2023 (8) TMI 697 - AT - Central Excise

Extended period of limitation - short payment of duty - suppression of facts or not - case of Revenue is that short payment of duty came to light only when the audit was conducted - HELD THAT - As per Section 11A of CEA, extended period of limitation can be invoked only in case of fraud, collusion, willful mis-statement, suppression of facts or violation of the Act or Rules with an intent to evade payment of duty - It is a well settled legal position that suppression does not mean mere omission, but a positive act of suppressing facts with a willful intent. In this case, the Department seeks to attribute this intent to the appellant because the Department itself chose not to scrutinize the returns based on Departmental instructions. Had the Department scrutinized the returns the alleged short payment would have come to light. The Department is seeking to use its own inaction as the basis to impute the motive of suppression of facts with intent to evade on the appellant. This cannot be permitted. The Department s inaction cannot be the basis for invoking extended period of limitation, let alone basing such inaction to impute motive to the appellant. It is also found that the appellant was supplying the goods to its own sister unit and, therefore, every rupee which the appellant paid as duty would have been available to its sister unit as Cenvat credit. Therefore there cannot be any intention to evade. The entire demand is time barred and neither the demand of duty nor the interest nor the penalty can be sustained - Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the determination of central excise duty payment based on the Cost Accounting Standard-4 (CAS-4) Certificate, the invocation of extended period of limitation for raising demand, and the suppression of facts with intent to evade payment of duty.

Central Excise Duty Payment:
The appellant, a manufacturer of automotive components, paid duty under Rule 8 and 9 of the Central Excise Valuation Rules on 110% of the cost of production as per the CAS-4 Certificate. Discrepancies were found in the duty paid, with an excess of Rs. 4,90,298/- paid overall. The appellant adjusted the short paid duty of Rs. 10,21,295/- by depositing the amount in its Cenvat credit account. A show cause notice was issued demanding the duty, interest, and penalties, invoking the extended period of limitation due to alleged suppression of facts.

Extended Period of Limitation:
The Department alleged that the appellant suppressed facts willfully to evade payment of duty, justifying the invocation of the extended period of limitation. However, the appellant argued that the duty paid was revenue neutral as it was available to its sister unit as Cenvat credit. The appellant contended that in the absence of evidence of fraud or suppression, the extended period of limitation cannot be invoked.

Decision:
The Tribunal found that the entire demand was time-barred as the Department's inaction in scrutinizing returns cannot be used to impute the motive of suppression of facts on the appellant. The Tribunal held that the appellant's payment of duty was revenue neutral, and there was no intent to evade payment. Consequently, the demand of duty, interest, and penalty was not sustainable. The impugned order was set aside, and the appeal was allowed in favor of the appellant with consequential benefits.