2018 (11) TMI 815 - AT - Central Excise

Time limitation - whether the demand for the differential duty for the period September 2008 to March 2009 is hit by limitation or otherwise? - Held that - The appellant had indicated in the returns for September 2008 onwards that he is seeking the change in the classification of final products of crude palm stearin from CETA 3823 1900 to 1515 9090. We also notice that by a letter dated 03.12.2008, Superintendent of Central Excise, Kakinada noted the change in classification sought in ER-1 return for September and October 2008 and directed the appellant to reclassify the product under 3823 1111 or 3823 11 12 or 3823 11 19 as the case may be and pay the differential duty. Invocation of the extended period is unsustainable as department was aware and have sought clarification and got the same on the change of classification that affected the duty liability, secondly there is no dispute as to the fact that appellants were indicating in monthly returns that clearances were under nil rate of duty by availing the benefit of notification. This would mean that there is no suppression of fact with intent to evade duty. The appeal needs to be allowed on the ground of limitation.

Summary

Issues:
1. Demands raised beyond the period of limitation.

Analysis:
The appeal was initially disposed of on merits, but an application for rectification of mistake (ROM) was filed to address the issue of demands raised beyond the period of limitation. The Bench acknowledged the error in the final order and listed the appeal for disposal to hear both sides on the question of limitation.

The appellant argued that they had changed the classification of their product in the monthly returns filed for September 2008, but the Revenue authorities continued to demand differential duty for the period September 2008 to March 2009 invoking the extended period of limitation. The appellant cited similar cases where the orders on limitation were set aside by the Bench, supporting their argument.

The Departmental Representative (DR) contended that there was suppression of facts, justifying the invocation of the extended period for demanding differential duty.

Upon careful consideration, the Bench focused on whether the demand for differential duty for the specified period was hit by limitation. It was observed that the appellant had indicated the change in classification in the monthly returns and corresponded with the authorities regarding the same. The Bench found that the invocation of the extended period was unsustainable as there was no intent to evade duty, and the appellants had correctly indicated clearances under the nil rate of duty.

Referring to a previous case, the Bench concluded that the appellants could have genuinely believed in the classification of the product under a specific chapter until a certain date. Therefore, the plea of limitation raised by the appellant was answered in their favor, and the appeal was allowed solely on the ground of limitation, setting aside the impugned order.

In the operative portion of the order, the Bench pronounced the decision to allow the appeal on the ground of limitation, thereby setting aside the impugned order based on the detailed analysis provided.