2006 (4) TMI 527 - SC - Central Excise

Tribunal Rejects Appeal: No Evidence of Intent to Evade Duty; Extended Limitation Period Inapplicable under Excise Act.

Commissioner of Central Excise, Jalandhar Versus Royal Enterprises

The Tribunal dismissed the appeal, ruling that the extended period of limitation under Section 11A of the Central Excise Act, 1944, could not be invoked ... Demand - Extended period of limitation - Words and Phrases - 'Suppression of facts' - HELD THAT:- We agree with the view taken by the Tribunal that there was no suppression of facts on the part of the respondent-assessee and the department was not entitled to invoke the extended period of limitation. Accordingly, this appeal is dismissed. Issues:1. Invocation of the extended period of limitation under Section 11A of the Central Excise Act, 1944 based on suppression of facts with intent to evade payment of duty.Detailed Analysis:The judgment in this case revolves around the issue of whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 can be invoked based on the suppression of facts with the intent to evade payment of duty. The Tribunal found that the Revenue authorities had knowledge of the relevant facts regarding the fabrication work and supply of raw materials by the appellant for quite some time. The Tribunal noted that the Revenue authorities had obtained contracts, sales invoices, and other documents related to the work for the Railway Coach Factory as early as 1992. Despite the low fabrication rates indicating that the cost of raw materials was not included, the Tribunal concluded that there was no suppression of facts with intent to evade duty. The Tribunal emphasized that relevant facts had been disclosed, and the appellant could not be faulted for the Revenue authorities' failure to scrutinize the documents thoroughly.Furthermore, the judgment referred to the case law of Collector of Central Excise v. Chemphar Drugs & Liniments, which established that the duty of excise can be sustained beyond six months up to five years only if there is evidence of fraud, collusion, wilful misstatement, suppression of facts, or contravention of the Act with the intent to evade duty. The Tribunal in the present case found no evidence of fraud and accepted the appellant's explanation for not including the value of certain goods in the declaration. The Tribunal's findings were not challenged, leading to the conclusion that the extended period of limitation could not be applied beyond six months as per Section 11A of the Act.Additionally, the judgment cited the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay, which emphasized that mere omission to disclose correct information does not constitute suppression of facts unless there is a deliberate attempt to avoid duty payment. The court agreed with the Tribunal's finding that there was no suppression of facts by the respondent-assessee, thereby dismissing the appeal and ruling that the department was not entitled to invoke the extended period of limitation. This comprehensive analysis of the issues involved in the judgment highlights the importance of establishing deliberate intent and non-suppression of facts in excise duty cases to determine the applicability of the extended period of limitation under the relevant legal provisions.