2004 (3) TMI 66 - SC - Central Excise

Whether the extended period of limitation is available, Whether the Appellants are entitled to the benefit of Notification No. 65/87-C.E., dated 1st March, 1987? Held that - Once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent period and/or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore, the Department cannot now urge that findings of the Collector that that Show Cause Notice was on a similar issue and for an identical amount is not correct. As the extended period of limitation was not available. In this view, it is not necessary to decide the second point. In favour of assessee.

Summary

Issues:
1. Entitlement to the benefit of Notification No. 65/87-C.E.
2. Availability of the extended period of limitation.

Entitlement to the benefit of Notification No. 65/87-C.E.:
The case involved the manufacturing of HDPE Woven Tubular Fabrics on Circular Looms, which were then cut and sewn to create sacks falling under Tariff Item 6301. The key question was whether the appellants were entitled to the benefit of Notification No. 65/87-C.E., dated 1st March, 1987. The Collector initially ruled in favor of the appellants, but the Customs, Excise and Gold (Control) Appellate Tribunal reversed this decision, denying the appellants the benefit of the Notification. The Tribunal held that there was suppression regarding the manufacturing process, leading to the availability of the extended period of limitation.

Availability of the extended period of limitation:
The Tribunal based its decision on the alleged suppression of facts related to the manufacturing process, which it deemed as an integral process in the manufacture of sacks. However, the Supreme Court disagreed with this assessment. Referring to previous judgments, the Court highlighted that if an earlier Show Cause Notice on a similar issue had been dropped, it could not be considered as suppression. The Court emphasized that the extended period of limitation under Section 11A could not be invoked in such circumstances. Therefore, the Court concluded that the extended period of limitation was not available in this case, rendering the question of the appellants' entitlement to the Notification moot. The Court allowed the appeal, setting aside the Tribunal's order.

In conclusion, the Supreme Court's judgment clarified that the appellants were not subject to the extended period of limitation due to the absence of suppression of facts, thereby upholding their entitlement to the benefit of Notification No. 65/87-C.E. The decision emphasized the importance of considering previous actions by the Department in similar matters to determine the applicability of the extended period of limitation.