CESTAT sets aside Time-Barred Excise Duty Demand Over Delayed SCN Issuance [Read Order]

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) sets aside an excise duty demand, holding it time-barred due to delayed issuance of the Show Cause Notice (SCN).

Jeppiaar Furnace and Steels P. Ltd, appellant-assessee, received a Show Cause Notice (SCN) on April 16, 2014, after the Revenue found a discrepancy of Rs. 17,32,475/- between sales figures in ER-1 Returns and the Balance Sheet. Since there was no response to multiple notices, the department assumed that goods were cleared without paying duty, leading to a demand for differential duty, interest, and penalties under the extended time limit of Section 11A(4) of the Central Excise Act, 1944.

In response, the assessee argued that Rs. 37,08,449/- worth of TMT bars were supplied to RNS Infrastructure Limited under an exemption and were not included in ER-1 Returns, reducing the disputed amount to Rs. 1,31,11,697/-. They also contested the extended time limit, citing judicial precedents.

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However, the Original Authority confirmed the demand through an order dated October 30, 2015. The First Appeal before the Commissioner (Appeals) was also rejected.

The assessee appealed before the tribunal.

The tribunal noted that Directorate General of Central Excise Intelligence(DGCEI) resumed records in 2010 and later issued a SCN on April 16, 2014, for the period June 2009 to December 2010. The assessee argued that DGCEI had reviewed their records but never raised concerns about duty-free removal of TMT bars or billets.

However, the appellate tribunal found that the Original Authority rejected this claim, stating that DGCEI’s inquiry was about wrongful credit claims, while this case involved alleged clandestine removal. It held that the extended time limit was rightly applied.

The CESTAT noted that the authority did not dispute DGCEI’s verification of records, including ER-1 Returns. It referred to the Jeppiaar Waters Pvt. Ltd. case, where the Supreme Court ruled that the extended time limit under Section 11A of the Central Excise Act, 1944, could apply only if there was fraud, willful misstatement, or suppression of facts with intent to evade duty. Mere inaction or failure to disclose was not enough.

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Read More: Time Barred SCN: CESTAT quashes Service Tax Demand

A single member bench comprising of P.Dinesha( Judicial Member ) found that DGCEI had visited and verified records in 2010, but the SCN was issued in 2014, more than three years later. Since the time limit started from the date of the visit, the demand was held to be time-barred.

In conclusion, the tribunal allowed the appeal due to time limitations and set aside the order.

To Read the full text of the Order CLICK HERE

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