The Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that extended limitation claimed by the department is not valid in the absence of suppression of fact by the duty payer.
Judicial member Mr Ramesh Nair and Technical Member Mr Raju there was no suppression of fact with intent to evade payment of duty on the part of the appellant.
The appellant a manufacturer of textile machinery falling under chapter 84 of the Central excise Tariff Act, 1985 namely “Relax Drum washer Machine” cleared the same availing exemption under notification No. 06/2002 dated 01.03.2002 describing the same as“Relax Drum for Relaxation of Fabric” in their sale invoices. The appellant submitted an application on 02.08.2007 for Central Excise Registration before crossing the limit of turnover in terms of Notification No. 08/2003-CE dated 01.03.2003. On 09.08.2007 the appellant was granted Central Excise Registration.
The Tribunal vide order dated 06.09.2019 remanded the matter with the direction to consider the matter on limitation in view of the verification report of the Superintendent. The Adjudicating Authority in the de- novo adjudication confirmed the duty demand invoking the extended period of limitation.
The appellant contended that the entire demand was raised invoking the extended period. He submits that there was no wilful misstatement or suppression of fact or intention to evade central excise duty as it was evident from the facts that the clearance goods without charging Central excise duty and describing the impugned machine as “Relax Drum for Relaxation of fabrics” in the sales invoices.
The Tribunal viewed that the range superintendent has verified the manufacturing activity physically and thereafter given the report that the product which is manufactured by the appellant was eligible for exemption under notification No. 06/2006-CE and the appellant filed ER- 1 return. Further observed that once an assessee claimed exemption notification which was in the knowledge of the department, the department has to verify whether the goods on which exemption was claimed can be covered under the notification or otherwise.
The Tribunal observed that the demand for the period 15.04.2004 to February 2008 was raised by the show cause notice dated 06.04.2009 and the entire demand was hit by limitation as it was prior to the normal period of one year. The impugned order was set aside and allowed the appeal with consequential relief.
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