Central excise duty exemption notification dated 01.03.2002 was ...

Fly-ash usage for excise duty exemption: Bonafide belief vs. alleged suppression.

Case Laws     Central Excise

September 23, 2024

Central excise duty exemption notification dated 01.03.2002 was denied, leading to recovery of duty, interest, and penalty. The extended period of limitation was invoked. However, the appellant had maintained records, provided intimation in Form D-3, and claimed exemption based on fly-ash usage above 25%. Audits conducted did not find discrepancies. The appellant did not suppress facts regarding fly-ash usage. The show cause notice alleged manipulation of fly-ash receipt records, but no reasons were provided to establish suppression of facts with intent to evade duty. The Supreme Court has held that for invoking extended limitation, duty non-payment should be due to fraud, collusion, willful misstatement, or suppression of facts. Mere failure to pay duty is insufficient. Suppression of facts should be deliberate to escape duty payment. If an assessee bona-fide believes in correct duty discharge, even if ultimately found wrong, it does not render the belief mala-fide. In self-assessment, the assessee must determine liability correctly based on judgment and bona-fide manner. In this case, the appellant did not suppress facts, let alone with intent to evade duty. Hence, the extended limitation could not be invoked. The Commissioner's order demanding duty, interest, and penalty was set aside by the Appellate Tribunal.

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