2026 (1) TMI 1155 - HC - Central Excise

Condonation of delay in extended limitation for manufacturing under Rule 16(2) dismissed as no substantial question of law

Condonation of delay was allowed on the basis that sufficient cause was shown despite extended limitation; the revenues assertion that the claim related ... Condonation of delay - Extended period of limitation - suppression of facts - substantial question of law - admission of appeal - manufacturing under Rule 16(2) - HELD THAT:- Instead of entering the controversy as to whether the delay in this case should be construed as 63 days or 428 days, we have proceeded on the premise that the delay is 428 days. Still, upon perusal of delay condonation application and the supplementary affidavit, we are satisfied that sufficient cause has been made out for condoning this delay. Merely because the revenue claims to have discovered that the assessee’s claim had a nexus with galvanisation and that the galvanisation did not amount to manufacture for the purposes of Rule 16(2), we cannot say that this was a case of suppression. At the highest, this could be a case of an incorrect claim if the revenue’s version is accepted. Assessee had his own version in the matter. However, we do not propose to go into the rival versions because we are not concerned with the determination of this question on the merits. The finding that there was no suppression established is a pure finding of fact. The same is supported by the material on record and therefore cannot be regarded as some perverse finding of fact. Even the additional question, which is now proposed by filing an interlocutory application, does not allege any perversity in the record of this finding of fact. Therefore, we are satisfied that this appeal involves no substantial questions of law. Once it is established that the invocation of the extended period of limitation was vulnerable, there was no question of the revenue addressing the matter on the merits. Such merits or demerits, therefore, do not give rise to any substantial questions of law based upon which this appeal is required to be admitted. Thus, we dismiss this appeal as involving no substantial questions of law. Issues: (i) Whether the delay of 428 days in presenting the appeal (including the delay in filing the condonation application) should be condoned; (ii) Whether the appeal raises any substantial question of law warranting its admission.Issue (i): Whether the 428-day delay in instituting the appeal (counting the period until the condonation application was filed) should be condoned.Analysis: The appeal was originally filed 63 days beyond the prescribed period; a condonation application was filed subsequently after the Registry pointed out the defect, resulting in an aggregate delay of 428 days. The quality of the explanation for delay is material. The supporting affidavit explains transfers of officials and communication gaps which caused the failure to file the condonation application earlier. On cumulative consideration of these circumstances, the explanation for the delay is satisfactory.Conclusion: The 428-day delay is condoned and the interim application for condonation of delay is allowed.Issue (ii): Whether the appeal involves any substantial question of law so as to admit the appeal against the CESTAT order which set aside assessment on the ground that the show-cause notice was time-barred under Section 11A(1).Analysis: The CESTAT recorded a factual finding that no suppression of facts was established and that the proviso to Section 11A(1) could not be invoked. That finding is supported by the record and is not perverse. The question whether galvanisation amounts to manufacture under Rule 16(2) relates to merits and was not specifically challenged in the appeal memo; the core issue is the factual determination on suppression and limitation. No substantial question of law arises from the accepted factual finding that extended limitation was not justifiable.Conclusion: The appeal does not involve any substantial question of law and therefore is not admissible on merits; the appeal is dismissed.Final Conclusion: The court condoned the delay and proceeded to consider admission, but ultimately dismissed the appeal for lack of any substantial question of law.Ratio Decidendi: A delay in filing an appeal may be condoned if sufficient cause is shown based on the quality of the explanation; however, an appeal will not be admitted where the impugned decision rests on a factual finding of no suppression supported by the record and no substantial question of law is thereby raised.