2007 (5) TMI 1 - SC - Central Excise

Supreme Court Overturns Revenue's Ruling on Time Limit, Stresses Fair Intent

LARSEN & TOUBRO LTD. Versus COMMISSIONER OF C. EX, PUNE’II

LARSEN & TOUBRO LTD. Versus COMMISSIONER OF C. EX, PUNE’II - 2007 (211) E.L.T. 513 (SC) , 2007 (80) RLT 253 (SC), (2007) 9 SCC 617 Issues Involved:1. Whether a process of 'manufacture' is involved.2. Whether the girders can be considered as immovable property.3. Whether the girders can be considered as marketable and whether exemption under Notification No. 59/90 can be extended.4. Whether there was suppression of facts on the part of the noticees so as to invoke the extended period.Detailed Analysis:1. Whether a process of 'manufacture' is involved:The Commissioner of Central Excise, Pune, held that the construction of bridges involves multiple components, including the foundation and superstructure. The manufacture of Pre Stressed Concrete Girders (PSC Girders) falls within the purview of this construction activity, thereby constituting a process of manufacture. Consequently, the activities carried out by the appellant were considered manufacturing activities subject to excise duty.2. Whether the girders can be considered as immovable property:The Commissioner opined that PSC Girders, once manufactured and transported to the construction site, were not embedded into the earth and thus could not be classified as immovable property. This classification was crucial as immovable property is not subject to excise duty under the Central Excise Act, 1944. The Tribunal upheld this view, leading to the conclusion that the PSC Girders were excisable goods.3. Whether the girders can be considered as marketable and whether exemption under Notification No. 59/90 can be extended:The Commissioner addressed the marketability of the PSC Girders, stating that they were indeed marketable. The appellant did not provide sufficient evidence to claim exemption under Notification No. 59/90. As such, the Commissioner concluded that the PSC Girders were subject to excise duty and did not qualify for the claimed exemption.4. Whether there was suppression of facts on the part of the noticees so as to invoke the extended period:The extended period of limitation was invoked based on allegations of suppression of facts by the appellant. The appellant argued that the first show cause notice did not allege suppression, and thus, the second notice could not introduce such an allegation. The Supreme Court agreed, noting that acts of fraud or suppression must be specifically pleaded and clear. The Court found that the facts alleged to have been suppressed were already known to the authorities when the first notice was issued. Consequently, invoking the extended period of limitation was deemed unjustified. The Court referenced several decisions, including *P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise* and *Nizam Sugar Factory v. Collector of Central Excise, A.P.*, which supported the view that the same set of facts could not be used to invoke the extended period of limitation if they were already known to the authorities.Conclusion:The Supreme Court set aside the impugned judgment, concluding that the Revenue was not justified in invoking the extended period of limitation. The appeal was allowed, and the Court emphasized that the appellant's plea of bona fide was not rejected, and no penalty was imposed under Section 11A of the Act, indicating no mala fide intent. The judgment highlights the necessity for clear and explicit allegations of suppression and the importance of adhering to statutory limitation periods.