2014 (2) TMI 770 - HC - Central Excise

Tribunal rules no willful misstatement justifying extended limitation period in Central Excise Act

The Tribunal held that the extended period of limitation under Section 11A (1) of the Central Excise Act was not justified as there was no suppression of ... Invocation of extended period of limitation - Section 11A (1) of the Central Excise Act, 1944 - Held that:- if a scrutiny had been made by the Range Officer of the ER-1 returns, that would have revealed that the assessee had cleared its MS tanks and radiators to the owning company for the manufacture of transformers. This indicated that there was no fraud, collusion, misstatement or suppression of facts. Besides, since the situation was revenue neutral, no intent to evade the payment of duty could be ascribed to the assessee. Once there was no intent to evade the payment of duty, the Tribunal was justified in coming to the conclusion that the extended period of limitation under the proviso to Section 11A (1) of the Act would not be attracted. Hence, no substantial question of law arises in the appeal - Decided against Revenue. Issues:1. Whether the extended period of limitation under Section 11A (1) of the Central Excise Act, 1944 was justifiedRs.2. Whether the penal provisions of 11AC were applicable in the caseRs.Analysis:1. The issue before the Commissioner and the Tribunal was whether the extended period of limitation under Section 11A (1) of the Central Excise Act, 1944 was attracted. The assessee, a company manufacturing MS tanks and radiators, cleared these products to its own unit during a specific period. The duty demand was upheld for short payment on these clearances. The revenue sought to invoke the extended period of limitation, but the Tribunal found that there was no suppression of fact or willful misstatement on the part of the assessee. The Tribunal observed that the short payment could have been detected earlier by the Range Officer if a detailed scrutiny of the ER-1 returns had been carried out, indicating no intent to evade duty. Additionally, the situation was revenue neutral since the duty paid was available as cenvat credit to the assessee itself. Therefore, the Tribunal held that the extended period of limitation was not justified.2. The Tribunal further considered the application of penal provisions under 11AC in the case. It was noted that there was no evidence of fraud, collusion, misstatement, or suppression of facts by the assessee. The Tribunal found that since there was no intent to evade duty and the situation was revenue neutral, the penal provisions of 11AC were not applicable. The Tribunal concluded that no substantial question of law arose in the appeal and dismissed it accordingly. The High Court, upon reviewing the Tribunal's judgment, concurred with the findings. It upheld that no intent to evade payment of duty was present, and since the situation was revenue neutral, the extended period of limitation under Section 11A (1) of the Act was not attracted. Therefore, the appeal was dismissed.