2012 (6) TMI 608 - HC - Central Excise

Extended period of limitation respondents filed an application for amendment in the registration certificate - respondents also filed return with the department which showed that appellants had cleared goods at a concessional rate of duty and in view of the fact that registration certificate had been amended, department cannot be said to be unaware of the fact of clearance of Stock manufactured prior to 17-4-1997 - Held that - Even after the visit of the officers on 8-5-1997 for preventive checks, the show cause notice could have definitely been issued within one year or six months extended period of limitation was not available to the department In case of Neminath Fabrics Pvt. Ltd. (2010 (4) TMI 631 (HC) ), once the facts necessary to permit the department extended period of limitation are established on record, thereafter, the question of initiating proceedings within six months/one year from the date of knowledge of the department, is not relevant

Summary

Issues:
1. Whether the Tribunal erred in deciding the appeal on the question of limitation without giving any finding on the merit of the case?
2. Whether the Tribunal was correct in holding that the extended period of limitation prescribed under the first proviso to Section 11A of the Central Excise Act, 1944 cannot be invoked?
3. Whether the Tribunal erred in rejecting the appeal of the revenue?

Analysis:

Issue 1:
The appeal revolved around the extended period of limitation for recovering unpaid duty. The Revenue sought to apply the extended period due to alleged clandestine removal of goods without payment of duty by the respondent. The Appellate Commissioner initially ruled in favor of the assessee, leading the Revenue to approach the Tribunal. After a remand from the High Court, the Tribunal rejected the Revenue's appeal. The Tribunal found that the Revenue failed to establish a case for extended limitation, as the department was aware of the relevant facts. The Tribunal emphasized that the demand was time-barred, as the show cause notice was issued in 2003, and the issue of limitation was raised at all levels. The Tribunal concluded that the demand could not be sustained due to the time limitation, ultimately rejecting the Revenue's appeal.

Issue 2:
The Revenue argued that the Tribunal erred in not granting the extended period of limitation based on a previous court decision. However, the Tribunal found that the foundational fact of clandestine removal was not established. It noted that the appellant was not eligible for a concessional rate of duty due to manufacturing dyed yarn before a specified date. The Tribunal concluded that there was no fraud or suppression of facts to evade duty, leading to the decision that the extended period of limitation was not applicable. The Tribunal's conclusion was based on factual findings and the application of statutory provisions to the case.

Issue 3:
While the Revenue contended that the Tribunal should have granted the extended period of limitation, the High Court upheld the Tribunal's decision. The Court agreed with the Tribunal's view that the entire issue was not free from doubt, and the Appellate Commissioner's initial stance in favor of the assessee was not sustainable. The Court dismissed the Tax Appeal, emphasizing that once the necessary facts for the extended period of limitation are established, the timing of initiating proceedings becomes irrelevant. The Court disagreed with any contrary observations in the Tribunal's order and affirmed the Tribunal's decision.

In conclusion, the High Court upheld the Tribunal's decision to reject the Revenue's appeal, emphasizing the factual findings and the lack of evidence supporting the application of the extended period of limitation. The Court dismissed the Tax Appeal, stating that the timing of initiating proceedings is not crucial once the relevant facts are established.