1. This appeal is directed against the impugned order dated 11.1.2013 passed by the Commissioner (Appeals), Central Excise, New Delhi.
2. The brief facts of the case are that the appellant is engaged in the manufacture of copper wires falling under Chapter Heading 7408 of the Central Excise Tariff Act, 1985. Audit of records of the appellant was conducted for the period July 2007 to March 2008 by the Central Excise department. During the course of audit, it revealed that the finished goods/raw materials were found in excess, as against the stock particulars available in the statutory records i.e. Daily Stock Account (DSA). On further investigation of the matter, the department initiated show cause proceed
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ings against the appellant, seeking confirmation of the duty demand on the alleged ground of clandestine removal and also for imposition of penalty. The show cause notice issued in this regard was adjudicated vide order dated 18.9.2012, wherein the adjudged demand were confirmed against the appellant. The ld. Commissioner (Appeals) vide the impugned order has upheld the adjudged demand. Hence, the present appeal is before the Tribunal.
3. The ld. Advocate appearing for the appellant, at the outset, submits that the proceedings initiated by the department are barred by limitation of time inasmuch as the facts of availability of excess stock in the factory of the appellant was known to the Audit Wing of the department on 20.8.2008 and since the show cause notice was issued on 19.8.2011, the same is clearly barred by limitation of time. To support such stand that the proceedings are not maintainable on the ground of limitation, the ld. Advocate has relied on the judgment of Hon'ble Allahabad High Court in the case of CCE & ST Vs. Triveni Engineering & Industries Ltd. : 2015 (317) ELT 408 (All.).
4. On the other hand, the ld. DR appearing for Revenue reiterates the findings recorded in the impugned order and further submits that since the facts of excess availability of the goods in the factory were suppressed by the appellant and the same were detected by the Audit Wing on 20.8.2008, issuance of show cause notice within five years from the date of such knowledge should be considered as the relevant period for the issuance of the show cause notice. Thus, he submits that the initiation of show cause proceedings by the department is not barred by limitation of time.
5. Heard both sides and perused the records.
6. I find from the available records that based on the audit conducted by the Central Excise department in the factory of the appellant from 20.8.2008 to 22.8.2008, the show cause notice was issued by the department on 19.8.2011. It is an admitted fact on record that the show cause notice has not been issued in this case within the normal period of one year provided under Section 11A of the Central Excise Act, 1944. Since, between the period of conducting such audit in August, 2008 and issuance of the show cause notice in August, 2011, the department has not gathered any additional information for initiation of the show cause proceedings, it cannot be said that the show cause notice issued in August 2011, is sustainable on the ground of limitation. I find that in context with the limitation aspect, the Hon'ble Allahabad High Court in the case of Triveni Engineering & Industries Ltd. (supra) held that the show cause notice issued after a gap of 22 months after an audit was conducted, is clearly barred by limitation of time. The relevant paragraphs in the said judgment are extracted herein below.
"5. We are of the opinion that the proviso to Section 11A is not applicable because the show cause notice does not indicate that there was deliberate act of suppression of fact, fraud, mis-statement, etc. committed by the assessee. Mere act of omission by the assessee without there being any intention to evade payment of tax cannot be a ground to invoke the proviso to Section 11A of the Act, especially when the evasion came to the notice of the department when the audit was conducted in the month of March, 2010.
6. In the light of the aforesaid, mere suppression of facts without there being a deliberate act of fraud, etc. with the intention to evade payment of duty cannot entitle the department to invoke the proviso to Section 11A of the Act.
7. In Pahwa Chemicals Private Limited v. Commissioner of C. Ex., Delhi : 2005 (189) E.L.T. 257 (S.C.) the Supreme Court held that:
"It is settled law that mere failure to declare does not amount to willful mis-declaration or willful suppression. There must be some positive act on the part of the party to establish either willful mis-declaration or willful suppression. When all facts are before the Department and a party in the belief that affixing of a label makes no difference does not make a declaration, then there would be no willful misdeclaration or willful suppression. If the Department felt that the party was not entitled to the benefit of the Notification, it was for the Department to immediately take up the contention that the benefit of the Notification was lost."
8. Similarly in Commissioner of C.Ex. Mumbai-IV v. Damnet Chemicals Pvt. Ltd.: 2007 (216) E.L.T. 3 (S.C.) the Supreme Court held:
"In the circumstances, we find it difficult to hold that there has been conscious or deliberate withholding of information by the assessee. There has been no willful mis-statement much less any deliberate and willful suppression of facts. It is settled law that in order to invoke the proviso to Section 11A(1) a mere mis-statement could not be enough. The requirement in law is that such mis-statement or suppression of facts must be willful. We do not propose to burden this judgment with various authoritative pronouncements except to refer the judgment of this Court in Anand Nishikawa Co. Ltd. v. CCE : 2005 (188) E.L.T. 149 (S.C.) wherein this Court held:
"We find that "suppression of facts" can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty, when facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression."
9. The reliance on the decision placed by the learned counsel for the appellant in the matter of Commissioner of C. Ex., Vishakhapatnam v. Mehta & Co., 2011 (264) E.L.T. 481 (S.C.) is distinguishable and is not applicable to the present facts and circumstances of the case.
10. For the reasons stated aforesaid, we do not find any merit in the appeal and is dismissed at the admission stage itself."
7. In view of above, I do not find any merits in the impugned order so far as it adjudicated the matter, beyond the normal period of limitation. Accordingly, after setting aside the same, I allow the appeal in favour of the appellant on the ground of limitation alone, without expressing any views on the merits of the case