Kanoria Energy & Infrastructure Ltd. Vs Commissioner, CGST & Central Excise (CESTAT Delhi)
Summary: In the case of Kanoria Energy & Infrastructure Ltd. v. Commissioner, CGST & Central Excise, the CESTAT, New Delhi, ruled that an extended period of demand cannot be sustained without establishing an intent to evade tax. The appellant, engaged in manufacturing asbestos cement pipes, had claimed exemption under Notification 06/2002-CE for using fly ash in their products. A 2006 investigation by excise officers alleged suppression of facts and evasion of excise duty amounting to ₹11.02 crore. However, the Tribunal noted that self-assessment by the appellant and subsequent audits did not reveal any deliberate suppression of facts. The court emphasized that invoking the extended period of limitation under Section 11A of the Central Excise Act requires proving fraud, collusion, or intent to evade duty, none of which were present. Consequently, the demand raised against the appellant for the extended period of December 2003 to March 2006 was deemed unsustainable, and the impugned order was set aside. The judgment highlights the necessity of proving intent when invoking an extended demand period in tax matters.
The CESTAT, New Delhi in the case of Kanoria Energy & Infrastructure Ltd. v. Commissioner, CGST & Central Excise [Final Order No’s 58092-58097/2024 dated August 28, 2024] held that an assessee may genuinely believe that duty is not leviable, while the department may believe that duty is leviable. The assessee may, therefore, not pay duty in the self-assessment carried out by the assessee, but this would not mean that the assessee has wilfully suppressed facts. To invoke the extended period of limitation, atleast one of the five necessary elements must be established and their existence cannot be presumed merely because the assessee is operating under self-assessment. Even otherwise, merely because facts came to light only during the audit does not prove that there is an intent on the part of the assessee to evade payment of duty. Hence, intention to evade tax must be proved by the Department. Thus, the extended period of limitation contemplated under the proviso to Section 11A(1) of the Central Excise Act, 1944 cannot be invoked, the impugned order passed by the Commissioner deserves to be set aside as the entire demand is covered under the extended period of limitation.
