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2015 (10) TMI 39 - AT - Central Excise100% EOU - Duty demand - They procured diesel duty free as well as on payment of duty and claimed that the electricity generated by using duty paid diesel would have been more than the quantity of electricity supplied to the colony. - Invocation of extended period of limitation - Held that:- Appellants had duly intimated Revenue that they would be supplying electricity to their residential colony w.e.f 1-1-2000. They had been procuring (importing) duty paid diesel also and their use of such diesel, it is not disputed by Revenue, would have produced more electricity than the quantity of electricity supplied to the colony for which they had even installed a separate meter. The show cause notice does not bring out as to what they wilfully misstated/suppressed with the intention to evade. - while issuing second and third show cause notices involving same/similar facts, suppression/wilful misstatement could not be alleged. Further the appellants were not unjustified in thinking that as the total duty paid diesel used by them would have generated more electricity than the quantity supplied to their residential colony, they were complying with condition of Notification No. 1/95-C.E./22/2003-C.E. In the case of Gopal Zarda Udhyog v. Commissioner of CCE, Delhi - [2005 (9) TMI 83 - SUPREME COURT OF INDIA] - the Supreme Court observed that mere failure or negligence on the part of the manufacturer does not attract the extended period. In case of CCE v. Chempher Drugs Liniments [1989 (2) TMI 116 - SUPREME COURT OF INDIA], Supreme Court held that something positive other than mere inaction or failure on the assessee’s part or conscious withholding of information when assessee knew otherwise is required for invoking extended period. - Thus, the allegation of wilfull misstatement/suppression of fact is clearly not sustainable. If it is not possible (because of common storage tank) for the appellants to conclusively demonstrate that duty paid diesel only was used for generating electricity supplied to the colony, it is equally impossible for the Revenue to show that it was not so used or to quantify as to how much duty free diesel out of the mixed lot was used for that purpose. What is being stated here is that such approach of the department is shylockian, untenable and falls in the category of ludicrous hair-splitting. Incidentally, similar demand, against the appellants for a different period was set aside by CESTAT - [2009 (12) TMI 784 - CESTAT NEW DELHI] - Decided in favour of assessee.
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