Full Judgment
2. The Show Cause Notice was issued to the Respondents alleging that they had wrongly availed of the MODVAT Credit in relation to some items. The Show Cause Notice was alleged to have been issued under Rule 56A(5) of the Central Excise Rules read with Section 11A of the Central Excises and Salt Act, 1944. In the Order-in-Original passed, the said demand was confirmed. In appeal filed before the Tribunal, however, the question was raised that notice for demand as issued, was beyond the period of six months and as such the demand was hit by the period of limitation and on that short ground only the Tribunal allowed the appeal and the demand was set aside. The Department has now come by way of Reference Application, seeking reference to the High Court on the following two questions: (i) Whether on the facts and circumstances of the case, Section 11A of the CES A is the relevant provision for recovering proforma credit illegally availed by the assessee or Rule 56A(5) is the relevant provision.
(ii) If Rule 56A is the relevant provision, whether the extended period of five years can be invoked under proviso to Sub-rule (5) of Rule 56A of the CE Rules, when the assessee has taken proforma credit of duty paid on goods.
3. Ms Lipika Majumdar Roy Choudhury, the Ld SDR, submitted that the order of this Tribunal was based principally on the fact that Section 11A stood attracted to the provisions of Rule S6A and that the notice was treated as barred by under the same provision. In her submission, Section 11A could be invoked only when duty had not been levied or not paid or short levied or short paid or erroneously refunded. It however could not be invoked, if the issue was not covered by any one of the five categories mentioned above. In her submission, therefore, the approach of the Tribunal in invoking the provision of only Section 11A of the CESA was erroneous and therefore a reference on the Question No (i) above as formulated was called fox.
4. Shri Willingdon Christian, the Ld Adv for the Respondents, however, submitted that the Show Cause Notice invoked the provisions of Rule 56A(5) as also Section 11A of CES A. He also submitted that the period of demand was subsequent to the amendment to Rule 56A(5), where the wordings identical to those existing in Section 11A, has been introduced. Merely because the Tribunal only referred to Section 11A, would not materially affect the finding as, even going by the provisions of Rule 56A(5), the demand would be hit by the period of limitation as no allegation of suppression etc was made in the Show Cause Notice.
5. Considering the submissions on that issue, it appears that the wording of Section 11A and Rule 56A(5) in relation to the period of limitation, are identical. Before the amendment to Rule 56A also, as determined by the case law, the provision of Section 11A stood attracted. The position was made absolutely clear by the judgment of the Bombay High Court in Zenith Tin Works Pvt. Ltd. v. Union of India . Subsequent to the amendment in Rule 56A however the position was altered in confirmity with the case law as it existed and as such the period of limitation remain the same. It is true that the Tribunal in its final order, has not specifically referred to Rule 56A(5) of the Rules, which also stood attracted and referred to only Section 11A as was the position existing even prior to amendment to Rule 56A. However, such an approach would not materially affect the final conclusion drawn by the Tribunal and the reference, if at all ought to be made, would be purely on academic issue and Section 35G of the CESA does not contemplate any reference on any academic issue. In view of this position, therefore, question No. (i) above as raised by the Department does not call for such a reference as being purely academic in nature, not affecting the final conclusion drawn by the Tribunal. Even by applying Rule 56A(5) the final conclusion would be the same.
6. Considering the question (ii) above, the same as it formulated is the one of factual nature. It is nobody's case that the Show Cause Notice contained any allegation of suppression etc. The position has been made clear by several judicial pronouncements that for invoking the extended period there should exist a positive wilful misstatement, deliberate suppression or fraud etc with an intention to evade payment of duty. Such an allegation did not exist in the Show Cause Notice and even otherwise the finding given by the Tribunal thereof would be in the nature of appreciation of fact and no reference under Section 35G is contemplated on the question of fact as appreciated by the Tribunal considering the evidence available on records. In the circumstances, none of the questions as formulated by the Department are required to be referred to the High Court.