2017 (11) TMI 1034 - SC - Central Excise

Rectification of order by subsequent order - proviso to Section 11 A - extended period of limitation - Held that - Not only the aforesaid finding is a pure finding of fact, which conclusion of the learned Tribunal is duly supported by adequate reasons, we do not find any error on a substantial question of law to have been committed by the learned Tribunal - As already observed, the demand raised on the assessee was primarily founded on the sales practices contained in the sales policy and sales agreement. Benefits of deduction passed on to the buyer under the sales policy and sales agreement have not been allowed to the assessee. Time limitation - Held that - as the materials on the basis of which the claims/demands have been raised were before the Revenue at all material points of time, no question of suppression or mis-statement can legitimately arise to enable the Revenue to avail the benefit of extended period of limitation. Appeal dismissed - decided against Revenue.

Summary

Issues: Validity of order dated 20.6.2005 under Section 35 L of the Central Excise and Sales Tax Act

In the judgment delivered by the Supreme Court, the appeal challenged the order dated 8th April, 2005, passed by the Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai, which was subsequently rectified by an order dated 20.6.2005. The central issue revolved around the validity of the rectified order dated 20.6.2005. The original order favored the Revenue, but the penalty imposed was reduced, leading to the Revenue's challenge. However, the Tribunal, during the rectification application, corrected an error of law and held that proceedings initiated under Section 11 A within six months from the relevant date alone would be legally competent, negating the proviso to Section 11 A and deeming the demand raised on an extended period as time-barred. The Tribunal's conclusion was based on the fact that the sales policy and agreement forming the basis of the demands were known to the department in 1997, yet substantial demands were raised within the extended five-year period, not the normal six-month period. The Court found the Tribunal's conclusion to be a factual finding supported by adequate reasons and no substantial error of law was identified. The demand on the assessee was primarily founded on sales practices, and the benefits of deductions were not allowed. As the materials supporting the claims were known to the Revenue at all relevant times, there was no suppression or misstatement enabling the Revenue to benefit from an extended limitation period. Consequently, the Court declined to interfere with the Tribunal's order dated 8th April, 2005, and dismissed the appeal.