2019 (3) TMI 2073 - HC - Central Excise

Maintainability of petition - assessee had failed to avail of the appellate remedy because there was no jurisdictional issue involved - invocation of extended period of limitation - suppression of facts or not - HELD THAT - In the present case, the show-cause notice made out a case of mis-statement or suppression of facts since the underlying theme of such show-cause notice was that the assessee had not appropriately described its product or furnished the declaration as required. However, the show-cause notice did not refer to the mis-statement or the suppression of facts being willful. In any event, the order impugned did not hold the assessee liable upon holding, as a matter of fact, that there was any mis-statement or suppression of facts which was made by the assessee and that such mis-statement or suppression of facts was willful. The law as it stood at the relevant time was that the suppression or mis-statement was actionable only if such suppression or mis-statement was willful. The law has been changed since and the word 'willful' may not cover both mis-statement and suppression of facts, today. Thus, it is evident that the order of the adjudicating authority assailed by the assessee in the petition under Article 226 of the Constitution was in error of jurisdiction as it disregarded the assessee's objection as to limitation without holding that the assessee's conduct was such that amounted to willful mis-statement or willful suppression of facts - the Single Bench has appropriately noticed the error of jurisdiction on the part of the adjudicating authority in passing the order dated December 6, 2005. The judgment and order impugned do not call for any interference - application disposed off.

Summary

Issues:
1. Entertaining a writ petition without exhausting appellate remedy.
2. Barred limitation for demanding duty and penalty.
3. Interpretation of Section 11A of the Central Excises And Salt Act, 1944.
4. Requirement of willful mis-statement or suppression of facts for extended limitation period.
5. Error of jurisdiction by the adjudicating authority in disregarding limitation objection.

Analysis:
1. The Revenue appealed against a judgment setting aside an order-in-original due to the extended limitation period not being available for penalizing the assessee. The principal issue raised was the entertainment of a writ petition without exhausting the appellate remedy, contending no jurisdictional issue was involved, and the assessee was not condemned unheard.

2. The case involved a show-cause notice issued long after the six-month period under Section 11A of the Act had expired, demanding duty and penalty. The assessee argued the demand was time-barred, and the goods' description did not obligate indicating their function, which formed the basis of the notice.

3. The interpretation of Section 11A was crucial, allowing short-levy realization within six months, extendable to five years in fraud or willful mis-statement cases. The Supreme Court's ruling emphasized willful mis-statement or suppression of facts must be proven for the extended period, not mere mis-statement or suppression.

4. The show-cause notice alleged mis-statement or suppression but did not establish willfulness. The judgment clarified that willful intent to evade duty must accompany mis-statement or suppression. The law required willful mis-statement or suppression to trigger action, which was not proven in this case.

5. The adjudicating authority erred in disregarding the limitation objection without finding willful conduct by the assessee. The judgment rightly pointed out this error of jurisdiction, as the conduct lacked willfulness, and the limitation could not exceed six months. The impugned judgment was upheld, and the appeal was disposed of with no costs awarded.