2010 (11) TMI 271 - AT - Central Excise

Demand and penalty - Limitation - The respondents submitted that in this case the show cause notice is barred by limitation - Allegations have been framed against the appellant on the basis of examination of the balance sheet of the respondent for the year 2005-06 and the show cause notice was issued on 18th December 2007 which is beyond the statutory period of limitation - Having the contrary decisions on the issue the matter be placed before the Hon ble President to refer the matter before the Larger Bench.

Summary

Issues:
- Appeal against dropping of demand and penalty by lower appellate authority.
- Bar on demand due to limitation period.
- Sustainability of duty demand based on information from balance sheet.
- Contradictory decisions on the invocability of extended period of limitation.

Analysis:
1. The appeal was filed by Revenue against the dropping of demand and penalty by the lower appellate authority. The case involved the respondents, who are manufacturers of Sponge Iron, allegedly receiving an insurance claim. The lower appellate authority dropped the demand, leading to Revenue's appeal.

2. The Revenue argued that the extended period is invocable as per precedents and that the duty demand on the finished goods is sustainable. The Adjudicating Authority confirmed the demand and penalty, which the lower appellate authority overturned.

3. The respondents contended that the show cause notice was barred by limitation, citing cases to support their argument. The proceedings were initiated based on information from the balance sheet for 2005-06, and the show cause notice was issued beyond the statutory period of limitation.

4. Upon examination, it was found that the show cause notice was indeed issued beyond the limitation period. The Tribunal held that the balance sheet is a public document, and allegations of suppression from Central Excise authorities were not viable. The extended period was deemed not invocable in this case.

5. The Tribunal referred to a case involving a similar issue where the demand was not barred by limitation due to excess stock revealed in the balance sheet. The conflicting decisions on the invocability of the extended period led to the Tribunal's decision to refer the matter before the Larger Bench for clarification.

6. The key issue to be decided was whether the demand raised based on information from the balance sheet after invoking the extended period of limitation is sustainable. Due to contradictory decisions on this issue, the matter was referred to the Hon'ble President for further action.

7. In conclusion, the Tribunal directed the Registry to place the file before the Hon'ble President for necessary action, highlighting the need for clarification on the sustainability of demands based on balance sheet information and the invocability of the extended period of limitation.