2018 (12) TMI 930 - AT - Central Excise

Extended period of limitation - misdeclaration of method of manufacture of NIVARON 90 - suppression of facts - whether the date of inspection by departmental officers at the unit of the appellant has any bearing in deciding the period of limitation when issuing SCNs in the proceedings initiated against the latter? Held that - The visit of the officers on 11.11.93 was only the starting point of the investigation. It cannot therefore be said that just because officers visited the premises of the appellant on 11.11.93, the department has automatically come to know about the alleged modus operandi as reflected in the SCN dt. 17.5.96. It is but evident that only after analysis and study of the documents seized under Mahazar on the date of visit, and subsequently has the department acquired reasonable belief that the appellant had, as indicated in para 3.0 of the SCN, filed wrong / false declarations; removed medicaments without payment of duty; no Central Excise Gate Passes were issued for removal of the excisable goods and no price lists were filed and no statutory accounts were maintained for the manufacture and clearance of goods. The date of inspection of 11.11.1993 will not have any bearing for being considered as the relevant date for issue of SCN within the period of limitation. The demand is not time-barred and the charge of suppression has been rightly held to have been proved by the authorities below - appeal dismissed.

Summary

Issues Involved:

1. Whether the date of inspection has any bearing in deciding the period of limitation to issue a show cause notice.
2. Jurisdiction of the Commissioner of Central Excise in deciding a classification matter.
3. Invoking the extended period of limitation when the impugned goods were Ayurvedic products.

Issue-Wise Detailed Analysis:

1. Date of Inspection and Period of Limitation:

The Tribunal focused on whether the date of inspection by departmental officers at the appellant's unit has any bearing on deciding the period of limitation for issuing show cause notices (SCNs). The appellant argued that the date of knowledge should be 22.10.1990, the date when the departmental officers visited the premises and accepted the 173B declaration. The Tribunal, however, concluded that the date of inspection (11.11.1993) cannot be considered the relevant date for calculating the limitation period. The Tribunal emphasized that the department's knowledge of the alleged evasion was only established after analyzing the documents seized during the inspection and subsequent investigations. Therefore, the SCN dated 17.05.1996, proposing a demand of ?78,14,418/- for the period 01.05.1991 to 28.02.1994, was within the extended period of limitation under Section 11A of the Central Excise Act.

2. Jurisdiction of the Commissioner of Central Excise:

Although the appellant raised the issue of the jurisdiction of the Commissioner of Central Excise in deciding the classification matter, the Hon’ble High Court of Madras did not interfere with the Tribunal's decision on this point. The Tribunal had earlier upheld the jurisdiction of the Commissioner, and this aspect was not reconsidered in the remand.

3. Extended Period of Limitation for Ayurvedic Products:

The Tribunal also addressed whether the extended period of limitation was applicable, considering the impugned goods were Ayurvedic products. The SCN alleged that the appellants misdeclared the process of manufacture and the formula of the product, suppressed the use of non-Ayurvedic ingredients, and evaded duty. The Tribunal held that the extended period of limitation was rightly invoked due to the suppression of facts. The supplementary SCN dated 25.07.1996, which proposed an additional demand of Special Excise Duty of ?6,29,868/-, was also deemed to be within the extended period of limitation.

Conclusion:

The Tribunal dismissed the appeal, concluding that the date of inspection (11.11.1993) does not affect the period of limitation for issuing the SCNs. The SCNs dated 17.05.1996 and 25.07.1996 were within the extended period of limitation, and the charges of suppression were upheld. The Tribunal's earlier findings that the demand was not time-barred and the charge of suppression was proved were reaffirmed. The appeal was dismissed, and the limited issue remanded by the Hon’ble High Court was considered and disposed of accordingly.