COMMISSIONER OF CENTRAL EXCISE Vs. MAHINDRA

JUDGEMENT

(1.) The respondent was called upon to show cause by the Collector of Central Excise, Bombay why the duty of Central excise of about Rs. 38 lakhs should not be demanded and/or recovered as provided under proviso to sub-sec. (1) of Sec. 11-A of the Central Excise Act, 1944 and why penalty should not be imposed on them under R. 173-Q of the Central Excise Rules, 1944. The Commissioner of Central Excise confirmed the duty demand in the sum of more than Rs. 34 lakhs and imposed a penalty of Rs. 5 lakhs on the respondent. The period in dispute is January 1987 to August 1988. The aforesaid show-cause notice is dated 30.04.1991.

(2.) On appeal filed by the respondent, the Customs, Excise and Gold (Control) Appellate Tribunal by the Judgement under appeal has set aside the order of the Commissioner of Central Excise on the ground that the MODVAT credit was available to the respondent assessee and on that basis alone coming to the conclusion that there could be no intention to evade payment of duty and thus the allegation of suppression so as to invoke the larger period of limitation under proviso to the aforesaid Sec. 11-A would not survive. The order of the Tribunal is under challenge. When the appeal was heard before a two-Judge Bench, reliance was placed by learned counsel for the respondent on a Judgement of this Court in AMCO Batteries Ltd. V/s. CCE1 to support the impugned judgment. The contention urged on behalf of the appellant before the Bench was that the decision in the case of AMCO1 was being frequently cited by the assessee before authorities to contend that when a party is entitled to get benefit of MODVAT Scheme, there could be no suppression by relying upon the observations that :

(3.) We have carefully examined the AMCO Batteries decision. The aforesaid observations in para 10 have to be read in the context of the facts noticed in paras 7, 8 and 9 of the decision. The AMCO Batteries decision cannot be held to have laid down that in cases where the assessee is entitled to get the benefit of the MODVAT Scheme, there can be no question of suppression of fact or invocation of the extended period of limitation under proviso to Sec. 11-A. In fact it has not been so held in AMCO Batteries decision. Having regard to the facts and circumstances noticed in the earlier paras 7, 8 and 9 and in addition to the appellant therein being entitled to get the benefit of MODVAT Scheme it was observed in para 10 that there was no justifiable reason for the appellant to suppress any fact.