2006 (11) TMI 39 - SC - Central Excise

Appeals to Supreme Court As per tribunal findings all units were separate and had no interconnectivity and there was no clandestine removal An evident show that all fact already in knowledge of Revenue- Revenue can t invoke extended period of limitation

Summary

Issues: Clubbing and clandestine removal; Extended period of limitation.

Clubbing Issue Analysis:
The case involves the clubbing of four units - M/s. Sotex, M/s. Unity, M/s. Sonic, and M/s. Stelex. The units were visited by excise department officers in October 1997, leading to a show cause notice in April 1998 alleging that M/s. Sotex was the main unit and the others were only nominal units. The notice cited common procurement of raw materials, shared workers, and the slitting of main raw material at M/s. Sotex or Precision Slitters, Amod. A demand of Rs. 1,45,29,754 for the period 1993-94 to October 1997 was raised, invoking the extended period of limitation and proposing penalties. However, the respondents provided evidence showing that the units were geographically separate, had independent financial arrangements, maintained separate registrations, accounts, and audits, and had no interconnectivity for clubbing purposes. The Tribunal found that the units were indeed separate entities, and there was no clandestine removal.

Extended Period of Limitation Issue Analysis:
Regarding the extended period of limitation, the Tribunal noted that the facts on which the demand was based were already known to the revenue department in 1994, as evidenced by a show cause notice dated 8-3-1994. Since the revenue was aware of these facts within the normal limitation period, issuing a notice in 1998 fell outside the extended period of limitation under Section 11A of the Act. The Tribunal's finding on this point was considered a factual determination that did not warrant interference. Consequently, the appeal was dismissed, with costs, based on the lack of grounds to invoke the extended period of limitation.

In conclusion, the Supreme Court upheld the Tribunal's decision, emphasizing the separate nature of the units and the revenue's prior knowledge of the relevant facts within the limitation period. The judgment highlighted the importance of maintaining distinct entities for excise purposes and the limitations on invoking extended periods for demands based on pre-existing knowledge by the revenue department.