Extended Period of Limitation not invokable in Classification Issue when Date and Method of Duty Payment known to Department: CESTAT [Read Order]

In a recent ruling, the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) held that the extended period of limitation cannot be invoked in classification issues as the date and method of payment of the excise duty were known to the department.

  In this case, the issue is the same in all the appeals and is arising out of a common order, due to which all are disposed by a common order.

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Several appellants, including M/s. Vardhaman Products and M/s. Atishay Pure Products, are involved in this case. These appellants are producers of excisable goods such as mouth fresheners, pan masala, and sweet supari.

On January 30, 2012, a common show cause notice ( SCN ) was sent to many parties. The SCN claimed that from 2007–2008 to 2009–2010, there was duty evasion. The main issue was whether the appellants improperly paid excise duty under Section 4A of the Excise Act, 1944, while the department argued that the duty should have been paid under Section 4. The show cause notice invoked an extended period of limitation under Section 11A(4) of the Act to recover duties, penalties, and interest.

The appellants, who were aggrieved by the impugned order of the adjudicating authority, which demanded duty and imposed a penalty, approached the CESTAT for relief.

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The counsel on behalf of the appellant argued that the extended period could not be invoked as the refund claims had been sanctioned after proper audit and scrutiny by the department.

The CESTAT bench held that the extended period of limitation cannot be invoked as the date and method of payment of duty were known to the department and because the duty was paid by the appellants according to the clarification given by the department.

The CESTAT bench, comprising Ashok Jindal ( Member Judicial ) and K. Anpazhakan ( Member Technical ), allowed the appeal and set aside the imputed order.

The appellants were represented by Advocate  S. Bagaria and Advocate  I. Banerjee and the revenue was represented by Authorized Representative Subrata Debnath.

To Read the full text of the Order CLICK HERE

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