Case Law Details
Brief of the Case
In the case of Shri Dharampal Lalchand Chug Vs CCE, it was held by Bombay High Court that the period of limitation prescribed in section 11A of the Act cannot be enlarged. Once it is possible to scrutinise and verify the compliance of the terms and conditions on which the exemption has been issued in this case, then, it will not be possible to hold that a separate period is prescribed for recovery of duty in case of this nature or that the period of five years prescribed would have to be computed only when the breach or violation of the Exemption Notification has come to the knowledge of the Department subsequently. It may be that such fact is discovered or comes to the knowledge of the authorities subsequent to the clearance, however, when the Department desires to recover the amount of duty, then, it must adhere to the period prescribed. If the period is prescribed of five years and that has to be computed from the relevant date.
Facts of the case
The Appellant is a sole proprietor carrying on business in the name and style of M/s. Vibha Impex and claims that it is a 100% Export Oriented Unit (EOU). The factory was earlier located at Malegaon and later on it shifted to another village but within the same district, namely, Nashik. The Appellant is engaged in the manufacturing of various types of Polyester Yarn and Fabrics falling under Chapter 54 of the First Schedule to the Central Excise Tariff Act, 1985. The Appellant was availing the exemption benefit under Notification 1/95-CE dated 1st April, 1995. The Appellant procured the raw material without payment of duty on the condition that the same will be used in the manufacture of final products for export. The Appellant had submitted an application to the Development Commissioner, SEEPZ, Special Economic Zone, Ministry of Commerce and Industry, Andheri (East), Mumbai 400 096, in order to setup a 100% EOU unit. The said Development Commissioner granted the permission on 9th November, 2001. The annual capacity for manufacture of yarn and fabrics was estimated at 3048.64 metric tons and 33, 60,000 meters respectively. The Appellant also executed and submitted a letter of undertaking dated 26th March, 2002 in order to comply with the terms of the permission. The Appellant also obtained a Customs licence dated 28th January, 2002. The Appellant also executed a Bond in the sum of Rs. 80 lacs with the Deputy Commissioner of Central Excise and Customs, Division-III, Nashik in order to comply with the condition of manufacture under the Bond. The Appellant also requested the Development Commissioner, SEEPZ, Mumbai to change the name of the Appellant firm to M/s. Seven Star Tex Private Limited with new factory address. Accordingly, that permission was granted. Necessary changes were made in the licence and the permissions obtained earlier.
The period under consideration is April, 2002 to January, 2003. The Central Excise Department carried out a search of the Appellant’s factory premises. In the course of the same, the Central Excise Department seized various documents for scrutiny under a panchanama drawn on 10th October, 2002. In the course of the search, the Central Excise Department alleged that the Appellant installed certain machines and there was a short payment of duty amounting to Rs.94, 498/-. There are shortages noticed in the manufacture of Polyester Yarn. The Appellant paid a short payment of duty by Challan dated 11th January, 2002.
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