Case Note & Summary
The appellant, Water Resources Development (formerly Irrigation Department), was engaged in manufacturing mechanical gates, parts, and hoists for dams constructed by the Government of Maharashtra. These goods were exempt from excise duty under Notification No.74/1993 dated 28.2.1993. On 1.4.1996, the Vidarbha Irrigation Development Corporation was formed under Maharashtra Act No. XV of 1996, and according to the Revenue, the appellant lost the exemption benefit. A show cause notice was issued on 8.5.2001 demanding excise duty of Rs.29,17,879/- for the period 1997-1998 to 2000-2001 under Section 11A(1) of the Central Excise Act, 1944, along with interest and penalty. The appellant replied on 15.1.2002 stating it was a State Government Department with no intention to evade duty. The Commissioner confirmed the demand on 25.3.2003. The appellant appealed to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which dismissed the appeal. The appellant then filed this appeal under Section 35G of the Act. The sole legal issue was whether the demand was barred by limitation. The court analyzed that the normal period for issuing a show cause notice is six months from the relevant date, extendable to five years if there is suppression of facts or fraud. The court found that the appellant had not suppressed any facts; it was a government department and the exemption notification was in place. The Revenue was aware of the facts. Therefore, the extended period could not be invoked, and the notice issued after more than six months was time-barred. The court allowed the appeal, set aside the demand, and answered the question of law in favor of the appellant.
Headnote
A) Central Excise - Limitation - Section 11A of Central Excise Act, 1944 - Show Cause Notice - The issue was whether the show cause notice issued on 8.5.2001 for the period 1997-1998 to 2000-2001 was barred by limitation. The court held that the notice was beyond the normal period of six months and the extended period of five years could not be invoked as there was no suppression of facts by the appellant, a State Government Department. The appeal was allowed and the demand was set aside. (Paras 1-6)
Issue of Consideration
Whether the Customs, Excise and Service Tax Appellate Tribunal was justified in law and in facts to hold that the demand under the show cause notice was not barred by law of limitation?
Final Decision
The appeal is allowed. The impugned order of the Customs, Excise and Service Tax Appellate Tribunal is set aside. The demand raised in the show cause notice is held to be barred by limitation. The substantial question of law is answered in favour of the appellant.
Law Points
- Limitation period for show cause notice under Section 11A of Central Excise Act
- 1944
- Extended period of limitation requires suppression of facts or fraud
- Exemption Notification No.74/1993
Case Details
2021 LawText (BOM) (12) 159
Central Excise Appeal No.14 of 2016
A.S. Chandurkar, G.A. Sanap
Smt. Sharda Wandile for Appellant, Shri S.N. Bhattad for Respondent
Water Resources Development, formerly known as Irrigation, Through Executive Engineer, Mechanical Lift Irrigation Div. No.2, Babu Peth, Chandrapur
Commissioner of Central Excise, Nagpur
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Nature of Litigation
Appeal under Section 35G of the Central Excise Act, 1944 against the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) confirming demand of excise duty.
Remedy Sought
The appellant sought to set aside the demand for excise duty on the ground that it was barred by limitation.
Filing Reason
The appellant challenged the CESTAT order which held that the demand under the show cause notice was not barred by limitation.
Previous Decisions
The Commissioner confirmed the demand on 25.3.2003; CESTAT dismissed the appeal.
Issues
Whether the show cause notice issued on 8.5.2001 for the period 1997-1998 to 2000-2001 was barred by limitation under Section 11A of the Central Excise Act, 1944.
Submissions/Arguments
Appellant argued that it was a State Government Department, there was no intention to evade duty, and the show cause notice was beyond the normal period of limitation.
Respondent argued that the appellant lost exemption benefit after formation of Vidarbha Irrigation Development Corporation and the extended period of limitation applied.
Ratio Decidendi
The show cause notice under Section 11A of the Central Excise Act, 1944 must be issued within the normal period of six months from the relevant date. The extended period of five years can only be invoked if there is suppression of facts or fraud. Since the appellant was a State Government Department and there was no suppression, the notice issued after six months was time-barred.
Judgment Excerpts
Whether the Customs, Excise and Service Tax Appellate Tribunal was justified in law and in facts to hold that the demand under the show cause notice was not barred by law of limitation?
The facts relevant for answering the aforesaid substantial question of law are that it is the case of the appellant that it is engaged in the manufacture of mechanical gates, parts and hoists that are required to be installed on dam constructed by the Government of Maharashtra.
This show cause notice was served on the appellant on 8.5.2001.
Reply was given by the appellant to the aforesaid show cause notice on 15.1.2002 in which it was stated that the appellant was a State Government Department and there was no transaction entered concerning payment of excise duty.
An order dated 25.3.2003 came to be passed by the Commissioner in which the show cause notice was confirmed and the amounts mentioned in the said notice were held to be recoverable
Procedural History
Show cause notice issued on 8.5.2001; appellant replied on 15.1.2002; Commissioner confirmed demand on 25.3.2003; appellant appealed to CESTAT which dismissed the appeal; appellant then filed this appeal under Section 35G of the Central Excise Act, 1944, which was admitted on 9.3.2017.
Acts & Sections
- Central Excise Act, 1944: Section 11A, Section 11AB, Section 11AC, Section 35G
