2016 (3) TMI 663 - AT - Central Excise

Extended period of limitation - whether the demand of duty is barred by limitation - Held that - In the present case it is noticed that the Revenue has not disputed the findings of the Tribunal while setting aside the penalty under Section 11AC of the Act as observed that there was no suppression/mis-statement on the part of the Appellant with intent to evade payment of duty. In Final Order dt.10.06.2015 it is observed by the Tribunal that there was no suppression of facts with intent to evade payment of duty. So the demand of duty for the extended period of limitation as per Proviso to Section 11A of the Central Excise Act 1944 cannot be sustained. Hence it would be read in the Final Order dt.10.06.2015 that the demand of duty alongwith interest for the extended period of limitation cannot be sustained. The ROM application filed by the Applicant is allowed in favour of assessee

Summary

Issues:
Rectification of mistake in Final Order regarding demand of duty being barred by limitation.

Analysis:
The Applicant filed for rectification of mistake in Final Order passed by the Tribunal, arguing that the demand of duty was contested on merit and limitation grounds. The Bench had overlooked the time bar issue during the order. The Revenue contended that since the time bar issue was not raised during the hearing, there was no mistake in the final order. However, the Appellant had clearly raised the limitation issue in their appeal and application. The Tribunal found that the Appellant had pleaded no suppression of facts to evade duty and upheld the order on merit but set aside the penalty under Rule 16(2) of CENVAT Credit Rules, 2004 read with Section 11AC of Central Excise Act, 1944. The Tribunal did not address the limitation issue in its order.

In a similar case, the Tribunal had allowed a ROM application stating that the demand was time-barred due to lack of intention to evade duty. The Revenue challenged this decision before the Gujarat High Court. The High Court observed that if a contention raised but not decided by the Tribunal, it could lead to rectification. The Tribunal's decision to set aside the penalty under Section 11AC was not disputed by the Revenue. The Tribunal's findings indicated no intent to evade duty, leading to the demand being time-barred under the Proviso to Section 11A of the Act. Therefore, the demand of duty for the extended period of limitation could not be sustained, and the ROM application was allowed.

The Gujarat High Court upheld the Tribunal's decision, emphasizing that there was no misdeclaration or willful misstatement to avoid duty. The invocation of extended limitation was rightly held impermissible. The Tax Appeal was dismissed, affirming the Tribunal's decision. The Final Order of the Tribunal stated that the demand of duty for the extended period of limitation could not be sustained, and the ROM application of the Applicant was allowed.