Supreme Court of India
M/S. GEO TFCH FOUNDATIONS & CONSTRUCTONversusCOMMNR. OF CENTRAL EXCISE PUNE
- Citation
- 2008 INSC 325
- Decided
- 7 March 2008
- Disposal
- Disposed off
- Bench
- ARIJIT PASAYAT
Holding
The invocation of Section 11‑A’s extended limitation period is impermissible; the show‑cause notice is barred by limitation and the CESTAT order is set aside.
Summary
The appellant, Geo Tech Foundations & Construction, manufactured PSC girders for a railway bridge and cleared them without paying central excise duty. A show‑cause notice demanding duty, confiscation and penalty was issued on 8 May 1996, well beyond the six‑month limitation period then applicable. The appellant contended that the notice was barred by limitation and that the girders were not marketable, hence not excisable. The CESTAT held that the extended limitation period under Section 11‑A of the Central Excise Act could be invoked and that the girders were excisable. The Supreme Court, relying on the Larsen & Toubro decision, held that the extended period could not be applied where the original notice did not invoke it and there was bona‑fide doubt about manufacture, rendering the notice barred by limitation. Consequently, the Court set aside the CESTAT order and allowed the appeals concerning the three earlier cases, while dismissing the later appeals.
Issues considered
- Whether the extended limitation period under Section 11‑A of the Central Excise Act can be invoked when the original show‑cause notice was issued beyond the statutory six‑month period.
- Whether the PSC girders are marketable and thus subject to central excise duty.
- Whether a bona‑fide doubt regarding the nature of manufacture bars the invocation of the extended limitation period.
Legislation cited
- Central Excise Act, 1944s. 11-A
Subjects
central exciselimitation periodSection 11-Ashow cause noticemarketabilitymanufacturePSC girdersCESTATbona fide doubt
Judgment
' ,
~2008] 4 S.C.R 575
MIS. GEO TFCH FOUNDATIO~S & CONSTRUCT'ON A
v.
COMMNR. OF CENTRAL EXCISE. PUNE
(Civil Appeal No. 5305 of 2005)
MARCH 7. 2008
8
[DR. ARIJIT PASAYAT AND ?. SATHASIVAM, JJ.]
Central Fxctse Act, 1944 - s. 11--A - PSC Girders -
Clearance of- Without payment of E:.'xcise duty - Show
cause notice demandtng duty issued beyond period of c
limitation - Held: InvocatiOn of extended period of limitation
is impermissible m the facts of the cases.
In Civil Appeal Nos 5305/2005, 7412/2005 and 7621/
2005, PSC Girders were cleared without payment of duty.
D
Show cause notice was issued demanding the duty.
Appellant-assessee contended that show cause notice
was barred by limitation having been issued beyond the
statutory period of six months prevalent at the relevant
time. Alternatively it was contended that since the Girders
were not marketable, it could not be subjected to levy of E
duty. Central Excise and Service Tax Appellate Tribunal
(CESTAT) held that extended period of limitation was
available to the Revenue. On the question of marketability,
the matter was referred to larger Bench of CESTAT. The
•"' larger Bench of CESTAT held in its orders which are F
subject of Civil Appeal Nos. 7412/2005 and 7621/2005 that
the articles were subject to excise duty as they are goods
which are not manufactured at site for construction of
buildings.
G
Civil Appeal Nos. 1330/2008, 2383/2006 and 2385/
2006 were also filed which bore the same issue.
In appeal to this court, appellant contended that this
court in Larsen & Turbo case had held that since there was
575 H
J )
576 SUPREME COURT REPORTS [2008] 4 S.C.R.
A bonafide doubt as to whether the activities carried on
amounted to manufacture or not, it was a debatable issue
and the questions were answered differently by different
·Benches, therefore, extended period of limitation is not
applicable.
B Allowing Civil Appeal Nos. 5305/2005, 7412/2005 and
7621/2005, and dismissing Civil Appeal Nos. 1330/2008,
2383/2006 and 2385/2006, the Court
't
HELD: 1.1 Admittedly, in Civil Appeal No. 5305/2005,
c when the first show cause notice was issued, the
extended period of limitation was not resorted to. A notice
should ordinarily be issued within a period of six months
(as the law then stood) i.e. within the prescribed period of
limitation but only in exceptional cases, the said period t:
could be extended to one year or five years, as the case
D
may be. When in the original notice, such an allegation
had not been made, the same could not have been made
subsequently as the facts alleged to have been
suppressed by the appellant were known to them.
[Para 10] [579-D, E]
E
P and B Pharmaceuticals (P) Ltd v. Collector of Central
Excise 2003 (153) E.L.T.14 (S.C.) -relied on.
1.2 The plea of bona fide had not been rejected. On
the contrary, there was diversion of views and the issue
F was answered by different Benches of the CESTAT. That
"...,
being so, the extended period of limitation could not have
been invoked. As the facts alleged to have been
suppressed by the appellant were known to the
department, in that view of the matter the extended period
G of limitation under Section 11-A of Central Excise Act, 1944
has no application. Invocation of Section 11-A, was
impermissible. [Para 12] [580-E, F, G]
2. In view of the· conclusions regarding non- ?-
availability of extended period of limitation, there is no
H
}
'
M/S GEO -~ECH FOliNDATIONS & CONSTR. v. 577
COMMNR OF CENT EXCISE. PU~E [PASAYAT, J.]
need to consider the question of marketability and/or A
excisability. The issue is academic. [Para 13] [580-H;
581-A]
CIVIL APPELLATE JURISDICTION : Civil Appeal No
' 5305 of 2005
B
From the f~nal Judgment and Order dated 11.03.2005 of
the Customs Exctse and Service Tax Appellate Trlbunal, West
Regional Bencn at MLmbai in Appeal No. E/3048/98, Final
Order No W286, 287/WZB/2005/CII.
WITH c
Civil Appeal Nos. 2383 & 2385 of 2006: 7412 & 7621 of
2005 & 1330 of 2008,
Joseph VellapaUy, P Vishwanatha Shetty and P.H. Parekh,
Romy Chacko, Arpit Gupta, Rashmi Malhotra, B. Krishna D
Prasad, M.P Vinod, Ajay K. Jain, Vimlesh Kumar, P.
~
Parmeswaran. Atul Y. Chitale, Sunanina Dutta Suchitra Atul
Chitale, L.P Dhir, Maneesha Dhir, N. Keerti Singh, Kirti Singh,
Pranab Kumar Mullick and Ajay Kumar Jha (for M/s. Parekh
and Co.) for the Appearing parties. E
The Judgment of the Court was delivered by
Dr. ARIJIT PASAYAT, J.
~
Civil Appeal Nos. 5305/2005, 7412 and 7621/2005. F
• 1. These appeals are directed against separate judgments
of the Customs, Excise and Service Tax Appellate Tribunal,
Mumbai Central (in short 'CESTAT') . The factual background
needs to be noted in brief.
G
2. Factual scenario is noted in respect of Civil Appeal
No.5305 of 2005. But the conclusions on the legal issues will
cover the other appeals.
3. Appellant manufactures PSC girders at site to be used
:n the construction of Railway Bridge for Kor.kan Railways. The H
( )
578 SUPREME COURT REPORTS [2008] 4 S.C.R.
A period involved is June 1994 to February, 1995. These articles
were cleared without payment of central excise duty under
Central Excise Act, 1944 (in short the 'Act'). A show cause notice
was issued on 8.5.1996 and the appellant was asked to show
cause as to why duty amountmg to Rs.53,91.498/- should not ,
B be demanded from it, as the girders were cleared without
payment of duty, why they should not be confiscated and why
penalty should not be imposed on the person concerned.
4. The Commissioner adjudicated the case demanding
duty and confiscating the girders which were by then removed
c to be placed on the bridge and imposed penalties.
5. The stand of the appellant before the CESTAT was that
the show cause nottce was barred by limitation, inasmuch as it
was issued beyond the statutory period of 6 months as provided
at the relevant time. Further. the department had knowledge of
0 the fact that the appellant manufactured PSC girders in 1994
itself. The show cause notice was issued in 1996 i.e. after the )l
penod of limitation. It was further submitted that even on merits
there was no scope for demanding duty. In the alternative, it
was pleaded that there was no marketability of PSC girders
E and since the girders are not marketable, therefore, the question
of levying any exc1se duty under the Act did not arise.
6 The CESTAT held that the larger period of limitation
was ava~lable. On the question of marketability the matter was
referred to a larger Bench of the CESTAT.
F "'...,
7 In C.A. Nos.7412/2005 and 7621/2005, chaHenge is to
the final order of CESTAT rendered by a larger Bench holding
that the benefit of Notification No.59/90-CE cannot be extended
to PSC girders as they are goods which are not manufactured
G at site for construction of buildings. Therefore, the articles were
held to be subject to excise duty.
8. In support of the appeals, Mr. Joseph Vellapally, learned
~
senior counsel for the appellant submitted that two appeals were
decided by CESTAT on the question of manufacture. One
H .-elated to the present appellants and the other to M/s Asian
' I
M/S GEO TECH FOUNDATONS & CONSTR. v. 579
COMMNR. OF CENT. EXClSf. PUNE :PASAYAT, J.]
Techs. Ltd. Correctness of the judgment in M/s Asian -rechs. A
Ltd. was considered by this Court in Larsen & Toubro Ltd. v.
Commissioner of Central Excise, Pune-/1 (2007 (211) E..L T.
513 (S C.). This Court held that since there was bora fJde doubt
as to whether the activities carried on arrounted to manufacture
or not, same was a debatable issue and the questions were B
answered differently by different Benches and. therefore. the
extended per!od of limitation in terms of Section 11-A of the Act
cannot be applied .
9. it is to be noted that !n the facts of the present case.
earHer r.otice was issued which was withdrawn and the second C
notice was issued on 8.5.1996. Prior to the arT',endment by Act
1C of 2000 w.e.f. 12.5.2000 the extended period of :imitation
was one year. After the 2000 amendment the period has become
5 years.
0
10 Admittedly. when the first show cause not1ce was
issued. the extended period of limitation was not resorted to . A
notice should ordinarily be issued wrthm a period of six months
(as the law then stood) i.e. with;n the prescribed per!od of
limitation but only in exceptional cases, the said period could
be extended to one year or five years, as the case may be. E
When in the ong1nal not1ce such an allegat:or. had r.ot been
made, we are of the opinion that the same could r.ot have beert
made subsequently as the ~acts alleged to have been
suppressed by the appellant were known to them.
11 . In P & B Pharmaceuticals (P) Ltd v Collector of Central
Excise (2003 (153) E.L.T.14 (S .C) th1s Court held as Jnder·
"19 However, Mr. Jaideep Gupta submits that the Tnburai
did not accept that here has been assignment of iogo n
favour of the assessee. We are unabie to accept the G
contention of the learned counsel. The tenor of the order
"the assessee had produced certain documents such as
registration form. trade mark authorities assigning the
trade mark to them but the fact remairs that there was
,.,aterial evidence by way of seizJre o~ goods H
\ , -
580 SUPREME COURT REPORTS [2008] 4 S.C.R.
A manufactured by M/s P & B Laboratories bearing the same
logo much after the alleged transfer of trade mark to the
appellants' discloses that the Tribunal accepted that there
has been an assignment but proceeded to deal with the
case of inapplicability of the exemption under the
B notification on the ground that the logo was being used by
M/s P & B Laboratories also. We have already indicated
above that use of logo of the manufacturer by third parties
is alien for purposes of denial of exemption on the strength
of Para 7 of the notification. In this view of the matter, we
c are unable to uphold the order of the Tribunal denying the
exemption to the assessee.
20. In any event, the ground that the assessee has
suppressed the fact that M/s P & B Laboratories was also
using the logo for availing the benefit under the notification
D cannot be a valid reason to invoke the proviso to Section
11A of the Act. There is no obligation on the owner of a
logo to make a roving enquiry to ascertain whether any
other person is also using his logo and disclose it to the
authorities to avert a possible allegation of suppression
E of fact for purposes of invoking the proviso."
12. One further aspect cannot be lost sight of. The
appellant as well as Konkan Railways raised a definite plea of
bona fide. Such a plea had not been rejected. On the contrary,
as noted above, there was diversion of views and the issue
F was answered by different Benches of the CESTAT. That being
"..,
so, the extended period of limitation could not have been
invoked. As the facts alleged to have been suppressed by the
appellant were known to the department, in that view of the
matter the extended period of limitation under Section 11-A of
G the Act has no application. Invocation of Section 11-A, was
impermissible, and therefore, we set aside the order of CESTAT
which is the subject matter of challenge in Civil Appeal No.5305
of 2005. The appeal is allowed. -~.
13. In view of the conclusions in C.A.5305 of 2005 there is
H
MIS. GEO TECH FOUNDATIONS & CONSTR v
581
COMMNR. OF CENT. EXCISE, PUNE [PASAYAT, j_)
~;.
no ~ee~. to con~ider ~he question of marketability and/or A
exc1sabihty. The Jssue IS academic. In view of the decision in
connected CivilAppeal No.5305of2005, Civil Appeal Nos.7412
of 2005 and 7621 of 2005 are allowed.
Civil Appeal 1330/2008
I :,
:.~.:,.. •.-
14. The show cause notice was issued on 30.5.1996. In
8
view of what ~s been decided in C.A. No.5305/2005, the
appeal deserves fa.be dismissed only on the ground of limitation.
Civil Appeal No.2383/2006
. . c
15. The dispute relates to the period from April 1993 to
July, 1993. _A show cause notice w~s issued on 8.5.1996. In
view of what has been stated in C.A.No.5305 of 2005 decided
today, the appeal deserves to be dismissed only on the ground
: ~
of limitation. D
Civil Appeal No 2385 of 2006
.
16. The period involved is November, 1993 to December,
1994 and the show cause notice was issued on 3.12.1996. In
..
view of what has been stated in C.A.No. 5305 of 2005 decided
today, this appeal deserves to be dismissed which we direct.
E .
K.K.T. C.A. Nos. 5305 of 2005, 7412 of 2005, 7621
of 2005 allowed and C.A. Nos. 1330 of 2008,
2383 of 2006, 2385 of 2006 dismissed.
-- ...
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