2016 (8) TMI 983 - AT - Central Excise

Invokation of extended period of limitation - Demand - Job-work - goods were manufactured out of raw materials supplied by M/s S.B.C.H. and have only received job work charges and on manufacture, corrugated boxes were sent to M/s S.B.C.H. without payment of duty - non-fulfillment of conditions laid down in the Notification No. 214/86 dated 25.03.1986 - Held that - if the provision for invocation of extended period is to be applied in a particular case separately one of the five ingredients such as fraud, collusion, any willful misstatement, suppression of facts or contravention of provisions of Act or Rules made thereunder needs to be established and also intention to evade is also to be established. It is found that in the present show cause notice revenue could not establish any of the above said 5 ingredients. Therefore, on limitation the show cause notice is not sustainable. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Central Excise duty demand on corrugated boxes cleared without payment.
2. Invocation of provisions for extended period for demand.
3. Barred by limitation - requirements for invoking extended period not fulfilled.

Analysis:
1. The case involved the appellant, a manufacturer of corrugated boxes, who cleared goods without payment of Central Excise duty on certain invoices during a specific period. The department issued a show cause notice demanding duty payment, invoking provisions for extended period, as per notification 214/86. The appellant contested the demand, arguing for exemption under the notification.

2. The Order-in-Original confirmed a demand for duty, penalty, and interest. The appellant appealed to the Commissioner (Appeals), who upheld the original order. The appellant then approached the Appellate Tribunal challenging the Order-in-Appeal, primarily on the grounds of limitation, contending that the demand was time-barred.

3. The crucial issue revolved around the invocation of the extended period for demand. The appellant argued that the show cause notice failed to establish the necessary ingredients for invoking the extended period, such as fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions. The Tribunal examined the provisions of Section 11A of the Central Excise Act, 1944, and concurred with the appellant's contention. It held that since none of the essential elements were proven by the revenue, the show cause notice was unsustainable on the grounds of limitation.

4. The Tribunal concluded that without establishing the required ingredients for invoking the extended period, the show cause notice demanding Central Excise duty was not sustainable. Consequently, the Order-in-Appeal and Order-in-Original were set aside, and the appeal by the appellant was allowed with no costs. The judgment highlighted the importance of meeting the statutory requirements for invoking extended periods in tax matters to ensure the validity of demand notices.