TaxTMI 
TaxTMI 
2010 (4) TMI 631
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....ts and circumstances of this case, the Tribunal has committed substantial error of law in allowing appeal of the respondent assessee with consequential relief to the said assessee? 2. On 03.03.2010 this Court had passed an order in the following terms: 1. Heard learned Counsel for Appellant-Revenue. While passing impugned order dated 25.8.2008, Customs, Excise & Service Tax Appellate Tribunal (the Tribunal), correct legal principles have been enunciated as to operation of Provisions of Section 11A (1) and the Proviso thereunder of the Central Excise Act, 1944. However, prima facie it appears that the Tribunal has fallen into error in applying principles to the facts of the case. 2. Hence, Notice for final disposal returnable on 25.03.2010. 3. In response to the notice issued by this Court, Mr. Paresh Dave learned advocate has put in appearance on behalf of the respondent. 4. Heard the learned advocates. 5. Admit. The following substantial question of law arises for consideration: Whether the Tribunal was justified in importing the concept of knowledge in the provisions of Section 11A of the Central Excise Act, 1944 read....
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.... by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Act, or of the rules made thereunder with intent to evade payment of duty, the period of one year prescribed for service of show cause notice under sub-section (1) of section 11A gets extended to five years. Hence, once it is found that any excise duty has not been paid or short levied etc, for any of the reasons stipulated under the proviso, the period of limitation for service of show cause notice would automatically stand extended to five years. Adverting to the facts of the present it is pointed out that non-payment of central excise duty by reason of suppression is admitted, hence, the ingredients of the proviso stand duly satisfied. It is submitted that the Tribunal has imported the concept of knowledge and a limitation of six months from the date of knowledge into section 11A of the Act to hold that the show cause notice was barred by limitation, which is not permissible in law. In support of his submissions, the learned counsel has placed reliance upon the decision of the Apex Court in the case of Mathania Fabrics Vs. Commissioner of Central E....
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....icer may, within one year from the relevant date, serve notice on the persons chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words one year, the words, five years were substituted : Explanation. - Where the service of the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing the aforesaid period of [one year] or five years, as the case may be. (1A) xxxxxxx. (2) xxxxxxx. (3) For the purposes of this section - (i) refund includes rebate of duty of excise on excisable go....
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....od of such stay shall be excluded from computing the aforesaid period of one year or five years, as the case may be. 14. Thus the scheme that unfolds is that in case of non levy where there is no fraud, collusion, etc., it is open to the Central Excise Officer to issue a show cause notice for recovery of duty of excise which has not been levied, etc. The show cause notice for recovery has to be served within one year from the relevant date. However, where fraud, collusion, etc., stands established the period within which the show cause notice has to be served stands enlarged by substitution of the words one year by the words five years . In other words the show cause notice for recovery of such duty of excise not levied etc., can be served within five years from the relevant date. 15. To put it differently, the proviso merely provides for a situation whereunder the provisions of sub-section (1) are recast by the legislature itself extending the period within which the show cause notice for recovery of duty of excise not levied etc. gets enlarged. This position becomes clear when one reads the Explanation in the said sub-section which only says that the period st....
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....he show cause notice has been served within a period of five years therefrom. 20. Thus, what has been prescribed under the statute is that upon the reasons stipulated under the proviso being satisfied, the period of limitation for service of show cause notice under sub-section (1) of section 11A, stands extended to five years from the relevant date. The period cannot by reason of any decision of a Court or even by subordinate legislation be either curtailed or enhanced. In the present case as well as in the decisions on which reliance has been placed by the learned advocate for the respondent, the Tribunal has introduced a novel concept of date of knowledge and has imported into the proviso a new period of limitation of six months from the date of knowledge. The reasoning appears to be that once knowledge has been acquired by the department there is no suppression and as such the ordinary statutory period of limitation prescribed under sub-section (1) of section 11A would be applicable. However, such reasoning appears to be fallacious in as much as once the suppression is admitted, merely because the department acquires knowledge of the irregularities the suppression woul....
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....hose facts were already in the knowledge of the authorities. Thus, it was in these circumstances, that the Apex Court had held that there was no suppression of facts on the part of the assessee and set aside the order impugned before it on the question of limitation only. The ratio of the said judgment cannot be deduced to mean that concept of knowledge is applicable even in a case of first show cause notice. Thus, once the Court had come to the conclusion that there was no suppression, it is but natural that the proviso would not come into play and the ordinary the period of limitation would be applicable. 25. The decision of this Court in the case of Commissioner of Central Excise And Customs Vs. Kwality Tube Industries (supra) also does not carry the case of the respondent any further inasmuch as in the facts of the said case the Court had interalia found that in absence of weighment slips the alleged shortage itself was doubtful and the finding to that effect arrived at by the Tribunal was neither unreasonable nor unjustified. Thus, as discussed above, when fraud, suppression etc., are not established the matter stands on a different footing. 26. In the fact....