2016 (8) TMI 491 - AT - Central Excise

Job-work - Invokation of extended period of limitation - recovery of duty on finished goods destroyed - allegation of suppression as there was delay on the part of appellant to furnish details - Held that - it is apparent that the appellants did not possess the requisite information called for by the department. In spite of their best efforts they could not get the information from NCCL. It is seen that only after issuance of summons by the Department, has NCCL woken up to supply the necessary details. Again though details were received on 06-04-2010, the show cause notice is issued after more than one and a half year, invoking extended period of limitation. As rightly pointed out by the appellant, there is no allegation raised in the show cause notice with regard to fraud or wilful suppression. The appellant being only job worker is not in a position to supply the details requested by the department. Further the show cause notice has accepted the figures taken as basis for claim of insurance made by NCCL for raising the demand of duty. In such circumstances, the appellants cannot be attributed with any intention to evade payment of duty. Further after receiving the information, the revenue has been in its bureaucratic slumber for more than a year to issue the show cause notice. As there is no evidence in the present case to establish willful suppression with intention to evade payment of duty, the demand is time barred, and unsustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Duty demand on goods lost in fire.

Analysis:
The appellants, engaged in manufacturing Sugar Confectionery and Chocolate as job work for another company, faced a major fire accident resulting in the destruction of raw materials, packing materials, and finished goods. The responsibility to pay excise duty and other taxes lay with the company for whom the job work was being carried out. Despite the appellants' efforts to obtain necessary information from the company, they could not provide details to the department promptly. The department issued a show cause notice for duty recovery, interest, and penalty, alleging suppression due to delayed information submission. The original authority confirmed the duty demand, interest, and penalty, which was upheld by the Commissioner (Appeals) with a provision to pay 25% of the duty as penalty. The appellants challenged this decision before the Tribunal.

The appellant's counsel argued on the ground of limitation, citing the destruction of goods in fire and entitlement to remission of duty under Rule 21 of the Central Excise Rules. He emphasized the appellants' efforts to obtain details from the company and the absence of fraud or suppression allegations in the show cause notice. The counsel relied on precedents to support the appeal's validity.

The department contended willful suppression by the appellants, highlighting delays in furnishing requested details despite reminders and the necessity to issue summons to obtain information. The department argued that intentional delays indicated an attempt to evade duty payment, justifying the extended period notice.

After hearing both sides, the Tribunal found that the appellants promptly reported the fire incident, made insurance claims, and lacked the information sought by the department due to reliance on the company. The Tribunal noted that the show cause notice did not allege fraud or willful suppression explicitly. It concluded that the delay in furnishing information was not intentional suppression to evade duty payment. Citing a Supreme Court judgment, the Tribunal held the demand time-barred and unsustainable, setting aside the impugned order on the ground of limitation and allowing the appeal with consequential reliefs.