Extended Period Of Limitation Can't Be Invoked If Officials Are Negligent: CESTAT
Mehak Dhiman
6 Sept 2024 6:43 PM IST
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that no further investigation was conducted by the Revenue for more than two years after the search, hence the extended period of limitation can't be invoked. The Bench of R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “the officials did not take up...
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that no further investigation was conducted by the Revenue for more than two years after the search, hence the extended period of limitation can't be invoked.
The Bench of R. Muralidhar (Judicial Member) and Rajeev Tandon (Technical Member) has observed that “the officials did not take up the further investigation properly and were shoddy at their best. No statements were recorded from the purported buyers inspite of having their details from the diary / notes. They have waited for next 2 years to take further statement from the Director. In case of shortages, they could have issued the SCN immediately, but even this was delayed, on account of unexplained reasons. All these points out to the extreme negligence of the officials when dealing with the case of this size.”
The assessees/appellants, manufacturers of Cable Trays and accessories were inspected by DGCEI officials in July, 2008. On physical verification of stock, it was also found that there was shortage of finished goods. Statements from the Director were recorded in July, 2008 and in January, 2011. Later, a show cause notice was issued in March, 2011 alleging suppressed material facts and clandestine removals. Demands totalling Rs. 93,22,667/- and Rs. 2,19,448/- (for shortages) were made against the first assessee, and Rs. 13,18,216/- and Rs. 27,196/- against the second assessee. After due process the Adjudicating authority confirmed the demands. Aggrieved by the decision of the Adjudicating authority the assessees have filed an appeal before the Tribunal.
The assessee contended that the show cause notice issued in March, 2011 for the search and investigation conducted in July 2008, is time barred as after the search conducted in July, 2008 and the Statement recorded by the Director, no further investigation process was taken up for more than 2 years. Other than recording one statement of the Director, no investigation was carried with the purported buyers, transporters, nor any other statements were recorded to corroborate the allegations. Similarly, no evidence has been brought in towards clandestine purchase of raw materials, usage of excess electricity so as to carry out the manufacture of the alleged clandestine manufacture of the goods.
The department contended that DGCEI officials visited the office and factory premises of the assessee and conducted thorough verification of the document and stocks. Only after finding shortages in the physical verification and recovering incriminating documents, the investigation was taken in a bigger detail. The Director has recorded his statement, where he has admitted to wrong doings and also has voluntarily deposited Rs.50 lakhs. Hence, it is a clear admission of shortage of stocks and clandestine removals.
The Tribunal opined that while it is alleged that the Diary and Notes record the details of various buyers with Invoice and quantity details, no statements have been recorded with any of such buyers to corroborate the allegations. It is surprising that when the diary and note sheets have specified the details of such buyers, still the Revenue did not make any attempt to contact anyone of them when the investigation was taken up against the assessee.
The Revenue with the sole evidence coming in the form of the recorded Statements of the Director on three occasions. The first statement was recorded in July, 2008 and the next two statements have been recorded after more than two years from this date. This itself goes on to show that there was hardly any proper follow up investigation in the intervening period. Thus, the Revenue has not discharged its onus to prove the clandestine manufacture and dispatch of the goods in question with proper corroborative evidence, added the Tribunal.
The Tribunal opined that the officials did not take up the further investigation properly and were shoddy at their best. No statements were recorded from the purported buyers inspite of having their details from the diary / notes. They have waited for next 2 years to take further statement from the Director. In case of shortages, they could have issued the SCN immediately, but even this was delayed, on account of unexplained reasons. All these points out to the extreme negligence of the officials when dealing with the case of this size.
The Tribunal observed that the Revenue had no case to invoke the extended period to confirm the demand.
In view of the above, the Tribunal allowed the appeal.
Counsel for Appellant/ Assessee: Indranil Banerjee
Counsel for Respondent/ Revenue: P. K. Ghosh
Case Title: M/s. Premier Power Products (CAL) Pvt. Ltd. v. Commr. of Central Excise, Haldia Commissionerate
Case Number: Excise Appeal No. 70222 of 2013
