.

3. Adequacy of Evidence and Procedural Fairness:
The appellant argued that the demand could not be confirmed solely based on private records and that the department failed to verify power consumption and other records. They also contended that cross-examination of key witnesses was not adequately conducted. The Tribunal noted that while these points touch on the merits of the case, they were instructed to focus solely on the limitation issue. The Tribunal found that the volume of evidence collected justified the time taken to issue the show cause notice and that there was no inordinate delay. The Tribunal dismissed the appellant's arguments, holding that the evidence of suppression was compelling and the extended period was appropriately invoked.

Conclusion:
The Tribunal upheld the invocation of the extended period of limitation, finding that the appellant was guilty of suppression of facts with intent to evade duty. The appeal was dismissed, and the demand was sustained on the grounds of limitation.

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