2023 (3) TMI 292 - AT - Central Excise

Wrong invocation of extended period of limitation while issuing the show cause notice - appellant had been manufacturing and clearing Magnesium Sulphate however without payment of central excise duty despite that the said product was falling under Chapter heading No. 28332100 neither any duty was paid nor the clearance was declared with the department - HELD THAT - Since the time of issuance of the show cause notice the department has observed that there is not merely a failure of paymet of duty by the appellant while clearing the manufactured Magnesium Sulphate but there has no declaration about the said manufacture and the clearance thereof. The clearances have not been shown by the assessee in the monthly ER-1 returns. The adjudicating authority below has recorded the findings about invoking the extended the period in para 6.4 of the order under challenge with the specific mention that the product in question was not declared by the appellant in his statutory returns. It is noted that the Learned counsel s arguments are that there is no evidence produced by the Department highlighting the alleged suppression of facts. In this context it may be pertinent to point out that with the introduction of Self Removal Procedure the Central Excise administration moved to a trust based tax administration for collection of the said indirect tax. Self assessment of goods and filing of returns are some of the initiatives wherein the Assessee assesses the goods himself and determines the duty and clears the goods - the appellant had failed to declare these goods in his returns and had failed to pay the duty. Therefore the suppression charges alleged by the Department stand proved. The plea of exemption under notification dated 17.03.2012 cannot be an act of bona fide belief as the product manufactured by the appellant is not mentioned therein. Had there been no scrutiny of appellant s record by the department the fact of non-declaration by the appellant would not have came to notice. The show cause notice is held to have rightly invoked the extended period of limitation - Appeal dismissed.

Summary

Issues:
- Appellant's liability for central excise duty on Magnesium Sulphate
- Invocation of extended period of limitation in the show cause notice
- Applicability of Notification No. 12/2012-CE dated 17.03.2012
- Alleged suppression of facts by the Appellant
- Interpretation of exemption notifications

Analysis:

The appeal challenges the confirmation of central excise duty demand on Magnesium Sulphate manufactured by the Appellant, falling under Chapter heading No. 28332100, without payment of duty. The Appellant claimed exemption under Notification No. 12/2012-CE dated 17.03.2012, which was contested by the department. The central issue revolves around the invocation of the extended period of limitation in the show cause notice, alleging suppression of facts by the Appellant regarding non-declaration and non-payment of duty on the manufactured product.

The Appellant argued that Magnesium Sulphate is used as a fertilizer, falling under the definition of fertilizer as per the Fertilizer (Inorganic, Organic Or Mixed) (Control) Order 1985. They contended that the show cause notice wrongly invoked the extended period of limitation without evidence of suppression. However, the department maintained that the product was not covered under the exemption notification and the Appellant failed to declare clearances or pay duty, justifying the extended period of limitation.

The Tribunal noted that the Appellant failed to declare the manufacture and clearance of Magnesium Sulphate, evading duty, which was evident from the absence of these details in their monthly ER-1 returns. The Appellant's argument of bona fide belief in exemption under the notification was dismissed as the product in question was not mentioned therein, indicating an intent to evade duty. Citing the Supreme Court judgment in M/s Meridian Industries Ltd. case, the Tribunal emphasized strict interpretation of exemption notifications, upholding the invocation of extended period of limitation.

Ultimately, the Tribunal upheld the findings of the lower authority, confirming the liability of the Appellant for central excise duty on Magnesium Sulphate and dismissing the appeal. The show cause notice was deemed to have rightly invoked the extended period of limitation, with no infirmity found in the order under challenge.

In conclusion, the judgment affirms the central excise duty liability on Magnesium Sulphate, addresses the issue of extended period of limitation, interprets the applicability of exemption notifications, and establishes the consequences of non-declaration and non-payment of duty by the Appellant.