2011 (2) TMI 2 - SC - Central Excise

Revenue's excise duty demand on hotel furniture upheld; limitation period begins 1997, admitted chairs and tables liable

The Commissioner of Central Excise Versus M/s. Mehta & Co.

SC upheld revenue's demand for central excise duty, finding the Commissioner properly concluded the respondent was liable for duty on specified items. The ... Demand for payment of duty - barred by limitation - Furniture affixed to the ground - movable or immovable - Held that:- As stated, after the order of remand was passed by the Tribunal, the Commissioner considered the issue with regard to the liability of payment of excise duty at length and held that the respondent is liable to pay central excise duty for the items as specifically mentioned in the said order passed. A perusal of the said order would also indicate that no issue with regard to the demand raised by the appellant as time barred was either raised or discussed by the Commissioner. The specific case of the revenue is that the assessee having manufactured the excisable goods covered under different chapter headings, removed them without payment of proper duty of excise and that from the aforesaid action it is explicit that there was an intention on the part of the assessee to evade payment of duty particularly when the contract clause between the respondent and M/s. Adyar Gate Hotel Ltd. clearly mentioned that the contractors quoted rate would also include excise duty. - The cause of action, i.e., date of knowledge could be attributed to the appellant in the year 1997 when in compliance of the memo issued by the appellant and also the summons issued, the hotel furnished its reply setting out the details of the work done by the appellant amounting to Rs. 991.66 lakhs and at that stage only the department came to know that the work order was to carry out the job for furniture also. A bare perusal of the records shows that the aforesaid reply was sent by the respondent on receipt of a letter issued by the Commissioner of Central Excise on 27.2.1997. If the period of limitation of five years is computed from the aforesaid date, the show cause notice having been issued on 15.5.2000, the demand made was clearly within the period of limitation as prescribed, which is five years. So far as the items such as chairs, tables etc. is concerned, the same admitted to be furniture by the assessee himself. The Commissioner having considered the aforesaid issue carefully and after proper scrutiny, the Tribunal was not justified in rejecting the said findings by mere conclusion and without trying to meet the findings recorded by the Commissioner. - Decided in favor of revenue. Issues:1. Whether the demand for payment of duty is barred by limitation.2. Whether items like chairs, beds, tables, desks affixed to the ground are immoveable assets not liable to excise duty.Analysis:Issue 1:The case involves a demand for excise duty payment by the appellant, Commissioner of Central Excise, Visakhapatnam, against the respondent, M/s. Mehta & Company, for manufacturing and removing goods without payment of excise duty. The primary contention revolves around the limitation period for issuing the demand. The Tribunal allowed the appeal, stating the demand was beyond the limitation period. The Commissioner argued that the demand was within the limitation period under Section 11A of the Act. The Supreme Court analyzed the facts and held that the demand was made within the prescribed five-year limitation period. The Court found the respondent's intention to evade excise duty established, invoking the proviso to Section 11A of the Act.Issue 2:The second issue pertains to whether items affixed to the ground, like chairs, tables, etc., qualify as immoveable assets exempt from excise duty. The Tribunal, citing a previous judgment, held that such items cannot be considered furniture. However, the Supreme Court disagreed, citing the settled law that furniture typically refers to moveable items. The Commissioner had differentiated between movable and immovable items, allowing deductions accordingly. The Court found the Tribunal unjustified in rejecting the Commissioner's findings without proper scrutiny. Consequently, the Court allowed the appeal, setting aside the Tribunal's order and restoring the Commissioner's decision.In conclusion, the Supreme Court ruled in favor of the appellant, Commissioner of Central Excise, Visakhapatnam, on both issues, finding the demand for excise duty payment not time-barred and affirming that items like chairs, tables, etc., are liable to excise duty as they are considered furniture.