Invocation of extended period of limitation

PJ/Case Laws/2011-12/1007

Case: Commissioner of C. Ex, Kolkata-I v/s Web Impression (India) Pvt Ltd

Citation: 2011 (264) ELT 193 (Cal)

Issue: - Whether extended period of limitation can be invoked when the Department had knowledge and there was no suppression?

Brief Facts:-Respondent-assessee were engaged in the activity of printing of gay wrapper which was classified under heading 4823 from 1996 onwards. On 10.09.1996 the Assistant Commissioner had directed respondent to take registration under Central Excise or submit a declaration for exempting from registration as respondent was manufacturing gat wrapper falling under heading 4823. Respondent replied wide letter dated 20.09.1996 explaining the activity of printing on gay wrapper. Then on 24.01.1997, the Assistant Commissioner again wrote a letter to respondent that the gay wrapper is classifiable under Chapter 48 and that the activity undertaken by the respondent amounted to manufacture. Respondent on 14.03.1997, again replied to the Assistant Commissioner. They obtained registration.

Revenue issued show cause notice demanding duty on 06.11.1997 for the period from 20.12.1996 to 31.03.1997 by invoking extended period of limitation on the ground that there was suppression of facts on the part of respondent. The litigation went upto Supreme Court. The Supreme Court remanded the matter to the Tribunal to be heard afresh.

The Tribunal allowed the appeal of the respondent vide judgment dated 11.02.2010 reported at 2010 (257) ELT 568 (Tri-Kol)]. The Tribunal held that the demand was barred by Limitation.

Against this decision, Revenue is in appeal before the High Court.

Appellant’s Contention: - Revenue contended that on the facts and circumstances of the case the extended period of limitation in proviso of Section 11A of the Central Excise Act, 1944 is applicable. It was also contended that once it was held that there has been suppression with evade to payment of duty the period of five years is automatically attracted.

Reasoning of Judgment: - The High Court pursued the proviso to Section 11A and held that on plain reading of the same it is clear that there must be amongst other suppression of fact with intent to evade payment of duty on the part of the assessee, meaning thereby on the analysis of the fact, it is found that if there is no scope for any suppression of fact by the assessee the above period of limitation as envisaged in the proviso is not applicable. The ordinary period of limitation of one year has to be followed is the rule and the provision of proviso in a fit case s mentioned therein is an exception. If it is not established by the Revenue that there was suppression on the part of the assessee with an intention to evade duty the said provision cannot be applied.

The High Court further held that to decide the question of limitation is absolutely mixed question of law and on fact. In the present case, the High Court held that the from the facts it was clear that Revenue was aware of the activity undertaken by the respondent as on 10.09.1995 when the respondent had explained their manufacturing process. The Assistant Commissioner had even made an enquiry on 29.09.1996. The Assistant Commissioner had not taken any action immediately. It does not appear that there was any suppression on the part of the respondent, hence quation of evading duty does not arise. Question of invoking extended period of limitation does not arise. Proviso to Section 11A was not applicable. The principle of Section 3 of the Limitation Act is squarely applicable in this case and it has rightly been applied.

Decision: - Appeal dismissed.

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PJ/Case Laws/2011-12/1007

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