2025 (3) TMI 496 - AT - Central Excise

Excise duty demand dismissed as time-barred; extended limitation period inapplicable due to prior departmental knowledge.

The Tribunal ruled that the demand for excise duty was time-barred, as the extended period of limitation under the Central Excise Act was inapplicable. ... Invocation of extended period - Short payment of duty - whether the demand for excise duty, as raised by the show-cause notice dated 07.07.2015, is barred by the extended period of limitation? - HELD THAT:- The appellant is contesting that the demand is barred by limitation. The audit was conducted and a spot memo was issued on 25.07.2012, and which was replied by the appellants on 27.09.2012. Thereafter, a show-cause notice was issued on 07.07.2015 for the period June, 2010 to December, 2013, by invoking extended period of limitation. All the facts were in knowledge of the Department by way of audit conducted by them. In that circumstances, the extended period of limitation is not invokable. The same view was taken by this Tribunal in the case of M/s Mageba Bridge Products Private Limited i(Unit III) [2024 (5) TMI 1054 - CESTAT KOLKATA], wherein this Tribunal has observed 'Even under the self assessment regime, scrutiny of the ER-1 Returns are still to be taken up by the Range officials. There is nothing to indicate that the self-assessed ER-1 were taken up for scrutiny and any query was raised towards the assessable value adopted by the appellant for their clearances.' Extended period of limitation - penalty - HELD THAT:- The demand is barred by limitation, accordingly, the same is set aside. Consequently, no penalties are imposed on the appellants. The impugned order is set aside - appeal allowed. ISSUES PRESENTED and CONSIDEREDThe primary issue considered in this judgment is whether the demand for excise duty, as raised by the show-cause notice dated 07.07.2015, is barred by the extended period of limitation. The core legal question revolves around whether the extended period of limitation under the Central Excise Act can be invoked given the circumstances of the case.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework pertinent to this case involves the Central Excise Act, particularly the provisions concerning the limitation period for issuing show-cause notices. The extended period of limitation is typically invoked in cases where there is suppression of facts, willful misstatement, or fraud. The Tribunal referenced its decision in the case of M/s Mageba Bridge Products Private Limited, which provides a precedent for assessing whether the extended period is applicable when the facts are already known to the department.Court's Interpretation and ReasoningThe Tribunal interpreted that the extended period of limitation is not applicable in this case. It reasoned that since the audit was conducted, and a spot memo was issued on 25.07.2012, followed by a reply from the appellants on 27.09.2012, the department was already aware of all relevant facts. Thus, the issuance of the show-cause notice on 07.07.2015, for the period June 2010 to December 2013, was outside the permissible period for invoking the extended limitation.Key Evidence and FindingsThe key evidence in this case includes the audit conducted by the department, the spot memo issued on 25.07.2012, and the appellant's reply dated 27.09.2012. These documents establish that the department had knowledge of the facts well before the issuance of the show-cause notice, which is critical in determining the applicability of the extended limitation period.Application of Law to FactsApplying the legal principles to the facts, the Tribunal found that since the department had conducted an audit and issued a spot memo, the facts were within the department's knowledge. Consequently, the extended period of limitation could not be invoked as there was no suppression of facts or willful misstatement by the appellant.Treatment of Competing ArgumentsThe appellant argued that the demand was time-barred, relying on the precedent set by the Tribunal in a similar case. The department, on the other hand, supported the impugned order and the invocation of the extended period. The Tribunal sided with the appellant, emphasizing the lack of grounds for invoking the extended period of limitation.ConclusionsThe Tribunal concluded that the demand for excise duty was barred by limitation. It set aside the demand and the associated penalties, as the extended period of limitation was not applicable under the circumstances.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal ReasoningThe Tribunal quoted its previous decision: 'There is nothing to indicate that the self-assessed ER-1 were taken up for scrutiny and any query was raised towards the assessable value adopted by the appellant for their clearances. Therefore, we set aside the confirmed demand for the extended period.'Core Principles EstablishedThe judgment reinforces the principle that the extended period of limitation cannot be invoked if the department is already aware of the facts due to prior audits or communications. The burden of proving suppression or willful misstatement lies with the department.Final Determinations on Each IssueThe Tribunal determined that the demand raised by the show-cause notice was time-barred and set aside the impugned order. Consequently, no penalties were imposed on the appellants, and all appeals were allowed.