2006 (12) TMI 308 - AT - Central Excise

Summary

Issues: Duty demand challenged on the ground of limitation.

In this case, the duty demand for the financial years 2003-04 and 2004-05 was being challenged primarily on the ground of limitation. The appellant had declared full facts while claiming small-scale exemption, arguing that there was no suppression or misdeclaration of facts. The duty demand was issued based on the proviso to Section 11A, allowing demands within an extended period of five years. The appellant's declaration included the value of clearance of goods for home consumption, crucial for eligibility to exemption, which exceeded the threshold for exemption. The appellant contended that the extended period should not apply as there was no misdeclaration of facts, and the error, if any, was a legal error in treating 'nil' rated goods as exempt goods.

Analysis:

1. Challenge on the Ground of Limitation: The appellant challenged the duty demand on the basis of limitation, arguing that full facts were disclosed during the claim for small-scale exemption. The appellant's declaration of the value of clearance of goods for home consumption exceeded the threshold for exemption, but it was contended that there was no suppression or misdeclaration of facts. The duty demand was issued within the extended period of five years as permitted by the proviso to Section 11A. However, the appellant maintained that the extended period should not apply since there was no actual misdeclaration of facts, but rather a legal error in categorizing 'nil' rated goods as exempt goods.

2. Interpretation of Declaration: The appellant's declaration included the value of clearance of various goods, with specific mention of rubber sheets as "wholly exempted." The impugned order sought to invoke the extended period based on the alleged misdeclaration of the clearance of rubber sheets. The appellant, however, argued that the term "wholly exempted" indicated no duty paid on those clearances, and any error was in treating 'nil' rated goods as exempt, which was a legal error rather than a factual misdeclaration. Therefore, it was contended that the extended period should not be applied for the recovery of any short levy.

3. Decision and Stay of Recovery: The Tribunal disagreed with the view taken in adjudication and concluded that there was no misdeclaration of facts by the appellant. As a result, the requirement for pre-deposit was waived, and recovery was stayed pending the disposal of the appeal. The Tribunal also ordered stay applications as mentioned and directed the Registry to list the case for hearing in its turn. The judgment was dictated and pronounced in open Court on 12-12-2006.