2024 (2) TMI 1158 - AT - Central Excise

Excise duty demand on intraocular lenses rejected as time-barred under Section 11A(5)

CESTAT Ahmedabad ruled in favor of appellant regarding excise duty liability on intraocular lenses cleared to domestic tariff area. The tribunal held that ... Liability of Excise duty equal to Special Additional Duty of customs (SAD) under Section 3(5) of the Customs Tariff Act 1975 - Intraocular Lens cleared to DTA - SCN dated 2-6-2015 issued under Section 11A (1)/ (5) of the Central Excise Act 1944 is without jurisdiction since the said Section 11A (5) stood omitted with effect from 14-5-2015 - Extended period of limitation - suppression of facts or not - HELD THAT:- The exemption under N/N. 23/2003-CE is not required and further that the goods cleared in DTA, if imported, were also exempt from SAD under Sr. No.1 of N/N. 29/2010-CUS dated 27-2-2010 up to 16-3-2012 and thereafter under Sr. No.2 of N/N. 21/2012-Cus dated 17-3-2012 since the same are pre-packaged goods for retail sale to which provisions of Legal Metrology Act and Rules apply. Therefore, excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL. Consequently, the exemption under N/N. 23/2003-CE is not required. It is thus clear that exemption from Excise duty equal to SAD under Notification No.23/2003-CE is not required since the said goods if imported are exempt from SAD and therefore Excise duty equal to SAD payable under the Proviso to Section 3 (1) of the Central Excise Act 1944, will be NIL. The Show Cause Notice dated 27-5-2015, which is purportedly issued under Section 11A(1)/A (5) of the Central Excise Act 1944 was barred by time and not maintainable in law. If the Notice is purported to be issued under Section 11A(1), the same is barred by time, having been issued beyond the period of one year then specified in Section 11A (1). If the Notice is purported to be issued under Section 11A (5), the same is not maintainable in law, since the said Section 11A (5) stood omitted with effect from 14-5-2015. The show cause notice having been issued under a non-existing provision is not maintainable in law. Section 11A (5) read with Section 11A (4) applies in cases of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade, none of which is present in this case. In the ER-2 Returns it is duly disclosed that the Appellant were availing Notification No.23/2003-CE. The Appellant have been subjected to audit from time to time. The Audit report records that the Appellant were availing Notification No.23/2003. The department was therefore fully aware that the Appellant were availing benefit of Notification no.23/2003. Moreover, No Dues certificate was also issued by the department at the time of exit from EOU. Accordingly, it is not a case of fraud, collusion, wilful mis-statement, suppression of facts or contravention with intent to evade and the larger period of limitation is inapplicable in the present case. The impugned order is not tenable both on merits and on limitation - appeal allowed. Issues involved:The issues in this case are:a) Whether Excise duty equal to Special Additional Duty of customs (SAD) was payable on 'Intraocular Lens' cleared by the Appellant in DTA during a specific period,b) Whether the Show Cause Notice issued under a specific section of the Central Excise Act is without jurisdiction due to an omission in the law, andc) Whether the notice is barred by time, and if a larger period of limitation applies.Issue a) Excise duty on 'Intraocular Lens' cleared by the Appellant:During the period in question, the Appellant, a 100% EOU, were manufacturing 'Intraocular Lens' and availing exemption under a specific Notification. The dispute arose when a Show Cause Notice was issued, alleging that the Appellant wrongly availed exemption from Excise duty equal to SAD. The contention was based on the goods being exempted from VAT under a State Government provision, which was deemed to disqualify them from the Excise duty exemption.Issue b) Jurisdiction of the Show Cause Notice:The Appellant argued that the Show Cause Notice was not maintainable due to a change in the law, rendering the section under which it was issued as non-existent. They further contended that the notice was time-barred and should not have been issued under the specific section mentioned.Issue c) Time limitation and larger period of limitation:The Appellant maintained that the Show Cause Notice was barred by time and not maintainable under the law. They argued that the larger period of limitation did not apply as there was no evidence of fraud, collusion, or intent to evade. The Appellant had disclosed their availing of the exemption in their returns and had been audited, indicating the department's awareness of the situation.Judgment Summary:The Tribunal examined the contentions of both parties and found that the exemption from Excise duty equal to SAD was not required as the goods in question, if imported, were exempt from SAD. Therefore, the Excise duty payable was deemed to be NIL under the Proviso to Section 3(1) of the Central Excise Act. The Tribunal also ruled that the Show Cause Notice was time-barred and not maintainable under the law due to changes in relevant provisions. The absence of fraud or intent to evade led to the larger period of limitation being deemed inapplicable. Consequently, the impugned order was set aside, and the appeals of the Appellant were allowed.Separate Judgment:No separate judgment was delivered by the Judges in this case.