2019 (4) TMI 1264 - HC - Central Excise

Extended period of limitation - clandestine removal - electricity consumption during the period 2009-10 - Whether in absence of any finding in order-in-original regarding invocation of extended period of limitation of 'five years', demand of duty beyond the normal period of limitation of 'five years', demand of duty beyond the normal period of limitation of 'one year' can be sustained? HELD THAT - The appellant has specifically raised the issue of limitation which has neither been considered by the Tribunal nor finding has been given. The matter is remanded back to the Tribunal for reconsideration.

Summary

Issues:
1. Invocation of extended period of limitation for demand of duty beyond the normal period.
2. Basis for presuming clandestine manufacture using electricity consumption.
3. Validity of findings regarding excess electricity consumption, installed capacity, and payment to labor contractor.

Analysis:
1. Invocation of Extended Period of Limitation:
The appellant challenged the demand of duty beyond the normal period of limitation of one year, arguing that the order-in-original did not address the invocation of the extended period of five years. The appellant contended that if the facts were known to the department, the extended period could not be invoked. The appellant cited Section 11A of the Central Excise Act, 1944, which allows the issuance of show cause notice within one year under normal circumstances, but within five years in cases involving fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade duty. The appellant specifically raised the issue of limitation, which was not considered by the Tribunal. The High Court set aside the impugned order and remanded the matter back to the Tribunal for reconsideration, emphasizing that the issue of limitation had to be addressed.

2. Basis for Presuming Clandestine Manufacture:
The case involved the appellant, engaged in the manufacture of Poly Propylene Glasses, being searched by Central Excise officers, revealing excisable finished goods production since 2005. The authorities found discrepancies indicating evasion of Central Excise Duty. A year-wise duty calculation was prepared based on electricity consumption records and production figures. The appellant's sales figures exceeded the threshold limit, raising suspicions of duty evasion. The appellant failed to produce essential Central Excise records, further supporting the allegations. The High Court did not specifically address this issue in its judgment.

3. Validity of Findings on Excess Consumption and Payments:
The Tribunal's findings on excess electricity consumption, installed capacity, and payments to labor contractors were challenged for lack of evidence, alleged perversity, and non-application of mind. The appellant argued that the Tribunal's conclusions were not based on evidence and were erroneous. However, the High Court's judgment focused primarily on the issue of limitation and the need for reconsideration by the Tribunal. The specific arguments regarding excess consumption and payments were not elaborated upon in the judgment.

In conclusion, the High Court's judgment primarily addressed the issue of limitation regarding the demand of duty beyond the normal period, remanding the matter back to the Tribunal for further consideration. The other issues related to presuming clandestine manufacture and challenging the validity of findings on excess consumption and payments were not extensively discussed in the judgment.