1989 (4) TMI 173 - AT - Central Excise

Summary

Issues Involved:
1. Limitation period for raising a demand of duty.
2. Allegation of fraud or suppression of facts.
3. Invocation of the extended time limit under Section 11-A of the Central Excises and Salt Act, 1944.
4. Adequacy of the Show Cause Notice in alleging fraud or suppression.

Issue-wise Detailed Analysis:

1. Limitation Period for Raising a Demand of Duty:
The appellants argued that the demand for duty was barred by limitation since the Show Cause Notice was issued on 6.7.81 for a period from 15.9.78 to 25.8.80. The appellants contended that the notice did not make any allegations of fraud or suppression of facts, and thus, the demand should be limited to six months as per the standard limitation period.

2. Allegation of Fraud or Suppression of Facts:
The department argued that the appellants had availed of a set-off of Rs. 330/- per M.T. instead of Rs. 100/- per M.T., which resulted in a short payment of duty. The department emphasized that under the Self Removal Procedure, the primary responsibility of making a correct declaration regarding duty liability and payment is on the assessee. The department claimed that the benefit of the fourth proviso to Notification No. 153/77 was wrongly claimed as the assessee did not have an electric furnace, which was a pre-requisite, indicating suppression of facts and fraudulence.

3. Invocation of the Extended Time Limit under Section 11-A of the Central Excises and Salt Act, 1944:
The appellants relied on the decision in Haryana State Electricity Board v. Collector of Central Excise, which held that without allegations of fraud, suppression of facts, or mis-statement, the department could not invoke the larger period of limitation. Conversely, the department cited cases such as H. Guru Instruments (P) Limited v. Collector of Central Excise, which stated that adequate material in the Show Cause Notice leading to an inference of such allegations is sufficient for invoking the extended time limit.

4. Adequacy of the Show Cause Notice in Alleging Fraud or Suppression:
The Tribunal analyzed the Show Cause Notice and found that it merely stated that the assessee had availed of a higher set-off than entitled. There was no explicit allegation of fraud, collusion, suppression of facts, or mis-statement. The Tribunal referenced several cases, including M/s. Mac Laboratories (P) Ltd. v. Collector of Central Excise and M/s. Jay Engineering Works Ltd. v. Collector of Central Excise, which emphasized the necessity of clear allegations in the Show Cause Notice to invoke the extended limitation period.

Conclusion:
The Tribunal concluded that the Show Cause Notice did not contain sufficient allegations of fraud or suppression of facts to justify invoking the extended time limit. The Tribunal referenced the Supreme Court's decision in Collector of Central Excise, Hyderabad v. M/s. Chemphar Drugs & Liniments, which stated that something positive beyond mere inaction or failure is required to invoke the extended period. Consequently, the demand raised for a period beyond six months was not maintainable, and the appeal was allowed.