TaxTMI 
TaxTMI 
2008 (2) TMI 437
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....t Act, 1944, by invoking extended period of limitation of five years, when a show cause notice has been issued to the party for the normal period, before the issue of the show cause notice invoking extended period as provided under the section quoted supra, when relevant data were not being supplied by the party in spite of best of efforts of the department and apparent non-cooperation on the part of the party, with the sole intent of suppression of facts ? 3. The relevant facts of the case are that the assessee (M/s. Escorts Limited (TED), Faridabad) was engaged in manufacture of Tractor parts falling under Tariff Heading 8708.00 of the Schedule to Central Excise Tariff Act, 1985. The unit has been manufacturing and clearing tractor parts on the basis of price lists supported by costing certificate duly certified by a Chartered Accountant, which were to be transferred to its sister division for captive use in the manufacture of tractors. Subsequently, on scrutiny, it was revealed that all the parts transferred by the assessee to its sister division were not being used captively, as some of the parts were being sold in open market as spare parts. Therefore, on 29-4-1993, a show ca....
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....ssee herein) to M/s. Escorts Ltd. (Tractor Division) were not being used captively by the Tractor Division as some of the parts were sold in open market through another sister concern. There was neither any allegation nor any material that the assessee had any knowledge of selling some of the goods by their sister concern in open market. It was further held that there could not be any intention to conceal facts to evade payment of duty, because the assessee cleared all the spare parts to its sister division for captive consumption, who has been availing Modvat credit. In any event, if the assessee would pay the amount of duty as demanded, their sister unit could avail Modvat credit. Thus, there was no intention of the assessee to evade payment of tax. The CESTAT held that in view of the decision of the Supreme Court in ECE Industries Ltd. v. CCE, New Delhi, (supra), the extended period of limitation is not invocable in subsequent proceedings, when earlier proceeding on the subject matter was decided without allegation of suppression and mis-statement of material facts with intent to evade payment of duty. The CESTAT has also placed reliance upon the decision in M/s. P & B Pharmaceu....
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....d : 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." In the present case, it has not been disputed that earlier a demand notice was issued on 29-4-1993, proposing demand of duty for the period from 1-10-1992 to 11-3-1993. The said demand raised by the show cause notice was confirmed by the adjudicating authority and upheld by the Tribunal vide order dated 5-10-1998. Undisputedly, in the said show cause notice, there was no allegation of suppression or mis-statement of facts with intent to evade payment of duty. When the second show cause notice was issued on 1-6-1994 for demand of duty for the period from 1-5-1989 to 30-9-1992, the same was clearly barred by limitation. However, the revenue can invoke the extended period of limitation, as provided under proviso to Section 11A of the Act. It is the case of the revenue that the assessee deliberately did not disclose the fact that the tractor parts transferred by the assessee to its sister concern for captive consumption were not wholly used for the manufacture purpose and some of....
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.... the second and the third show cause notices were issued in 1988. At all these stages, the necessary material was before the authorities. They had then taken the view that M/s. Pharmachem Distributors was not a related person. If the authorities came to the conclusion subsequently that it was a related person the same fact could not be treated as a suppression of fact on the part of the assessee so as to saddle with the liability of duty for the larger period by invoking proviso to Section 11A of the Act. So far as the assessee is concerned, it has all along been contending that they were not related persons, so, it cannot be said to be guilty of not filling up the declaration in the prescribed proforma indicating related persons. The necessary facts had been brought to the notice of the authorities at different intervals from 1985 to 1988 and further, they had dropped the proceedings accepting that M/s. Pharmachem Distributors was not a related-person. It is, therefore, futile to contend that there has been suppression of fact in regard M/s. Pharmachem Distributors being a related person. On that score, we are unable to uphold the invoking of the proviso to Section 11A of the Act ....