2025 (1) TMI 306 - HC - Central Excise

Calcutta HC Affirms Tribunal: Duty Payments Compliant u/s 3, Show Cause Notice Time-Barred, Appeal Dismissed.

The Calcutta HC upheld the Tribunal's decision, affirming the respondent's compliance with duty payments under Section 3 of the Central Excise Act, 1944, ... Error in allowing the appeal of the respondent when the respondent has liable to pay the duty under Section 3A of the Central Excise Act, 1944 but paid in terms of Section 3 of the Central Excise Act or not - permission granted by the erstwhile Commissioner to pay duty under Section 3 have any statutory value when admittedly the respondent is liable to pay duty under Section 3 of the said Act - issuance of Show Cause Notice is time barred when the respondent has not disclosed their liability to pay duty under section 3A - HELD THAT:- The issue involved in this appeal is covered by order passed by the Tribunal in assessee’s own case [2023 (4) TMI 708 - CESTAT KOLKATA]. Apart from the Learned Tribunal had rightly noted that the Commissioner had granted permission vide letters dated 29-3-1997 and 20-4-1998. This aspect of the matter is not in dispute as it has been admitted in the order passed by the Commissioner dated 29-12-2017, wherein the Commissioner would observe that permission was granted by the Commissioner in response to the request made by the assessee and in the interest of revenue to eliminate the inconvenience in practical operation with the condition that concession would be reviewed at the end of the final order on the basis of the revenue performance of the assessee. There is nothing on record to indicate that there was a review of the matter and the permissions granted by the department vide letters dated 23-9-1997 and 20-4-1998 remained intact. The Learned Tribunal granted relief to the assessee taking note of the undisputed facts. With regard to notification of the extended period of limitation, the facts clearly show that the issue with regard to payment of duty under Section 3 of the Act had attained finality after the order of the Learned Tribunal dated 27-2-2023 and in such circumstances, the question of applying the extended period of limitation under the Rules would not arise. Consequently, the penalty is also not imposable. Conclusion - There is nothing on record to indicate that there was a review of the matter and the permissions granted by the department vide letters dated 23-9-1997 and 20-4-1998 remained intact. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe judgment from the Calcutta High Court considered the following core legal questions:Whether the Tribunal erred in allowing the appeal of the respondent by accepting duty payments under Section 3 of the Central Excise Act, 1944, instead of Section 3A.Whether the permission granted by the Commissioner to pay duty under Section 3 holds any statutory value despite the liability under Section 3A.Whether the issuance of the Show Cause Notice was time-barred when the respondent did not disclose their duty liability under Section 3A.Whether the conditions of Section 11A(1) of the Central Excise Act were applicable in this case.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Duty Payment under Section 3 vs. Section 3ARelevant Legal Framework and Precedents: Section 3 and Section 3A of the Central Excise Act, 1944, govern the duty payment mechanisms. The Tribunal had previously addressed this issue in the respondent's case.Court's Interpretation and Reasoning: The court noted that the Tribunal had thoroughly reviewed the factual matrix, which justified the respondent's payment under Section 3.Key Evidence and Findings: The Tribunal found that the Commissioner had granted permission for duty payments under Section 3, as acknowledged in the Commissioner's order dated 29-12-2017.Application of Law to Facts: The court agreed with the Tribunal's decision, emphasizing that the permission granted was valid and undisputed.Treatment of Competing Arguments: The revenue's argument that duty should have been paid under Section 3A was countered by the established permissions and the Tribunal's prior orders.Conclusions: The court upheld the Tribunal's decision, finding no error in allowing the respondent's appeal.Issue 2: Statutory Value of Commissioner's PermissionRelevant Legal Framework and Precedents: The statutory authority of permissions granted by the Commissioner under the Act.Court's Interpretation and Reasoning: The court highlighted that the permissions granted by the Commissioner were in response to the respondent's requests and were aimed at practical operational convenience.Key Evidence and Findings: The permissions were documented in letters dated 29-3-1997 and 20-4-1998, with no subsequent review or revocation.Application of Law to Facts: The court found the permissions to be valid and effective, supporting the respondent's case.Treatment of Competing Arguments: The court dismissed the revenue's challenge regarding the statutory value of the permissions.Conclusions: The permissions were deemed to have statutory value, supporting the respondent's duty payments under Section 3.Issue 3: Time-Barred Show Cause NoticeRelevant Legal Framework and Precedents: The time limitations for issuing Show Cause Notices under the Central Excise Act.Court's Interpretation and Reasoning: The court observed that the matter of duty payment under Section 3 had reached finality, negating the applicability of the extended limitation period.Key Evidence and Findings: The Tribunal's order dated 27-2-2023 had resolved the issue, rendering the notice time-barred.Application of Law to Facts: The court found no grounds for applying the extended period of limitation.Treatment of Competing Arguments: The revenue's argument for the extended period was not upheld due to the finality of previous orders.Conclusions: The Show Cause Notice was deemed time-barred, and penalties were not applicable.Issue 4: Applicability of Section 11A(1)Relevant Legal Framework and Precedents: Section 11A(1) of the Central Excise Act outlines the recovery of duties not levied or short-levied.Court's Interpretation and Reasoning: The court found that the conditions under Section 11A(1) were not met, given the established facts and prior orders.Key Evidence and Findings: The Tribunal's findings supported the non-applicability of Section 11A(1).Application of Law to Facts: The court agreed with the Tribunal's assessment that the section was not applicable.Treatment of Competing Arguments: The revenue's claim under Section 11A(1) was rejected based on the Tribunal's conclusions.Conclusions: Section 11A(1) was not applicable in this case.3. SIGNIFICANT HOLDINGSVerbatim Quotes of Crucial Legal Reasoning: 'The Tribunal has elaborately considered the factual position... which would preclude the department from maintaining a challenge to the order passed by the Learned Tribunal.'Core Principles Established: The validity of permissions granted by the Commissioner, the finality of Tribunal orders, and the non-applicability of extended limitation periods and penalties.Final Determinations on Each Issue: The appeal was dismissed, affirming the Tribunal's decision and the respondent's compliance with duty payment under Section 3.The judgment concludes with the dismissal of the appeal and the stay application, reinforcing the Tribunal's findings and the respondent's compliance with the Central Excise Act.