2015 (3) TMI 36 - AT - Central Excise

Waiver of pre deposit - Area based exemption under Notification No. 50/03-CE. - delayed filing of declaration - Bar of limitation - suppression of facts - clandestine clearance - Held that - The show cause notice for demand of duty was issued only on 08/07/11 and as such this show cause notice has been issued beyond the normal limitation period of one year from the relevant date. In these circumstances, the Department s allegation that the appellant had suppressed the relevant facts from the Department with intent to evade the payment of duty is difficult to accept. Moreover, when the appellant's unit was located in the area specified in the Notification No. 50/03-CE and the goods being manufactured by them was not in the negative list of the exemption notification, the appellant had nothing to gain by clearing the goods clandestinely without reporting to the Department. It is not the allegation of the Department that during the period of dispute, the goods being manufactured by the appellant were some other goods covered by the negative list of the exemption. Beside this, when the appellant's stand from the very beginning is that they had filed required declaration on 18/06/09 under certificate of posting and had enclosed a certificate of the postal authorities in this regard, the Department should have at least made inquiries with the postal authorities, but no such inquiries had been made. Similarly, there is no explanation as to why no inquiries were made with the appellant when they were filing quarterly returns in respect of the value of the goods being cleared by them by availing duty exemption under Notification No. 50/03-CE for the quarters ending 30th June, 2009, 30th September 2009, 31st December, 2009. - prima facie case is in favor of assessee - Stay granted.

Summary

Issues:
1. Eligibility for duty exemption under Notification No. 50/03-CE.
2. Compliance with filing requirements for exemption declaration.
3. Invocation of extended limitation period under proviso to Section 11A (1) of the Central Excise Act, 1944.

Analysis:

Issue 1: Eligibility for duty exemption under Notification No. 50/03-CE
The appellant, engaged in manufacturing doors and windows, was availing exemption under Notification No. 50/03-CE. The Commissioner held that the appellant was not eligible for duty exemption for a specific period and demanded duty along with interest and penalty. The appellant contended that they had complied with the exemption notification by filing the required declaration and quarterly returns. The Tribunal noted discrepancies in the Department's actions and found that the show cause notice for duty demand was time-barred. The Tribunal observed that the appellant had a strong prima facie case on limitation, leading to the waiver of pre-deposit and stay of recovery.

Issue 2: Compliance with filing requirements for exemption declaration
The appellant claimed to have filed the declaration on the same day they commenced clearances, but the Department alleged non-receipt of this declaration. The appellant argued that even if the initial declaration was not received, a fresh one was filed later. The Department contended that the appellant misled them and failed to comply with the necessary filing procedures. The Tribunal found that the Department's allegations lacked substantial evidence and that no inquiries were made with the postal authorities or the appellant when quarterly returns were being filed. This lack of due diligence by the Department supported the appellant's case for waiver of pre-deposit.

Issue 3: Invocation of extended limitation period under proviso to Section 11A (1)
The show cause notice invoked the extended limitation period under proviso to Section 11A (1) for alleged evasion of Central Excise duty. The Tribunal scrutinized the timeline of events and concluded that the Department was aware of the appellant's activities from a certain date. Despite this awareness, the Department delayed issuing the show cause notice for duty demand, rendering it time-barred. The Tribunal emphasized that the appellant had nothing to gain by evading duty and that the Department's failure to conduct necessary inquiries weakened their case. Consequently, the Tribunal allowed the stay application, considering the appellant's strong prima facie case on limitation.

In summary, the Tribunal ruled in favor of the appellant, granting a waiver of pre-deposit and stay of recovery based on the issues of eligibility for duty exemption, compliance with filing requirements, and the invocation of the extended limitation period under the Central Excise Act, 1944.