Muhammed Ismail Mills vs CESTAT, Chennai

A. Selvam, J.—This Civil Miscellaneous Appeal has been preferred against the Final Order No. 1226 of 2009 in Appeal No. E/712/2002 passed by the CESTAT. The appellant has been doing manufacture of cotton yarn. Further it has used to receive job work from M/s. Raghavendra Spinners Limited, 24/3, Anna Nagar, Tirunelveli. Under the said circumstances, the Department has issued a show cause notice dated 3-8-1998, wherein it has been specifically stated that by way of suppression of material facts, the appellant has evaded in paying Central Excise Duty. Under the said circumstances the appellant has been directed to pay the amount mentioned therein within the stipulated period. The demand made in the form of show cause notice, dated 3-8-1998 has been upheld in Order-in-Original No. 16 of 1999, dated 30-8-1999 by the Joint Commissioner of Central Excise, Madurai and the same has been challenged before the Commissioner of Central Excise (Appeals), Tiruchirapalli, wherein the demand made by the Department as well as order passed in order-in-original No. 16 of 1999 have been set aside. Against the order passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli, Appeal No. E/172/2002 has been filed by the Department before the CESTAT.

The CESTAT, after considering the rival contentions put forth on either side, has allowed Appeal No. E/172/2002 and thereby set aside the order passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli. Against the final order passed by the CESTAT, the present Civil Miscellaneous Appeal has been filed at the instance of the assessee as an appellant.

The short point raised in the present Civil Miscellaneous Appeal is as to whether the claim of the Department is barred by limitation, since the period started from 28-1-1997 to 31-3-1997.

The learned counsel appearing for the appellant/assessee has repeatedly contended that the concerned show cause notice has been issued on 3-8-1998 and the concerned period started from 28-1-1997 to 31-3-1997 and therefore, show cause notice must be given within a period of six months from the date of due of Central Excise Duty. Under the said circumstances, the entire demand made by the Department is totally barred by limitation and the CESTAT, without considering the fact that there is no suppression on the part of the assesses, has erroneously found that the period of limitation for the period mentioned in the show cause notice is five years and therefore, the final order passed by the CESTAT is liable to be set aside.

The learned counsel appearing for the respondents has contended that the appellant has been doing job works for M/s. Raghavendra Spinners Limited, Tirunelveli but the appellant without informing either the brand name or trade name of its products under the guise of job work has willfully suppressed the same. Under the said circumstances, period of limitation of six months is not applicable and the proper period of limitation is five years and therefore, the final order passed by the CESTAT perfectly correct and the same does not require any interference.

From the rival submissions made on either side, the Court has to analyse as to whether the assessee has made willful suppression of the details of goods produced under the guise of job work.

It is an admitted fact that on 17-1-1997 itself, the assessee has duly intimated the fact that it has been doing job work received from M/s. Raghavendra Spinner Limited, Tirunelveli and its main process is to convert the materials supplied to it into cotton yarn.

It is a static principle of law that as per Section 11(A) of the Central Excise Act, 1944 the normal period of limitation is six months and if there is any willful suppression of material facts, the period of limitation is five years and the same has been fortified on the side of the appellant/assessee by way of relying upon the decision reported in Anand Nishikawa Co. Ltd. Vs. Commissioner of Central Excise, Meerut, , wherein the Honourable Apex Court has clearly held that "period of six months extended to five years where there has been suppression of facts" or like on the part of the assessee".

As pointed out earlier, the main contention put forth on the side of the Department is that even though the assessee/appellant has duly intimated the factum of job work has failed to intimate the brand name or trade name of its products.

It is a well settled principle of law that if there is no suppression of facts on the part of the assessee, the normal period of limitation for making claim of Central Excise duty is six months and if there is suppression of facts, the period of six months would extend to five years.

The appellant/assessee has duly intimated the process of job work received from M/s. Raghavendra Spinners Limited, Tirunelveli. The only contention put forth on the side of the Department is that even though the assesses has fairly conceded that it has received job work from M/s. Raghavendra Spinners Limited, Tirunelveli it failed to intimate either brand name or trade name. In order to answer befittingly, the learned counsel appearing for the appellant/assessee has drawn the attention of the Court to the decision referred to earlier, wherein it has been clearly mentioned that failure to mention classification as supplied by assessee does not come within the purview of suppression of facts. Therefore, it is quite clear that there is no suppression of facts on the part of the appellant/assessee in respect of job work done by it during the relevant period mentioned in the show cause notice.

The CESTAT has rejected the claim of the assessee mainly on the ground that the assessee has made suppression of facts. In view of the aforesaid elucidation of factual aspects coupled with the dictum given by the Hon''ble Apex Court, this Court is of the view that the conclusion arrived at by the CESTAT is totally against law as well as facts.

It has already been pointed out that if there is no suppression of facts, normal period of limitation is six months. The claim in question has been made for the period started from 28-1-1997 to 30-3-1997 and show cause notice has been given on 3-8-1998. Even from 31-3-1997, no show cause notice has been given within a period of six months. Under the said circumstances, the demand made through show cause notice, dated 3-8-1998 is clearly barred by limitation. Since the claim made through show cause notice, dated 3-8-1998 is barred by limitation, it is needless to say that the order passed by the CESTAT is liable to be set aside and the order passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli is liable to be restored. In fine, this Civil Miscellaneous Appeal is allowed without costs and the Final Order No. 1226 of 2009 in Appeal No. E/172/2002, dated 9-9-2009 passed by the CESTAT is set aside and the order passed by the Commissioner of Central Excise (Appeals), Tiruchirapalli is restored.