Pankaj 
12 September 2023 
152 Views 
While hearing an appeal challenging invoking of extended period of limitation under the Central Excise Act, 1944 by the Revenue, so as to deny benefit of SSI exemption and Cum Duty, the CESTAT at Chandigarh observed that the Department had invoked extended limitation for issuing Show Cause Notices, based on an assumption of the Assessee having wrongly classified goods in order to claim the aforestated benefits.
A Division Bench of Mr. SS Garg, Member (Judicial) and Mr. P Anjani Kumar, Member (Technical) observed that there had to be a positive act of suppression, wilful mis-statement with intent to evade payment of duty so as to attract the provisions of Section 11A of the Act, for invoking the extended period. The Bench noted that the Department had not produced any evidence to corroborate the same.
The Appellant-Revenue was represented by Mr. Aneesh Dewan, AR, whereas the Respondent-Assessee was represented by Mr. Gaurav Aggarwal.
Briefly, the Assessee is engaged in the manufacture of Zirconium Oxide and Zirconium Oxychloride. The Assessee applied for amendment of the classification of the products from CETSH 28.25 to 26.15 vide letter dated 28.03.2003. The Assessee filed a declaration dated 12.03.2004 showing their intent to avail the benefit of Notification No.50/2003 dated 10.06.2003. The Assessee continued to classify their products under CETSH 26.15
The Revenue challenged the classification and an O-I-O dated 30.06.2006 decided the classification under CETSH 28.25.
On appeal, the Commissioner (Appeals) allowed the appeal and held that the product merits classification under CETSH 26.15.
On an appeal filed by the Department, the CESTAT vide Final Order dated 24.06.2008 allowed the appeal filed by the Department and held that the impugned products merits classification under CETSH 28.25. Meanwhile, the Department issued four show-cause notices, after invoking extended period of limitation.
The Commissioner vide the impugned order held that extended period could not be invoked. Cum-duty benefit and Small Scale Industry (SSI) exemption was allowed and benefit of Cenvat credit on all inputs and input services was held to be permissible. Hence the Revenue’s appeal.
On considering the submissions of both sides, the Tribunal noted the Department’s claim that the Assessee had suppressed the true nature of the goods manufactured by them and have wrongly classified the same with intent to avail the benefit of the Notification No.50/2003 in a fraudulent manner. In this regard, the Bench observed that mere knowledge of the Department is not enough to invoke extended period of limitation.
The Bench also observed that the Assessee had on earlier occasions, informed the Department of its intention to change the classification of the subject goods. Hence it could not be inferred that the Assessee changed the classification with a view to avail undue benefit, the Bench found.
The Department was free to cause necessary verification and to change the classification, and the argument that verification took long time because of the procedures involved like testing by the agencies, could not be a reason to allege suppression of fact, the Bench observed.
The Bench also noted that there had to be a positive act of suppression, wilful mis-statement with intent to evade payment of duty so as to attract the provisions of Section 11A for invoking the extended period.
In respect of Cum duty benefit, the Bench examined the invoices furnished by the Assessee and observed therefrom that the total invoice value subsumed the Cenvat duty paid. Accordingly, the value adopted requires to be considered as a cum-duty price. Hence the Bench found that the Assessee was eligible for Cum duty benefit.
With these observations, the Bench settled the issues in favour of the Assessee.
Cause Title: M/s CS Zircon Ltd vs CCE Chandigarh [Excise Appeal No. 299 of 2011 / 2023-Enterslice-5-CESTAT-Chand]
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