Modern Engineering Vs Customs Excise And Service Tax (Madras High Court)
The appeal before the Madras High Court arose from an order dated 18.05.2009 passed by the Customs, Excise and Service Tax Appellate Tribunal, Chennai. The sole issue for consideration was whether the Tribunal was justified in rejecting a plea of limitation that was raised for the first time during oral arguments, without having been pleaded before the adjudicating authority, the Commissioner (Appeals), or even in the written appeal before the Tribunal.
The appellant was engaged in fabrication activities. For the period 1995–96, a show cause notice dated 29.03.2000 alleged that the appellant had floated two shadow units to split clearances and wrongfully avail Small Scale Industry exemption, thereby evading excise duty. The Department proposed clubbing of clearances and levy of duty and penalty. Before the adjudicating authority, the appellant contested the case only on merits and did not raise any objection regarding limitation or the invocation of the extended period under Section 11A of the Central Excise Act, 1944. The adjudication order dated 28.03.2001 confirmed the demand. The first appellate authority also upheld the order, and again no plea on limitation was raised.
In the second appeal before the Tribunal, no ground relating to limitation was taken in the memorandum of appeal. The Tribunal examined the case on merits and recorded findings of suppression, noting that all manufacturing activities were carried out from the appellant’s premises and that the so-called sister concerns had no independent factory or machinery. The Tribunal concluded that these entities were floated only to split clearances and wrongly claim exemption. When a limitation plea was raised orally during the hearing, the Tribunal rejected it on the ground that it was a new plea unsupported by facts and not raised at any earlier stage.
