2008 (8) TMI 360 - HC - Central Excise

Summary

Issues:
1. Limitation period for demand from April 2000 to October 2003.
2. Enquiry into whether the factory is situated in a rural area for exemption.

Analysis:

Issue 1: Limitation period for demand from April 2000 to October 2003
The High Court reviewed the tribunal's order concerning the limitation period for the demand from April 2000 to October 2003. The tribunal had held that the demand was barred by the law of limitation for this period due to the department not being entitled to the extended period of limitation. However, the High Court found that the tribunal did not provide clear reasons for this decision. It was noted that the tribunal's reliance on an order dispensing with pre-deposit was improper as it only reflected a prima facie view. The High Court emphasized the necessity for the tribunal to give detailed reasons for its conclusion on the department's entitlement to the extended period of limitation. As a result, the High Court set aside the tribunal's decision on this issue and remanded the matter back to the Commissioner for a fresh inquiry and decision.

Issue 2: Enquiry into whether the factory is situated in a rural area for exemption
Regarding the aspect of whether the factory of the respondent was situated in a rural area for exemption, the tribunal had remanded the matter for further investigation. The High Court observed that if it is found that the department was entitled to the extended period of limitation for the period up to October 2003, then the inquiry into the location of the unit in a rural area becomes relevant. The High Court opined that it would have been appropriate for the tribunal to remand the matter back on both questions: the limitation period issue and the rural area location issue. Consequently, the High Court directed that the Commissioner should consider both questions together in the denovo enquiry. The High Court disposed of the appeal with the instruction for the Commissioner to address both issues comprehensively.

In conclusion, the High Court set aside the tribunal's decision on the limitation period issue and remanded the matter for a fresh inquiry. Additionally, the High Court directed the Commissioner to consider both the limitation period question and the rural area location issue together in the denovo enquiry for a just and proper resolution in the interest of justice.