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2018 (7) TMI 193 - HC - Customs100% EOU - Extended period of limitation - escapement of assessment u/s 14 of the Customs Act, 1962 - The case of the respondent is that the Show Cause Notices were issued in respect of the periods from 1994-1996 and 1993-1996 respectively. The Show Cause Notices were issued, beyond the period of five years from the relevant date - Held that - The appellant issued Show Cause Notices on 01.11.2001 and 07.11.2001 respectively for recovering the amount due to the revenue. The Show Cause Notices issued on 01.11.2001 and 07.11.2001 clearly shows that based on specific intelligence report, the Preventive Unit searched the factory premises of the respondent on 10.11.2000 and 11.11.2000 and certain incriminating documents were seized under Mahazar. The Show Cause Notices cannot be termed as time barred. The question of limitation is a mixed question of fact and law. It is not purely a question of law. The said question cannot be decided summarily without considering the materials available on record. Appeal allowed - decided in favor of appellant.
Issues:
1. Validity of Show Cause Notices issued beyond the statutory limitation period under Section 11-A of the Central Excise Act. 2. Interpretation of the Apex Court judgment regarding interference at the stage of issuance of show cause notice. 3. Allegations of evasion of Central Excise Duty by an Export Oriented Unit (EOU) through under valuation and suppression of production. Analysis: Issue 1: Validity of Show Cause Notices The appellant issued Show Cause Notices to the respondent for recovery of amounts allegedly due from the respondent for the periods from 1994-1996 and 1993-1996. The respondent contended that the notices were issued beyond the five-year limitation period as per Section 11-A of the Central Excise Act. However, the appellant argued that the notices were based on specific intelligence reports following a search of the factory premises and seizure of incriminating documents. The court held that the question of limitation involves a mixed question of fact and law and cannot be summarily decided without considering the evidence on record. The learned Single Judge's decision to quash the notices without giving the adjudicating authority an opportunity to assess the contentions was deemed premature. Consequently, the court set aside the Single Judge's order and allowed the appeals. Issue 2: Interpretation of Apex Court Judgment The respondent relied on an Apex Court judgment emphasizing limited interference at the stage of show cause notice issuance, except in cases of jurisdictional issues or abuse of process of law. The court noted that mere assertions of lack of jurisdiction or abuse of process are insufficient; there must be a prima facie establishment of such claims. Factual adjudication may preclude interference, and the writ court should generally allow parties to present their contentions before the authorities concerned. However, exceptions exist where interference is warranted, as in cases of jurisdictional errors or abuse of process. Issue 3: Allegations of Central Excise Duty Evasion The respondent, an Export Oriented Unit (EOU), was accused of evading Central Excise Duty through under valuation, suppression of production, and misusing concessions related to plant and machinery. Following a search and seizure operation, Show Cause Notices were issued based on the recovered documents. The appellant contended that the respondent owed significant amounts as per the seized records. The court found merit in the appellant's argument and concluded that the Show Cause Notices were not time-barred, as they were supported by specific intelligence reports and evidence obtained during the search operation. In conclusion, the High Court of Madras set aside the Single Judge's order, allowing the appeals and closing the connected miscellaneous petitions without costs. The judgment emphasizes the importance of considering all evidence before determining the validity of Show Cause Notices and highlights the limited scope of interference at the stage of notice issuance as per legal precedents.
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