Honest mistake committed in maintenance of stock register can not be treated as fraud or willful mis-statement or suppression of facts – SC

C.C.E., Mangalore  Vs M/s. Pals Micro systems Ltd. (SC) – The department could not establish that there was any suppression of facts or a fraud on the part of the respondent-assessee. We find that the honest mistake committed in maintenance of stock register etc. was frankly admitted by the Managing Director of the respondent-assessee. There is no finding to the effect that there was a fraud or wilful mis-statement or suppression of facts. Thus, it is very clear that the notice was issued after expiry of the period of limitation.

Assessee, manufacturer of data processing machines was availing benefits under MODVAT scheme – Superintendent of Central Excise visited the factory premises of the assessee for verification of the stock of inputs on which assessee availed MODVAT credit and found that there was a vast difference between physical stocks available and that shown in RG23A Part 1 Register – Revenue issued show cause notice to the assessee – The Joint Commissioner confirmed the duty demand of Rs. 1,91,537/- u/r. 57I of the Rules r/w. 11A(1) of the Act – The Joint Commissioner also imposed penalty of Rs. 1,91,537/- u/s. 11AC of the Act and interest u/s. 11AB of the Act on the assessee – Commissioner dismissed appeal filed against said order – Tribunal allowed the appeal filed against said order and held that the show cause notice was issued belatedly and that too without prior permission of the Commissioner – HC dismissed appeal filed against said order – Hence, the instant appeal- Whether order of the tribunal as affirmed by the HC could be upheld? – Held, it was not in dispute that alleged suppression of payment of duty by the assessee was brought to the notice of the authority on 25.10.1996, when the Superintendent of Central Excise had inspected the premises of the assessee, whereas the show cause notice was issued on 26.06.2000 – Hence, the notice was issued after expiry of the period of limitation – Moreover, revenue could not establish that there was any suppression of facts or a fraud on the part of the assessee – Hence, impugned order upheld – Revenue’s appeal dismissed.