counting of limitation period for issuance of an SCN

[onkar kumar]

Sir,

The limitation period for issuance of demand cum show cause notice starts from the date of filing of return or date of non-payment / short-payment of duty, as prescribed under Section 11A of the Central Excise Act, 1944. If the duty was not paid on account of fraud, suppression of facts, etc. the extended limitation period is of five years, otherwise the normal limitation period is of one year.

Is there any recent case law or provision prescribing counting of the period of limitation from the date of knowledge to the department. Now, logically I am of view that, if the SCN is issued after one year from the date of knowledge, it is time barred even if it is issued within five years from the date of non-payment or short-payment on account of fraud, suppression or etc. Am I correct?

I want to know that any matter raised by audit and initial reply was given by the assessee on that particular audit para. Now the department has issued an SCN after more than one year from receipt of the reply from assessee. Can assessee have option to strongly contest the SCN on the ground of limitation bar? Is there any case law squarely applicable in such type of case? Pl. quote.

[NEERAJ KUMAR, RANCHI]

Dear Mr Kumar

In my opinion your stand doesnot appear to be correct, infact statutory period of five years is available to the department, irrespective of the date of knowledge of suppression. But yes,  five year period is applicable only for clearance made prior to the date of knowldge of the department.

[NEERAJ KUMAR, RANCHI]

You can refer to the case law in the matter of COMMISSIONER OF CENTRAL EXCISE SURAT-I

Vs NEMINATH FABRICS PVT LTD  by the Hon'ble

HIGH COURT OF GUJARAT
AT AHMEDABAD Dated: April 22, 2010

 

AI Summary

Limitation for show-cause notices: extended period applies for fraud or suppression; otherwise normal period bars issuance. Limitation for issuance of a demand cum show-cause notice runs from filing of the return or date of non-payment/short-payment; a longer limitation period applies where non-payment stems from fraud or suppression. The extended period is available irrespective of the department's date of knowledge, but applies only to clearances made prior to the date the department became aware of the suppression.