Commissioner of C. Ex. vs Gujarat Glass Ltd.

Akil Kureshi, J.—Revenue is in appeal challenging judgment of the Tribunal dated 1-10-2008 [2009 (242) E.L.T. 254 (Tri.-Ahmd.)] raising following questions for our consideration which are framed as substantial question of law:

(a) Whether in the facts and circumstances of the case, the Tribunal has committed substantial error of law in allowing appeal of Respondent on the point of limitation?

(b) Whether in the facts and circumstances of this case, the date of knowledge of irregularities by the department has any bearing in deciding period of limitation to issue show cause notice in case covered by first proviso to Section 11A of the Central Excise Act, 1944?

(c) Whether the law permits reckoning limitation criterion not prescribed in the Central Excise Act, 1944 even while the Assessee has failed to comply with the prescribed requirements of law within the prescribed time limits and limitation period and its criterion are prescribed in the such law?

(d) Whether in the facts and circumstances of this case, the Tribunal has committed substantial error of law in holding entire situation Revenue neutral where circumstances mentioned in proviso to Section 11A of the Central Excise Act, 1944 stands proved?

Notice of final disposal was issued on 10-2-2011, since counsel for the Revenue placed reliance on decision of Division Bench in case of Commissioner of Central Excise Vs. Neminath Fabrics Pvt. Ltd., which according to him covers this situation. Though notice was served as far back as on 28-2-2011, no one has appeared on behalf of the Respondent. We have therefore, heard counsel for the Revenue for final disposal of appeal.

Issue pertains to extended period of limitation u/s 11A of the Central Excise Act. Assessee was issued show cause notice alleging clandestine removal of certain goods to its sister concern demanding duty, interest and payment. But Assessee opposed show cause notice contending that he had not suppressed any material and that the extended period should not to be invoked. Commissioner of Central Excise in his order in original dated 24-9-2004 rejected the contention of the Assessee making following observations:

It can be inferred from perusal of other two judgments in the case of M/s. Jyoti Ltd. and M/s. India Foils Ltd. that revenue neutral situation comes even in relation to the credit available to sister concern also but with caution. Having full regard to the said judgments, it appears to me that it is true that when credit is available to Assessee himself there will not be an intent to evade payment of duty but the situation may not be same when credit is available to the sister concern. A situation may arise when one Assessee may deliberately choose not to pay duty on the clearances to their sister concern and if the practice remained unnoticed beyond the period of limitation and if a demand is made invoking extended period of time, he will come the plea that demand is time barred, there it cannot be said that there was no intention. Two or more sister concern units registered with Central Excise for the purpose of manufacture of excisable goods are separate and distinct and may be operating in different situation one may not be able to utilize credit whereas other may have to pay considerable amount of duty from PLA. Therefore, in my view, revenue neutral situation will not arise in a situation when credit is available to the Assessee other than himself. The decision in Jyoti Ltd. & Foils Ltd. are distinguishable from the other decisions in the case of Jai Yuhshin Ltd., Compton Greaves and Harbans Lal Malhotra cases referred above. Even in revenue neutral situation also, the Hon. Supreme Court in a recent judgment in the case of Commissioner of C. Ex., Mumbai Vs. Mahindra and Mahindra Ltd., has also opined that whether there is suppression or not is a question to be decided on facts of each case and has nothing to do with available credit or a party having benefit of MODVAT scheme.

Furthermore, the matter involved in all the cases were of valuation of excisable goods or short payment of duty, whereas in the present appeal the matter is of non-payment of duty in respect of goods cleared without following the provisions central excise of Act & Rules. The Appellant submission that they themselves have informed the department, does not dilute the offence, since the intimation has been sent to the department in the year 2000, whereas they cleared the goods since year 1997. It cannot be presumed that they were not aware that they were required to clear the goods under C. Ex. invoice and only after payment of duty. If at all they had any doubt the clarification should have been sought before effecting clearance. This itself costs serious doubt on the intention of the Appellant. Therefore, in my opinion the extended period is rightly inviolable in this case.

Said order of the Commissioner was reversed by the tribunal making following observations:

In any case, we note that duty having been paid by the Appellant on 23-3-2000 on the assessable value adopted by them, the entire facts were within the knowledge of Revenue. If there was any dispute about the correct assessable value, same could have been raised within the normal period of limitation. Inspite of the facts being in the knowledge of the department, the show cause notice raising differential duty to the extent of Rs. 2,23,990/- was issued only on 8-10-2002 by Revenue within normal period of limitation. As such, we are of the view that the appeal is to be allowed on the point of limitation.

Counsel for the Revenue placed reliance on Division Bench judgment of this Court in case of Neminath Fabrics Pvt. Ltd. (supra) wherein the Division Bench considered the question of extended period of limitation u/s 11A of the Central Excise Act and held that once ingredients of the proviso to Section 11A of the Central Excise Act are satisfied, extended period of five years of limitation would be available. Contention that such suppression of facts or clandestine removal of goods came to the notice of the officer of the department, one year of period of limitation would apply from date of such knowledge was not approved.

In the present case though ratio laid down in case of Neminath Fabrics Pvt. Ltd. (supra) may not be applicable directly, nevertheless, we find that the tribunal reversed findings of the Commissioner holding that there was misrepresentation and clandestine removal by the Assessee, without any discussion at all Simply by stating that facts were within the knowledge of the Revenue and if there was any dispute about correct assessable value, same should have been raised within period of limitation in our opinion would not be sufficient to reverse the findings of the Commissioner. From the recorded portion of the Commissioner, it can be seen that he was of the opinion that Assessee had clandestinely removed certain goods. Tribunal in our opinion did not address to this aspect of the matter and proceeded on question of valuation of goods and duty liability which question was not germane.

Under the circumstances order dated 1-10-2008 is quashed. Proceedings are remanded to the tribunal for fresh consideration, particularly, on question of deciding whether conditions laid down in proviso to Section 11A of the Central Excise Act are satisfied so as to give extended period of limitation to the Revenue.

With above directions, the tax appeal is disposed of.