2023 (7) TMI 948 - HC - Central Excise

Time Limitation - demand for the period February 1991 to July 1995 (out of total period of February 1991 to January 1996) is barred by limitation or not - HELD THAT - There is no disputes between the parties that the Show Cause Notice was issued on 12th February 1996, demanding duty along with interest and penalty for the period from February, 1991 to July, 1995. The judgment of the Supreme Court referred by the learned counsel for the Appellant in M/S SANJAY INDL CORPN AND ANOTHER VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI 2015 (3) TMI 592 - SUPREME COURT the facts pertained to raising a duty of business of cutting larger steal plates. So also, the trader had challenged the imposition of penalty, and amongst other grounds the issue of limitation was taken up. It was held that demand beyond normal period of 6 months was not sustainable. In the present proceedings, the Show Cause Notice was issued on 12th February, 1996, for a period from February, 1991 to July, 1995, which is admittedly issued beyond a period of 6 months. At the relevant time the unamended Section 11A(1) mentioned a period of 6 months within which a notice could be served. Therefore, the Show Cause Notice can be sustained only if the department is able to show that there is suppression on the part of the Appellant. However, no material is available on record that the appellant indulged in suppression so as to attract any of the requirements as contended in the proviso to Section 11A of the Central Excise Act to apply the extended period of limitation. The question of law needs to be answered in favour of the Appellant, and against the respondent - Appeal allowed.

Summary

Issues involved:
The issue involves the question of law regarding whether the demand for a specific period was barred by limitation under Section 11A of the Central Excise Act, 1944.

Summary:
The case involves a Central Excise Appeal challenging the Final Order passed by the Customs Excise and Service Tax Appellate Tribunal. The Appellant, a Company engaged in gas cutting, was intercepted in August 1995, leading to a Show Cause Notice in February 1996 proposing duty recovery. The Commissioner confirmed the demand in 2001, imposing penalty, which was later remanded by the Appellate Tribunal in 2007. The Commissioner again confirmed the demand in 2009, leading to the current Appeal before the Tribunal.

The Appellate Tribunal, in its final order, held that duty on profile cut plates was payable as it amounted to manufacture. The penalty was reduced, but the Appellant's plea regarding the limitation of the demand was not addressed. The Appellant contended that the demand was beyond the normal six-month period and was under a bonafide belief that the activity did not amount to manufacture.

The Appellant argued that the process of gas cutting did not amount to manufacture, citing correspondence with commissionerates and legal opinions. They also referenced relevant case laws to support their position. The Respondent, however, claimed that the Appellant suppressed facts and forged invoices to avail benefits. The Appellant's belief was supported by the Supreme Court judgment in Sanjay Industrial Corporation, indicating that the demand beyond the six-month period was not sustainable without evidence of suppression.

Considering the principles laid down in the Supreme Court judgment, the Court concluded that the demand for the specific period was indeed barred by limitation. As there was no evidence of suppression by the Appellant, the Appeal was allowed, quashing the impugned orders.