2016 (7) TMI 290 - AT - Central Excise

Claim of exemption of Notification No.108/95-CE dated 28.8.1995 as amended - goods supplied to the projects funded/financed by the United Nations or an international organisation and approved by Government of India. - Revenue s main argument is that in the case of 196 Hydraulic Excavators, new condition that the goods required for the projects are not to be withdrawn after the execution of the project (as made applicable by the amendment Notification No.13/2008-CE dated 1.3.2008 to the original Notification No.108/95-CE has not been fulfilled. Held that - Considering the findings that there has been no suppression on the part of the appellants and in view of the decisions of the judicial fora quoted above, we hold that amendment to the original Notification No.108/95-CE dated 28.8.1995 made by Notification No.13/2008-CE dated 1.3.2008 would have prospective operation and the demand against the appellants can be sustained only for one year period which is within the period of limitation and the penalty imposed by the impugned order deserves to be set aside. - Decided partly in favor of appellant.

Summary

Issues:
Admissibility of benefit under Notification No.108/95-CE for goods supplied to UN or international organization-funded projects; Interpretation of amendment by Notification No.13/2008; Allegations of non-compliance and duty recovery; Applicability of Explanation 2 retrospectively; Suppression of facts and limitation period for demand; Judicial precedents on retrospective amendments.

Analysis:
The judgment revolves around the admissibility of benefits under Notification No.108/95-CE for goods supplied to projects funded by the United Nations or international organizations. The amendment introduced by Notification No.13/2008 on 1.3.2008 added Explanation 2, clarifying that goods must not be withdrawn post execution for the benefit to apply. Revenue alleged non-compliance for Hydraulic Excavators supplied during 2004-2008, leading to a recovery notice of duty and penalties.

The appellant argued that Explanation 2 applies prospectively and only Parliament or Sovereign can enact retrospective amendments. They cited case laws to support their stance and claimed no suppression of facts, urging for the demand to be set aside. They contended that all necessary information was provided to the Department beforehand.

The Tribunal analyzed the facts and submissions, noting the appellant's proactive approach post the amended Notification. It found no evidence of suppression or intent to evade duty, rendering the extended limitation period against the appellants legally unsustainable. Citing judicial decisions, the Tribunal held that the amendment by Notification No.13/2008 operates prospectively, limiting the demand to one year within the statutory period.

Consequently, the Tribunal remanded the case to the adjudicating authority for quantification of duty demand within the one-year limitation period. The penalty imposed was set aside, emphasizing the prospective nature of the amendment and the absence of suppression by the appellants. The judgment provides a detailed analysis of the legal principles governing retrospective amendments and the application of statutory provisions in tax matters.