Case Law Details
CA Urvashi Porwal
Brief of the Case
In the case of, M/s. Aidees Electronics Pvt. Ltd. V/s. CCE it was held by Madras High Court that if the original authority had invoked the enhanced period of limitation on only one particular ground viz., suppression of fact and the appellate authority had set aside that finding, the larger period of limitation was not available to the Department themselves in view of the fact that the Tribunal did not interfere with the finding of the first appellate authority relating to the only basis on which the enhanced period of limitation was taken recourse to by the Department.
Brief Facts
The appellant is a Small Scale Industry. They are manufacturing linear measuring instruments falling under the heading 84.66 of the Central Excise Tariff Act. It appears that the appellant entered into a “Technical Licence Agreement” on 14.1.1992 with a Company by name “Newall Measurement Systems” incorporated in the United Kingdom, for the manufacture, use and sale of linear measuring instruments. On the basis of the said agreement, the appellant applied to the Department and obtained a registration certificate on 22.11.1995, in terms of Rules 174 and 192 of the Central Excise Rules 1944.
It appears that a letter was sent way back on 25.1.1996 to the appellant calling upon them to pay full rate of duty, on the ground that the appellant was not entitled to the benefit of Notification 1 of 1993 dated 28.2.1993. However, the appellant gave a reply dated 30.1.1996, served on the Department on 13.2.1996, to the effect that the equipments manufactured by them carried their brand name “Aidees Newall” and that this brand name is not that of anybody else so as deprive him of the benefit of the notification.
After two years of the submission of the said reply, the Commissioner of Central Excise issued a show cause notice contending that the brand name “Newall” belonged to a third party and that therefore the benefit of the notification was not available. The appellant gave a reply, which was not accepted and an order of adjudication was passed on 11.8.1998. The order of adjudication was set aside by the first appellate authority on merits. Though the appellant had raised the question of limitation, the first appellate authority did not go into the question of limitation. This was in view of the fact that the first appellate authority accepted the contention that the brand name “Aidees Newall” belongs to the appellant.
However, the Department filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal, as against the order of the first appellate authority. The Tribunal allowed the appeal of the Department. Therefore, the appellant has come up with the above appeal.
Held by Hon’ble High Court of Madras
The Hon’ble High Court stated that Section 11A prescribes two different periods of limitation. The first is a period of one year and the second is a period of five years. In cases where, the duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, on account of any fraud or collusion or wilful misstatement or suppression of facts or contravention of the provisions of the Act or the Rules, the period of limitation for the issue of a show cause notice is five years. But, in all other cases, the period of limitation is one year as seen from clause (a) of sub-section 1 of section 11A.
In the case on hand, the registration of the Company with the Central Excise Department happened on 22.11.1995. The registration was in respect of the goods described as “Aidees Newall linearing measuring instruments” as seen from the registration certificate.
Within a couple of months from the date of issue of the registration certificate, the Superintendent of Central Excise called upon the appellant to pay duty on the ground that the appellant was not entitled to the benefit of the notification, vide his notice dated 25.1.1996.
The show cause notice was issued two years thereafter viz., on 5.3.1998. In the show cause notice, the only allegation made against the appellant was that they had contravened the provisions of the Acts and the Rules.
However, it is seen from the order of the Tribunal that the finding of the first appellate authority to the effect that there was no suppression of fact, has not been interfered with. If the original authority had invoked the enhanced period of limitation on only one particular ground viz., suppression of fact and the appellate authority had set aside that finding, the larger period of limitation was not available to the Department themselves in view of the fact that the Tribunal did not interfere with the finding of the first appellate authority relating to the only basis on which the enhanced period of limitation was taken recourse to by the Department.
In view of the above, the Hon’ble High Court stated that the demand is barred by limitation and hence allowed the appeal.
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