TaxTMI 
TaxTMI 
2010 (12) TMI 1001
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....after denying credit and for imposition of penalty alleging suppression with intent to evade payment of duty. The adjudicating authority confirmed the demand along with interest and also imposed a penalty under Section 11AC of the Act. The Commissioner (Appeals) on appeal filed by the Respondents after taking into consideration the Audit Notes issued on 5-4-2006 to 10-4-2006 whereby it has been pointed out by the Audit that Respondent had availed wrong credit held that the Show Cause Notice dated 4-6-2008 is time barred as Revenue was aware of the fact that Respondents had availed the credit when the Audit Notes were issued. 4. The contention of Revenue is that the findings of the Commissioner (Appeals) regarding time-bar is not sustainable in view of the decision of the Hon'ble Gujarat High Court in the case of CCE, Surat-I v. Neminath Fabrics Pvt. Ltd. - 2010 (256) E.L.T. 369 (Guj.). The contention of Revenue is that Hon'ble High Court held that suppression not obliterated merely because department acquired knowledge of irregularities. 5. The contention of respondents is that when the Audit Notes were issued in the year 2006 Revenue was aware of the fact regarding....
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....Cause Notice was subsequently issued with the allegation of suppression with intent to evade payment of duty. Hon'ble High Court held as under :- 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 of Explanation in the said sub-section which o....
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....the relevant date and as to whether the 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 cate. 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 applicable. However such reasoning appears to be fallacious inasmuch as once the suppression is admitted, merely because the department acquires knowledge of the irregu....
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....n the part of the assessee as those 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 v. 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 inter alia 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 footi....