The Madras High Court held that the Customs, Excise, Service Taxes Appellate Tribunal (CESTAT) has rightly granted relief to Assessee and has not allowed an extended period of limitation to the Adjudicating Authority observing that additional duty cannot be imposed on the assessee without establishing the suppression of facts. The bench further observed that the department cannot take different stand at different points of time of the adjudication proceeding.
The Revenue has filed the Appeal under Section 35G of the Central Excise Act aggrieved by the order of the CESTAT, allowing the Appeal of the Respondent Assessee JSW Steel Limited.
On the issue of extended period of limitation under Section 11A of the Central Excise Act, the Tribunal held in favor of the Assessee that the Assessee could not be attributed with any suppression of relevant facts in regard to the valuation under Rule 8 of the Central Excise (Valuation) Rules 2000 in respect of Steel Bars, Rods, etc. transferred by them to their Sister Concerns during the period in question by the show cause notice issued on August 19, 2010 as Section 11A of the Central Excise Act, 1944 which permits only one year prior to the issuance of show cause notice to be covered by it, there is a case of suppression of facts made out against the Assessee and therefore, the extended period of limitation of 5 years cannot be applied.
The revenue authority urged that the Assessee did not disclose the facts to the Department that the goods in question were transferred by them to their Sister Concerns for captive construction and not for the manufacture of further excisable goods and therefore, in the absence of such a disclosure, the Assessee was guilty of suppression of material facts in this regard and therefore, the extended period of limitation can be invoked by the Adjudicating Authority in the present case.
It was further submitted that the Tribunal has erred in allowing the appeal filed by the Assessee and holding that the Adjudicating Authority cannot invoke the extended period of limitation under Section 11A of the Act.
The Respondent-Assessee referred the communication wherein it is clearly stated by the Central Excise Authority itself that during the year 2005-2006 and 2006-2007, the Assessee had transferred Bars and Rods for self-consumption for use in the construction work as payment on duty and the value of goods so consumed by the Assessee and also transferred to the Associated Company should be strictly based on CAS 4 valuation and duty paid accordingly.
The division judge bench of Justice Vineet Kothari and Justice Krishnan Ramasamy opined that the extended period of limitation in the present case was not available to the Revenue Authorities and therefore, the Show Cause Notice issued to the Assessee on August 19, 2010 could not cover the period in question except to the extent of one year from the date of issuance of Show Cause Notice and therefore, the Tribunal was justified in holding in favor of the Assessee to that extent.
“The Revenue Authority cannot be allowed to take a different stand at different points of time to suit their convenience and impose Additional Duty on the Assessee without establishing any suppression of facts on the part of the Assessee,” the court said.
Therefore, the court held that the Assessee cannot be blamed for suppression of facts and the extended period of limitation cannot be invoked by the Authority concerned under the impugned Show Cause Notice.
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