By TIOL News Service

CHENNAI, OCT 16, 2015: "BUT for the investigation carried out by the officers non-payment of duty could not have come to light" is a popular line in Central Excise Show Cause Notices issued under extended period. This is yet another such case. The appellant is engaged in the manufacture of scaffolding, shuttering and propping, items falling under Chapter sub-heading No.7308 of the First Schedule to the Central Excise Tariff Act, 1985. Based on the intelligence, the officers of Central Excise visited the appellant's unit and verified the records and also recorded statements. Accordingly, a show cause notice was issued demanding excise duty. The Commissioner confirmed the demand, but dropped part of the demand in respect of sub-contracted production. Both the assessee and the revenue are in appeal before the CESTAT.

Without going into the merits of the case, the Tribunal examined the issue on limitation and held:

+ It is pertinent to see that neither in the SCN nor in the impugned order, there is any iota of evidence brought out against the appellants on the wilful suppression of facts with intent to evade duty. The only remarks we find in the SCN at para-12 mentioning as "but for the investigation carried out by the officers non-payment of duty could not have come to light". On the contrary, it is evident from the statements of the Proprietor of the firm, wherein he categorically stated inter alia that they are only job worker carried out fabrication and received labour charges and also stated that he was not aware that such fabrication undertaken by them would attract excise duty. Further, in their reply to SCN they submitted before adjudication authority it was stated that they have not suppressed any facts with intention to evade duty as they were under bonafide belief based on the Tribunal decisions such activity of drilling, cutting, bending, welding of steel tubes and sheets not amounts to manufacture.

+ The appellants genuinely believed that mere cutting, bending, welding of steel rods/sheets not amount to 'manufacture' and held no new commodity emerged out and there is merit in appellant's justification. It is pertinent to state that the dutiability of structurals and parts thereof was held in favour of Revenue only by the Tribunal's Larger Bench decision in the case of Mahindra & Mahindra Ltd. Vs CCE - 2005-TIOL-1215-CESTAT-DEL-LB . Therefore, there is enough justification in favour of the appellant and there was no suppression of facts with intent to evade non-payment of duty.

+ By respectfully following the Supreme Court decision in - 2013-TIOL-13-SC-CUS we are of the considered view that the entire demand covered in the SCN dt. 31.1.2008 for the period 2004-05 to 2006-07 is hit by limitation as there is no suppression of facts and invocation of extended period not justified and beyond the scope of law. Since the demand itself held as time-barred no penalty imposable on the appellants. On the Revenue appeal, there is no infirmity in the impugned order in so far as it relates to deduction of value allowed on the value of goods pertaining to sub contractor.

(See 2015-TIOL-2225-CESTAT-MAD)