2013 (7) TMI 679 - AT - Central Excise

CESTAT Clarifies Time Limit for Show Cause Notices under Central Excise Act

M/s Union Quality Plastic Ltd., Shri Juzar Ahmed Kathawala, and others Versus Commissioner (CE., ST.), Vapi and Commissioner (CE., ST.), Daman

The Appellate Tribunal CESTAT AHMEDABAD, in a judgment by Justice G. Raghuram, clarified that a show cause notice issued after six months from the date of ... Limitation – Extended period of 5 years, if Revenue had the knowledge of suppression – Held that:- Relying upon the judgment in the case of Commissioner of Central Excise, Surat-I Vs Neminath Fabrics Pvt. Ltd. reported in [2010 (4) TMI 631 - GUJARAT HIGH COURT] - whenever there is non-levy or short levy of duty with an intention to evade payment of duty, or any of the circumstances enumerated in the Proviso to Section 11A(i) of the Central Excise Act, 1944; such suppression or willful omission is either admitted or demonstrated, invocation of the extended period of limitation would be justified; and that the proviso cannot interpreted to mean that since Revenue has knowledge of suppression, the extended period of limitation cannot be legitimately invoked – Decided against the Assessee. Issues:- Consideration of the limitation period for issuing show cause notice under Section 11A of the Central Excise Act, 1944.Analysis:The judgment by the Appellate Tribunal CESTAT AHMEDABAD, delivered by Justice G. Raghuram, addressed the issue of whether a show cause notice issued after six months from the date of visit of Revenue officers or completion of investigations is barred by limitation under Section 11A of the Central Excise Act, 1944. The Tribunal considered the decision of the High Court of Gujarat in Commissioner of Central Excise, Surat-I Vs Neminath Fabrics Pvt. Ltd., where it was established that the extended period of limitation can be invoked in cases of non-levy or short levy of duty with an intent to evade payment, or under circumstances specified in the Proviso to Section 11A(i) of the Act. The High Court clarified that the knowledge of suppression by the Revenue does not prevent the legitimate invocation of the extended limitation period.The Tribunal noted that both the counsel for the assessee and the Departmental Representative agreed that the issue was settled by the decision in Neminath Fabrics Pvt. Ltd., rendering the reference to the Larger Bench unnecessary. Consequently, the reference was declared infructuous, and the appeals were directed to be placed before the appropriate Bench for further adjudication on merits. This decision reaffirmed the applicability of the extended limitation period in cases involving non-levy or short levy of duty with an intention to evade payment, as clarified by the High Court's ruling in Neminath Fabrics Pvt. Ltd.In conclusion, the judgment provided clarity on the interpretation of Section 11A of the Central Excise Act, 1944, regarding the limitation period for issuing show cause notices in cases of duty evasion or suppression. The decision emphasized the importance of invoking the extended limitation period when circumstances warrant it, as established by relevant legal precedents and interpretations of the law.