2017 (12) TMI 957 - HC - Central Excise

Extended period of limitation - Job-work - N/N. 214/86-CE dated 25.03.1986 - Held that - it is not disputed that the principal manufacturer/s, had submitted such declaration under the N/N. 214/86-CE - The fact that principal manufacturer/s did not honour the undertaking given by the department and thus they did not discharge the duty liability cannot be cited as a fact or circumstance against the assessee to invoke extended period of limitation. While the duty liability may arise against the assessee as a legal consequences of non compliance made by the principal manufacturer/s, yet, the assessee had neither concealed nor suppressed any fact in this regard. There is no evidence or allegation by the revenue that the assessee ever concealed or suppressed the facts that the principal manufacturer/s had not discharged the duty liability. It appears it was a matter for the revenue to have addressed and made proper verification/s with regard to the conduct of the principal manufacturer/s at the relevant time. That having not been done, the assessee cannot be subjected to recovery by invoking extended period of limitation in absence of suppression or concealment - appeal dismissed.

Summary

Issues:
1. Whether there was suppression of facts by the party regarding duty payment?
2. Whether the extended period of limitation was correctly invoked based on the job work details in the monthly ER-1 returns?

Analysis:
The appeal under Section 35-G of the Central Excise Act, 1994 was filed by the revenue against the order of the Customs, Excise and Service Appellate Tribunal, Allahabad Bench, raising questions of law. The Tribunal allowed the assessee's appeal, setting aside the order invoking the extended period of limitation. However, the demand under the normal period of limitation was upheld, which the assessee accepted. It was established that the assessee was a job worker for two principal manufacturers in Himanchal Pradesh, and the liability for central excise duty was relaxed subject to a declaration by the principal manufacturers to discharge the duty. The principal manufacturers had indeed submitted such a declaration.

In the case, it was found that the assessee did not make duty payments at the time of clearance due to the declaration by the principal manufacturers. An audit party directed the assessee to pay service tax for job work services provided, which was duly paid. The Tribunal noted that there was no suppression or concealment of facts by the assessee, considering the declaration by the principal manufacturers and the audit inspection. The failure of the principal manufacturers to honor the undertaking did not justify invoking the extended period of limitation against the assessee, as there was no evidence of suppression or concealment by the assessee.

The Tribunal concluded that the assessee was not liable for the duty non-compliance of the principal manufacturers, as there was no evidence of the assessee concealing or suppressing any facts. The Tribunal's decision was based on factual findings and evidence, determining that the extended period of limitation was not warranted. The order was deemed free from error, and the appeal was dismissed without costs.