2018 (5) TMI 1289 - AT - Central Excise

Extended period of limitation - manufacture - process of hot deep galvanization of MS fabricated items - case of appellant is that the issue of galvanization was within the knowledge of department and they had obtained Service Tax registration from the department, and thus the demand is barred by limitation - Held that - the issue of job-work being undertaken by the appellant was within the knowledge of the department as can be seen from the relied upon documents for issue of show cause notice dated 02.04.2012 - Revenue had issued Service Tax registration to the appellant for the activity of galvanization and therefore the activity undertaken by the appellant was known to the department from the date of issue of said registration under Service Tax and that the show cause notice dated 02.04.2012 was issued for the period from 2007-08 - SCN is clearly hit by limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the show cause notice dated 02.04.2012 is within the limitation period.
- Whether the subsequent show cause notices for different periods are sustainable.
- Whether the appellant was eligible for exemption under Notification No.214/86-CE.

Analysis:

Issue 1: Show Cause Notice dated 02.04.2012
The appellants argued that the show cause notice dated 02.04.2012 was beyond the limitation period. They contended that the department was aware of the galvanization activity as they had obtained Service Tax registration and were paying Service Tax. The appellants relied on the Supreme Court ruling in Padmini Products v. Collector, emphasizing that a bona fide doubt on excisability due to conflicting decisions does not warrant the extended limitation period. The Tribunal found merit in this argument, noting that the department was aware of the activity, rendering the notice time-barred. Consequently, the impugned order was set aside, and both appeals were allowed.

Issue 2: Subsequent Show Cause Notices
Regarding the subsequent show cause notices, the Tribunal examined the invocation of the extended limitation period. Citing the Nizam Sugar Factory case, the appellants argued that once the extended period was invoked in the initial notice, subsequent notices could not rely on the same grounds. The Tribunal agreed, deeming the show cause notice dated 28.03.2013 unsustainable due to the prior invocation of extended limitation. Similarly, the show cause notice dated 24.01.2014, invoking sub-section (4) of section 11A of the Central Excise Act, lacked evidence of fraud or collusion. Consequently, the Tribunal set aside the impugned orders for these notices and allowed the appeals.

Issue 3: Eligibility for Exemption
The Revenue contended that the appellant was ineligible for exemption under Notification No.214/86-CE as the principal manufacturer was availing Area Based Exemption. While this argument was presented, the judgment did not explicitly address the eligibility for exemption in the final decision.

In conclusion, all six appeals were allowed, and the appellants were granted consequential relief as per the law. The Tribunal's detailed analysis of the limitation period and sustainability of show cause notices led to the favorable outcome for the appellants.