Demand of Central Excise Duty cannot be sustained being time barred and in absence of any suppression by the assessee


The CESTAT, Ahmedabad in the matter of Ambica Engineering Works v. C.C.E. & S.T.-Surat-I [Excise Appeal No. 10859 of 2020, dated June 7, 2022] set aside the demand order has held that invoking extended limitation period by the Revenue Department cannot be sustained, being time barred and is invalid in the absence of suppression of fact with intent to evade payment of duty on the part of the assessee.


Ambica Engineering Works, (“the Appellant”) is engaged in the manufacturing of textile machineries, falling under Chapter 84 of the Central Excise Tariff Act, 1985 (“the Central Excise Act”). The Appellant cleared the manufactured goods by availing exemption under Notification No. 06/2002-Central Excise dated March 01, 2002 (“N/N 06”).

The Appellant submitted an application on August 02, 2007 for Central Excise Registration, which was granted. Further, a post facto verification was done by the Revenue Department (“the Respondent”) of the premises and intended purpose for which Central Excise Registration application was made by the Appellant and a report was given w.r.t. eligibility of exemption on the goods manufactured by the Appellant under Notification No. 06/2006 Central Excise dated March 1, 2006 (“the Exemption Notification”).

In November 2008, an audit was conducted and accordingly, the statement of the Appellant was recorded and thereafter a Show Cause Notice dated April 06, 2009  (“the SCN”) was issued inter-alia raising demand of duty for the period April 15, 2004 to February 2008 and denying the benefit of Exemption Notification, which were confirmed vide Order dated July 31, 2010, by invoking the extended period of limitation. The Appellant in this regard, filed an appeal before the CESTAT, Ahmedabad, wherein, vide order dated September 06, 2019 the matter was remanded with the direction to consider the matter on limitation in view of the verification report of the Respondent.

However, vide Order-in-Original dated September 30, 2020 (“the Impugned Order”) whereby demand of the duty was confirmed.

Being aggrieved, this appeal has been filed.


  • Whether the extended period of limitation can be invoked in absence of any evidence of wilful mis-declaration or suppression of facts or intention to evade payment of duty?


The CESTAT, Ahmedabad in Excise Appeal No.10859 of 2020, dated June 7, 2022 held as under:

  • Observed that, the Respondent had carried out the verification of the manufacturing activity of the Appellant physically and specific report in respect of the claim of Exemption Notification was reported, which was not considered by the lower authorities as the same was neither presented nor available at the time of adjudication.
  • Noted that, the information regarding the nature of goods claimed for exemption was within the knowledge of the Respondent.
  • Stated that, once the exemption is claimed and the same is in the knowledge of the Respondent, firstly the Respondent is to do the proper verification to ascertain whether the goods on which exemption is claimed are covered under the Exemption Notification. The belief of an assessee may be right or wrong but it is incumbent on the Respondent to ascertain the correctness of the eligibility of the Exemption Notification. Therefore, by declaring the goods under Exemption Notification, there cannot be a charge of suppression of fact on the part of the Appellant or the Appellant had suppressed anything or had an intention to evade payment of duty.
  • Set aside the SCN and the Impugned Order passed by the Respondent.
  • Held that, the demand raised in the SCN and confirmed vide the Impugned Order is not sustainable, being time barred.

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CA Bimal Jain
A2Z Taxcorp LLP is a boutique Indirect Tax firm having its offices at New Delhi and Guwahati specializing in GST, Central Excise, Custom, Service Tax, VAT, DGFT, Foreign Trade Policy, SEZ, EOU, Export – Import Laws, Free Trade Policy, etc. It is a professionally managed firm having a team of experienced and distinguished Chartered Accountants, Company Secretary, Lawyers, Corporate Financial Advisors and Tax consultants to provide various services like litigation and representation, transaction advisory, diagnostic reviews/ health checks, audit defense & protection, retainership & compliance, configuration of tax efficient business model etc. Its clientele consists mainly of Foreign MNC, large/mid-sized Indian companies which includes exporters, FMCG, consumer durables, automobiles, aerated beverages, ceramic tiles, real-estate, hospitality, etc. Our clients include Varun Beverages Limited, Kajaria Ceramics Limited, L.G. Electronics India Private Limited, Shipra Hotel Limited, Multani Pharmaceuticals Limited, Shangri-La Eros Hotel etc. Flat No. 34B, Ground Floor, Pocket - 1, Mayur Vihar, Phase–I, Delhi – 110091 India Desktel:+91-11-42427056 Mobile:+91 8076563802
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