SCN Issued 3.5 Years After Voluntary Disclosure Without New Findings or Suppression: CESTAT quashes Extended Period Demand [Read Order]
CESTAT quashed the extended period, holding that a show cause notice issued 3.5 years after voluntary disclosure without evidence of suppression was unjustified
SCN Issued 3.5 Years After Voluntary Disclosure
SCN Issued 3.5 Years After Voluntary Disclosure
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the extended period of limitation cannot be invoked when the assessee has voluntarily disclosed duty liability and there is no evidence of suppression or intent to evade tax.
Sungreen Ventilation Systems Pvt. Ltd., the appellant, is engaged in manufacturing Wind Driven Ventilators. The appellant did not pay excise duty under a bona fide belief that their product was exempt for the years 2008-09 and 2009-10.
Upon realising that they had crossed the SSI exemption threshold, the appellant voluntarily approached the department in July 2010, obtained registration, and paid Rs. 9.02 lakh in duty and Rs. 83,615 in interest. They requested that no show cause notice (SCN) be issued under Section 11A(2B) of the Central Excise Act, 1944.
Despite this, the department issued an SCN in April 2014, nearly 3.5 years later, alleging suppression of facts and confirming demand with penalty under Section 11AC.
The appellant argued that there was no fraud, suppression, or willful misstatement, and all duty had been paid along with interest well before issuance of the SCN. They also submitted that CENVAT credit should not be denied merely due to procedural lapses like delayed registration.
The revenue counsel supported the order of the lower authorities and maintained that the extended period was rightly invoked due to non-registration and procedural breaches.
The two-member bench comprising Ajayan T.V. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) observed that the department had not discovered the lapse but was informed by the appellant voluntarily.
There was no evidence of intent to evade duty, and the delay in issuing the SCN was not justified. The tribunal also held that the denial of CENVAT credit without examining invoices was unsustainable.
The tribunal ruled that the conditions to invoke the extended limitation period under Section 11A were not met. The appellant had already complied and disclosed all facts, so the demand and penalty were set aside. The appeal was allowed with consequential relief.
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