2023 (7) TMI 633 - HC - Central Excise

Non-payment or short payment of duty for a period more than one year prior to the date of issuance of the show-cause notice - wilful misstatement or suppression of facts or not - extended period of limitation - HELD THAT - Apropos the extended period of limitation under the proviso to Section 11A(1) of the Act, as it stood at the relevant point of time, the Appellate Tribunal noticed the certificate issued by the Range Superintendent on September 13, 2006 and expressed surprise as to how such clarification in respect of the dutiability of the product could be sought when it was subsequently accepted by the assessee that the product became dutiable from March 1, 2006 pursuant to notification No. 3/2006-CE of such date. The Appellate Tribunal wondered as to what purpose there may have been for the assessee to have approached the Range Superintendent to obtain the opinion or the certificate. There is no doubt that in response to the above query, the Range Superintendent categorically indicated in his letter of September 13, 2006 that the manufactured product of the assessee did not attract any excise duty and, as such, it was not obligatory on the part of the assessee to obtain any central excise registration. It does not appear that such certificate or the opinion of the Range Superintendent expressed therein was obtained by fraud or collusion or wilful misstatement or wilful suppression. The facts were clearly indicated in the assessee s letter of September 4, 2006 and nothing in such letter can be said to have deceived or attempted to deceive the relevant Range Superintendent. In view of the fact that the assessee had approached the Department or an officer in the Department for an opinion and acted in terms of the opinion rendered, it would rule out any act of deceit on the part of the assessee or conduct which could be construed to having an intent to evade payment of duty - Once so much is seen, the proviso to Section 11A(1), as it then stood, would not be available to the Department and the rest of the arguments and findings on such arguments become redundant. However, there is a further leg on which the assessee s contention can stand. The fallacious approach adopted by the Appellate Tribunal, though the consideration as to revenue neutrality and exemption under the relevant notifications become irrelevant upon it being noticed that the show-cause notice issued in the year 2008 could not have related to a period of more than one year prior to the date of its issuance since there was no element of deceit or intention on the part of the assessee to evade duty nor had any case in such regard been made out - the judgment and order impugned passed by the CESTAT on August 25, 2022 is set aside. Since the assessee has already made payment of the duty that it was liable to from March 1, 2006 onwards, there will be no further liability to the assessee on such account. Appeal disposed off.

Summary

Issues Involved:

1. Applicability of exemption notifications.
2. Determination of turnover exceeding Rs. 1 crore.
3. Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act, 1944.

Summary:

1. Applicability of Exemption Notifications:
The court examined whether the benefit of exemption Notification No 8/2002-CE and 8/2003-CE was admissible to the appellant during the periods 2002-03 and 2003-04. The assessee claimed exemption based on the location of its manufacturing unit and argued that it should be refunded any excise duty paid. The court noted that the Appellate Tribunal did not provide specific reasons for denying the benefit under the relevant notifications, indicating a fallacious approach.

2. Determination of Turnover Exceeding Rs. 1 Crore:
The court considered the issue of when the assessee crossed the turnover limit of Rs. 1 crore, as prior to such period, no excise duty could be levied on the goods manufactured by the assessee. The court highlighted that the Appellate Tribunal failed to ascertain this crucial aspect adequately.

3. Invocation of Extended Period of Limitation:
The court scrutinized the invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944. The show-cause notice dated April 7, 2008, pertained to a period beginning March 2003. The court emphasized that for the extended period to apply, the Department needed to establish "intent to evade payment of duty." The court found that the assessee had approached the Range Superintendent for clarification and acted based on the opinion rendered, ruling out any intent to evade payment of duty. Consequently, the proviso to Section 11A(1) was deemed inapplicable, making the Department's claim for the extended period invalid.

Conclusion:
The judgment and order passed by the CESTAT on August 25, 2022, were set aside. Since the assessee had already paid the duty from March 1, 2006, there was no further liability. The appeals were allowed, and the related miscellaneous application was disposed of without any order as to costs.