1997 (7) TMI 150 - SC - Central Excise

Whether the short payment of duty was by reason of fraud collusion or any wilful misstatement or suppression of facts with intent to evade payment of duty by the respondent? Held that - The show cause notice dated February 7, 1983, issued by the Superintendent of Central Excise does not indicate that the conditions required for invoking the extended period of limitation envisaged by Section 11A were present in this case. In the circumstances, it must be held that the proceedings initiated against the respondent on the basis of the show cause notice dated February 19, 1983 relating to payment of duty on single yarn manufacturing prior to February 28, 1992 was barred by limitation and were rightly dropped. On that view it is not necessary to go into other questions raised in the appeal. The appeal is, therefore, dismissed.

Issues:
- Appeal against judgment of Customs, Excise & Gold (Control) Appellate Tribunal regarding excise duty payment on single ply yarn converted to double yarn.
- Interpretation of Section 11A of the Central Excise Act for invoking extended period of limitation.
- Consideration of grounds for initiating proceedings under the proviso to Section 11A.
- Assessment of whether the proceedings against the respondent were barred by limitation.

Analysis:

The case involved an appeal by the Collector of Central Excise against the judgment of the Customs, Excise & Gold (Control) Appellate Tribunal concerning the payment of excise duty on single ply yarn converted into double yarn. The respondent, a textile mill, faced a show cause notice alleging short payment of excise duty on single ply yarn removed for doubling before February 28, 1982. The issue revolved around the excise duty rate applicable to the single ply yarn, whether at the doubled yarn stage or the single ply stage. The respondent contended that the duty was correctly paid at the time of removal for sale and objected to the demand raised under Section 11A of the Central Excise Act, arguing no fraud or intent to evade duty. The Assistant Collector and the Collector (Appeals) both ruled in favor of the respondent, finding no short payment of duty.

The Tribunal, however, had a difference of opinion among its members, leading to the matter being referred to a third member. The third member dismissed the appeal, while one member highlighted the issue of limitation, stating it was not raised before the lower authorities. The Supreme Court analyzed the show cause notice and the respondent's reply, emphasizing that the notice did not indicate grounds for invoking the extended period of limitation under Section 11A. The Court noted that the conditions for invoking the extended period of limitation were absent in the show cause notice, and the respondent had specifically raised the plea of no grounds for such invocation. Therefore, the Court held that the proceedings initiated against the respondent based on the notice were barred by limitation and rightly dropped. Consequently, the Court dismissed the appeal, emphasizing that no costs were to be awarded.

In conclusion, the Supreme Court's judgment focused on the interpretation of Section 11A of the Central Excise Act regarding the period of limitation for initiating proceedings. The Court emphasized the importance of the show cause notice in indicating the grounds for invoking the extended period of limitation and upheld that the proceedings against the respondent were indeed barred by limitation. This case highlights the significance of procedural requirements and the necessity for clear grounds to justify the extension of the limitation period in excise duty matters.

← Previous Next →