2013 (6) TMI 635 - HC - Central Excise

Extended period of limitation - period subsequent to date of knowledge of the fact of suppression and evasion of duty to the department - Held that - Tribunal committed a substantial error in interpreting the provisions of section 11A of the Central Excise Act, 1944. As noted above, the assessee had on its own brought to the knowledge of the Department the fact about clearances of the goods to its sister unit without duty before the date of visit of the officers who noticed such clandestine clearances. The assessee s conduct was candid and therefore bona fide. There was no element of intentional evasion. - Decided against the assessee.

Summary

Issues:
Appeal under section 35G of the Central Excise Act, 1944 against Customs, Excise and Service Tax Tribunal's order. Interpretation of provisions of section 11A of the Central Excise Act, 1944.

Analysis:

Issue 1:
The Department appealed against the Tribunal's order regarding the evasion of duty by the respondent. The respondent, engaged in manufacturing glass bottles and vials, was found to have clandestinely cleared excisable goods to its sister unit without paying duty. The Tribunal held that there was no intent to evade duty as the respondent voluntarily disclosed the clearance of goods in a letter before the visit by Central Excise officers. The Tribunal concluded that the extended limitation period under section 11A was not justified due to the honest conduct of the assessee.

Issue 2:
The Tribunal considered the revenue neutrality aspect of the case, emphasizing that the goods were cleared to a sister unit registered separately with the Central Excise Department. Referring to precedents like Indian Oil Corporation Limited vs. CCE Mumbai and CCE Vadodara vs. Indeos ABS Limited, the Tribunal held that clearance of goods to a sister unit without duty payment resulted in a revenue-neutral situation. The Tribunal's decision was supported by the Hon'ble Supreme Court's ruling in CCE, Pune vs. Coca-Cola (India) Pvt. Limited. The Tribunal's interpretation of section 11A was deemed correct, as the assessee's conduct was found to be candid and not indicative of intentional evasion.

Conclusion:
The High Court dismissed the Tax Appeal, upholding the Tribunal's decision. The Court found that the respondent's conduct was honest, and there was no element of intentional evasion. The Tribunal's interpretation of section 11A was deemed appropriate, and the appeal was decided in favor of the assessee on both questions framed as substantial questions of law.