2018 (7) TMI 1056 - HC - Central Excise

Tenability of invocation of the extended period of limitation - Section 11 of the Central Excise Act - case of appellant is that there is no positive finding rendered by any of the authorities below which says that the assessees were parties to the fraud - Held that - All the appellants stated in their defence that they had tasked one or the other individual to deposit the duty amounts with the concerned bank periodically. The least that could have been done by them in these circumstances, was to establish through some credible material i.e. by summoning the bank records or citing the concerned individuals as witnesses and ensuring that their statements were recorded. The assessees however, chose to baldly assert that they were victims of fraud and that the First Information Report was in fact lodged against a certain individual, one Sachin, against whom investigations are ongoing. There is no denial of the fact that the appellants availed of and sought to take advantage of the fraudulent documents, which they pleaded to be genuine, even though the amounts in fact were never deposited. The invocation of the extended period was justified - appeal dismissed - decided against appellant.

Summary

Issues Involved:
Tenability of invocation of extended period of limitation under Section 11 of the Central Excise Act, 1944 based on fraud allegations.

Comprehensive Analysis:

Issue 1: Tenability of invocation of extended period of limitation
The question of law in this case revolves around the tenability of invoking the extended period of limitation under the proviso to Section 11 of the Central Excise Act, 1944. The assessees/appellants challenged the findings of the Adjudicating and Appellate Authority, which were later affirmed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), as being erroneous. The appellants, who manufacture stainless steel strips, claimed to have availed a compounding scheme and deposited the excise duty leviable as per the Act and Notifications. The show-cause notices alleged that the compounding scheme was availed without depositing the required amounts, with documents like bank receipts being claimed as forged. The authorities rejected the assessees' explanations, confirmed the duty payable for the extended period, and imposed penalties. The assessees argued that the invocation of the extended period was erroneous as there was no positive finding that they were involved in the fraud. They emphasized the absence of evidence showing their active participation in the alleged fraud, as they claimed to be victims of a fraud and not perpetrators. The assessees relied on legal precedents to support their argument, while the Revenue cited other judgments to justify the invocation of the extended period.

Issue 2: Evaluation of facts and circumstances
The High Court evaluated the facts and circumstances of the case and found the concurrent findings of fact to be in order. The appellants' defense that they had tasked individuals to deposit duty amounts periodically was deemed insufficient, as they failed to provide credible evidence such as bank records or witness statements to support their claims. The Court noted that the appellants had taken advantage of the fraudulent documents, which they pleaded to be genuine, despite the amounts not being deposited. The Court referred to legal precedents to support its decision, highlighting the consequences of benefiting from fraudulent acts. The Court disagreed with the appellant's reliance on certain judgments and upheld the invocation of the extended period based on the facts presented and the actions of the appellants. Ultimately, the Court dismissed the appeals, affirming the lower authorities' findings and the imposition of penalties.

In conclusion, the High Court's judgment focused on the tenability of invoking the extended period of limitation under the Central Excise Act, 1944 based on fraud allegations. The Court carefully evaluated the facts and circumstances of the case, considering the appellants' defense and the legal precedents cited by both parties. The Court found the invocation of the extended period justified, emphasizing the consequences of benefiting from fraudulent acts and the appellants' failure to provide sufficient evidence to support their claims. The appeals were dismissed, affirming the lower authorities' findings and penalties imposed.