Extended period of limitation cannot be invoked for central excise duty recovery without proving deliberate intent to evade duty.

CESTAT New Delhi held that extended period of limitation cannot be invoked for central excise duty recovery on coal extracted by appellant without proving deliberate intent to evade duty. Mere suppression of facts insufficient; department must establish willful evasion. Show cause notice failed to allege or prove intentional suppression regarding additional levy of Rs. 295/- per MT. Additionally, any additional duty would be revenue neutral as appellant's unit could claim CENVAT credit for same amount. Extended limitation period improperly invoked, demand confirmation set aside. Appeal allowed.

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Issues Involved:

1. Whether the additional levy of Rs. 295/- per metric ton is subject to central excise duty.
2. Whether the extended period of limitation for issuing the show cause notice is applicable.
3. Whether the appellant suppressed material facts with intent to evade payment of central excise duty.
4. Whether the penalty and interest imposed are justified.
5. Whether the finding that the additional levy is akin to royalty is beyond the scope of the show cause notice.

Summary:

1. Additional Levy and Excise Duty:
The appellant argued that the additional levy of Rs. 295/- per metric ton, imposed by the Supreme Court, was in the nature of compensation and not subject to central excise duty. They contended that this levy was an "abnormal cost" and should not be included in the cost of production as per CAS-4 read with rule 8 of the Valuation Rules. The Tribunal noted that the appellant had a bonafide belief, supported by the provisions of CAS-4, that the additional levy was not to be included in the cost of production.

2. Extended Period of Limitation:
The show cause notice was issued on 20.05.2016 for the period from May 2011 to March 2015. The Tribunal emphasized that the extended period of limitation under section 11A (4) of the Central Excise Act is applicable only in cases involving fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty. The Tribunal found no evidence of such intent or deliberate suppression by the appellant and held that the extended period of limitation could not be invoked.

3. Suppression of Material Facts:
The Tribunal examined whether the appellant's omission to include the additional levy in the cost of production constituted suppression of facts with intent to evade duty. It referred to several Supreme Court decisions, which clarified that suppression must be deliberate and with intent to evade duty. The Tribunal concluded that the appellant's belief was bonafide and there was no intent to evade duty, thus suppression could not be alleged.

4. Penalty and Interest:
Given that the extended period of limitation was not applicable and there was no intent to evade duty, the Tribunal held that neither penalty nor interest could be imposed on the appellant.

5. Additional Levy as Royalty:
The Tribunal noted that the finding in the impugned order that the additional levy is akin to royalty was beyond the scope of the show cause notice and thus could not be sustained.

Conclusion:
The Tribunal set aside the order dated 28.11.2017 passed by the Commissioner, confirming the demand of central excise duty, and allowed the appeal. The Tribunal emphasized that the entire exercise was revenue neutral since any additional duty paid by the appellant would be available as CENVAT credit to its Raigarh unit.

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