2022 (2) TMI 1072 - HC - Central Excise

Maintainability of appeal before High Court - Section 35L of the Central Excise Act - invocation of larger period of limitation - HELD THAT - The appeals concerned only the question of invocation of larger period of limitation and such question is not hit by the provisions contained in Section 35L of the Central Excise Act. This contention is therefore turned down. The Tribunal has curtailed the period of limitation for collecting duty on the ground that the issue was not free from doubt prior to the issuance of exemption notification dated 05.12.2008. With these observations, we are in agreement. The discussion of the Tribunal on the point is rather brief. We have therefore referred to the stand of the department in the show-cause notice and that of the assessee in the reply filed. This would demonstrate that the question is whether the process undertaken by the assessee amounted to manufacturing process. We may recall, the assessee had contended that in all cases the sugar is subjected to heating process and though it may undergo physical changes, the chemical character remains the same and mere physical change does not bring into existence a new commodity. Extended period of limitation - HELD THAT - In fact in the present case the assessee has been proved to be incorrect in its belief. However to invoke larger period of limitation in terms of proviso to Section 11A of the Central Excise Act what is required is that the duty of excise is not levied or paid or has been short levied or short paid or erroneously refunded the reason of fraud, collusion or in willful misstatement or suppression of facts or contravention of any of the provisions of the act or the rules which intent to evade payment of duty. In absence of elements of fraud, collusion, willful misstatement, suppression of facts or intention to evade duty, larger period of limitation cannot be invoked. The appeal is dismissed.

Summary

Issues:
1. Condonation of delay in filing the appeal.
2. Determination of manufacturing activity in the production of specific goods.
3. Applicability of excise duty and registration requirements.
4. Invocation of extended period of limitation for duty collection.
5. Jurisdiction of High Court under Section 35L of the Central Excise Act.

Analysis:
1. The judgment begins with the condonation of delay in filing the appeal, citing reasons presented during arguments.
2. The appeals revolve around the manufacturing activity of the respondent-assessee involved in producing Boora, Mishri, Batasha, and Makhana, as described in detail by the Commissioner of Central Excise.
3. The Commissioner alleged that the assessee engaged in manufacturing activities without excise registration, clearing goods without duty payment, and evading excise duty.
4. The assessee argued for exemption under a notification but contended that the process did not amount to manufacturing, emphasizing the lack of chemical change in sugar despite physical alterations.
5. The Tribunal upheld the exciseability of the products but limited the period for duty collection, a decision challenged by both parties.
6. The High Court addressed the maintainability of the appeals under Section 35L of the Central Excise Act, concluding that the issue of limitation was not covered by the provision.
7. The judgment emphasized the requirement of fraud, collusion, willful misstatement, or suppression of facts to invoke an extended period of limitation for duty collection, ultimately dismissing the appeals based on the absence of such elements.

This comprehensive analysis covers the key issues addressed in the judgment, providing a detailed overview of the legal reasoning and conclusions reached by the High Court in the case.