2018 (4) TMI 1317 - HC - Central Excise

Validity of SCN - time limitation - suppression of facts - Whether a demand cum SCN can not be issued within a period of five years from the relevant date as per the provisions contained under the proviso to section 11A(1) of the erstwhile Central Excise Act, 1944, when the party has suppressed the material fact of production and clearance of excisable goods from the department with an intent to evade payment of Central Excise duty? - Held that - the revenue has not taken action against the assessee within the period of one year from the relevant date. What is that relevant date in the given facts and circumstances, is not in dispute, for it is the date on which the goods were cleared, i.e. date of clearance of goods/filing of monthly returns. Both events incidentally fall within the same month, which in the instant case, was February, 2008. It is also a matter of record that in July, 2009 itself, the assessee had apprised the department of revenue, by way of a declaration, as envisaged under the Act/Rules/ Regulations, indicating its intent of taking benefit of Notification dated 10.06.2003 - assessee had made evident its intent of availing the benefits under the Act, in accordance with law. Under identical circumstances, the Apex Court in case titled as Pushpam Pharmaceuticals Company Versus Collector of Central Excise, Bombay, 1995 (3) TMI 100 - SUPREME COURT OF INDIA has explained that in normal understanding, contravention of any of the provisions of the Act cannot be read separately, in isolation or differently, that of the accompanying words, such as fraud, collusion or willful default - Where facts are known to both the parties omission by one to do what he might have done and not that he must have done, does not render it suppression. Appeal disposed off.

Summary

Issues:
- Interpretation of the proviso to section 11A(1) of the Central Excise Act, 1944 regarding the issuance of demand cum show cause notice within a specific period.
- Applicability of the proviso in cases of suppression of material facts and contravention of provisions to evade payment of Central Excise duty.

Analysis:

Issue 1: Interpretation of Proviso to Section 11A(1)
The judgment revolves around the question of law regarding the issuance of a demand cum show cause notice within a specific period under the proviso to section 11A(1) of the Central Excise Act, 1944. The case involved an assessee engaged in the manufacture of electrical goods availing exemption from Central Excise Duty under a specific notification. The revenue issued a show cause notice after the statutory period of one year but within five years, alleging suppression of material facts and contravention of provisions to evade duty. The Tribunal held that the revenue failed to establish grounds for invoking the extended period of limitation. The High Court concurred with the Tribunal's findings, emphasizing that the revenue's action did not fall within any exceptions stipulated in the proviso to the main Section.

Issue 2: Applicability of Proviso in Cases of Suppression
The judgment further delves into whether the assessee's actions constituted fraud, collusion, willful misstatement, or suppression of facts to warrant the extended period of limitation up to five years. Citing a Supreme Court case, the High Court clarified that contravention of provisions must involve deliberate acts to escape duty payment. The Court noted that mere omission by one party, without deliberate intent to suppress facts, does not amount to suppression. In this context, the High Court upheld the Tribunal's decision, highlighting that the revenue failed to demonstrate deliberate suppression or contravention by the assessee. The judgment concluded by affirming the Tribunal's order and stating that the question of law was settled, warranting no interference.

In summary, the High Court's judgment clarifies the interpretation of the proviso to section 11A(1) of the Central Excise Act, 1944 concerning the issuance of demand cum show cause notice within a specific period. It emphasizes the necessity of establishing deliberate suppression or contravention to invoke the extended period of limitation up to five years. The judgment underscores that mere omission without intent does not constitute suppression, affirming the Tribunal's decision in favor of the assessee.