Extended-period demand under s.11A(4) invalid where show-cause notice alleges suppression but not deliberate intent to evade duty

CESTAT held the extended period under s.11A(4) of the Excise Act could not be invoked because the show-cause notice merely alleged suppression of facts without alleging deliberate suppression with intent to evade duty. Reliance on SC authority established that suppression must be deliberate to escape duty. As the Department did not allege intent and no finding was recorded by the Commissioner (Appeals), the extended-period demand could not be sustained. The demand limited to the extended period was set aside and the appeal was allowed.

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Issues Involved:
1. Invocation of the extended period of limitation under section 11A(4) of the Central Excise Act, 1944.
2. Allegation of suppression of facts with intent to evade payment of duty.

Detailed Analysis:

Invocation of the Extended Period of Limitation:
The primary issue examined was whether the extended period of limitation under section 11A(4) of the Central Excise Act, 1944, could be invoked. The appellant argued that the show cause notice issued on December 09, 2015, was beyond the one-year period from the relevant date, January 02, 2014, and that there was no justification for invoking the extended period of five years. The Department contended that the extended period was justified due to the appellant's failure to disclose required information in the ER-1 form.

The Tribunal emphasized that for the extended period to apply, there must be evidence of fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty. The show cause notice merely mentioned an audit without specifying the date and did not allege intent to evade duty. The Tribunal found no space in the ER-1 form where the appellant was required to disclose the relationship with RSSL, thus ruling out suppression of information.

Allegation of Suppression of Facts with Intent to Evade Payment of Duty:
The Tribunal scrutinized whether the appellant had suppressed facts with intent to evade duty, which is necessary for invoking the extended period under section 11A(4). The show cause notice and subsequent orders did not establish that the appellant had intent to evade duty. The Tribunal referred to several Supreme Court judgments, including Pushpam Pharmaceuticals, Anand Nishikawa Co. Ltd., and Uniworth Textiles Ltd., which clarified that mere failure to declare does not amount to wilful suppression. There must be a deliberate act to escape payment of duty.

The Tribunal noted that departmental instructions require officers to scrutinize returns and call for necessary documents. The lack of such scrutiny by the officers cannot be blamed on the appellant. The Tribunal concluded that the Department failed to prove that the appellant suppressed facts with intent to evade duty.

Conclusion:
The Tribunal set aside the impugned order, ruling that the extended period of limitation could not be invoked as there was no evidence of suppression of facts with intent to evade duty. The appeal was allowed, and the demand was quashed.

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