2018 (10) TMI 25 - HC - Central Excise

Extended period of limitation - SSI Exemption - use of brand name - N/N. 1/93 - bone of contention raised by the assessee is on the ground that extended period of limitation could not have been invoked in their case - Suppression of facts. Held that - Admittedly, in the instant case, the assessee was using the brand name of a different entity and presumed to have full knowledge that they are not entitled to the benefit of the exemption notification - the second proviso to the notification would stand attracted subject to fulfilment of the condition in the first proviso. Thus, having not disclosed the same nor filed the declaration as provided in the first proviso to the notification, it is, undoubtedly, a case of suppression and the department was justified in invoking the extended period of limitation. The learned counsel for the assessee contended that the legal issue attained finality only after the decision in the case of Grasim Industries Limited. 2005 (4) TMI 64 - SUPREME COURT OF INDIA - However, we find that such contention was never raised by the assessee at any point of time. Therefore, we cannot permit the assessee to raise such contention for the first time in this appeal, especially in the earlier round of litigation, which was challenge to levy of duty had attained finality against the assessee. The assessee had suppressed information from the department. The case on hand is one pertaining to the claim for exemption. The burden is on the assessee to establish that the goods manufactured by them will come within the ambit of the exemption notification and the burden of proof is on the assessee to establish on facts that they are entitled for exemption. Furthermore, the exemption notification are required to be interpreted strictly and in favour of the department and in case of any ambiguity or doubt, it will be resolved in favour of the Revenue and not in favour of the assessee - the Tribunal rightly held that the extended period of limitation was invokable in the facts and circumstances of the case. Penalty - Held that - Penalty is not warranted and is set aside. The substantial questions of law framed for consideration are answered against the assessee - penalty deleted - petition allowed in part.

Issues Involved:
1. Rejection of the appellant's plea on limitation.
2. Applicability of the extended period of limitation.
3. Scope of the impugned order vis-à-vis the Show Cause Notice.
4. Consideration of the appellant's submissions regarding decisions favoring them on similar issues.

Detailed Analysis:

1. Rejection of the Appellant's Plea on Limitation:
The appellant argued that the CESTAT's order rejecting their plea on limitation was unsustainable due to hostile discrimination, as similar issues were previously decided in their favor. The Department issued a show cause notice on 09.08.2000, alleging that the appellant manufactured and cleared excisable goods with the brand name 'Cansoft' without paying excise duty or following excise procedures. The appellant contended that they did not manufacture goods with another's brand name and that the burden of proof lay with the Department, which was not discharged. They also argued that the demand was time-barred as there was no suppression of information with intent to evade duty. The Adjudicating Authority, however, rejected these contentions, confirming the demand and stating that the appellant had suppressed information, thus justifying the invocation of the extended period under Section 11A of the Central Excise Act.

2. Applicability of the Extended Period of Limitation:
The appellant contended that the extended period of limitation was not applicable, referencing the case of Micro Chem Products (India) Pvt. Ltd. The Tribunal initially allowed the appeal on the merits but remanded the matter to the lower Appellate Authority to decide on the limitation issue. The lower Appellate Authority upheld the Adjudicating Authority's order, stating that the extended period was rightly invoked due to the appellant's failure to file the required declaration and their suppression of information. The Tribunal affirmed this decision, stating that the appellant's failure to disclose the use of another's brand name justified the extended period of limitation.

3. Scope of the Impugned Order vis-à-vis the Show Cause Notice:
The appellant argued that the Tribunal's order was outside the scope of the Show Cause Notice, as it was based on grounds not raised in the notice. The Department maintained that the appellant was required to file a declaration under notification No.22/98, which they failed to do, thus justifying the invocation of the extended period. The Tribunal's decision was found to be within the scope of the Show Cause Notice as the appellant had not disclosed the use of another's brand name, which was a material fact relevant to the case.

4. Consideration of the Appellant's Submissions Regarding Decisions Favoring Them on Similar Issues:
The appellant claimed discrimination, stating that similar cases, such as M/S. Data Tech Systems, were decided in favor of the appellants. They also cited the Supreme Court's decision in Pushpam Pharmaceuticals Company, arguing that there was no suppression of information. However, the Tribunal distinguished these cases, noting that the appellant had not filed the required declaration and had used another's brand name, which justified the invocation of the extended period. The Tribunal's decision was also supported by the Supreme Court's ruling in Commissioner of Central Excise, Trichy v. Grasim Industries Ltd., which held that using another's brand name disqualified the appellant from claiming exemption.

Conclusion:
The Tribunal's decision to invoke the extended period of limitation was upheld, as the appellant had suppressed material facts by not filing the required declaration and using another's brand name. The penalty imposed on the appellant was deleted, following the Supreme Court's observations in Grasim Industries. The substantial questions of law were answered against the appellant, and the appeal was dismissed with no costs.

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