IMPORTANT POINT
When the extended period of limitation was not resorted to and allegation of suppression of fact was not made in the first show cause notice, the same could not have been made subsequently.

J U D G M E N T

S.B. Sinha, J :—

1.An order dated 16.2.2006 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Appeal No.E/3634/98-Mum., is in question before us. The appellant is a company incorporated under the Companies Act. It undertook a contract for construction of bridges for M/s. Konkan Railway Corporation Ltd. (‘Konkan Railway’, for short), which is a public sector undertaking. Appellant manufactured Pre Stressed Concrete Girders (PSC Girders). It used to transport them to the site of construction of bridges of the Railways. It did not register itself with the authorities of the Central Excise.

2.Alleging that the appellant, for the period March 1993 and December 1994, although was involved in the manufacturing activity, by undertaking manufacture of 75 PSC Girders, but did not pay any excise duty thereupon.

3.A notice was issued to the appellant directing it to show cause as to why Central Excise duty to the tune of Rs.32,35,575/- should not be demanded and recovered from them in terms of the proviso appended to Rule 49(1) of the Central Excise Rules, 1944 (Rules) read with Section 11A of the Central Excise and Salt Act, 1944 (Act) and as to why penalty should not be imposed on them and the plant & machinery and the manufactured goods should not be confiscated. Cause was shown by the appellant inter alia stating that no excise duty was payable. The said notice was withdrawn stating:

“The said Show Cause Notice has been issued without obtaining approval of the proper authority or by the proper officer. Accordingly, Show Cause Notice dated 27.1.94 hereby withdrawn. The withdrawal of the Show Cause Notice is without prejudice to any action including issue of fresh Show Cause Notice which may be taken against M/s. Konkan Railway Corporation Ltd., Ratnagiri (North), Lanjekar Compound, Phansi Baug, Udyamnagar, Ratnagiri of Central Excise Law or any other law of the time being is force.”

4.After a long time, namely, on 1.5.1996, another show cause notice was issued on the same premise for the period March 1993 and December, 1994. The extended period of limitation was invoked alleging suppression of fact on the part of the appellant. Appellant herein filed a show cause wherein inter alia the question of applicability of the extended period of limitation as contained in the proviso appended to Section 11A of the Act was specifically raised. The Commissioner of Central Excise, Pune, in his judgment opined that basically following four issues were involved :

“(i)Whether a process of ‘manufacture’ is involved?

(ii)Whether the girders can be considered as immovable property or not?

(iii)Whether the girders can be considered as marketable or not and whether exemption under Notification No.59/90 can be extended?

(iv) Whether there was suppression of facts on the part of the noticees so as to invoke extended period?

5.It was held that as construction of the bridges consists of many things, including foundation and super structure, manufacture of PSC Girders would come within the purview thereof; and the same would not be immoveable property. It was further held that the longer period of limitation has rightly been invoked as the appellant had suppressed the fact from the department that the goods in question were excisable articles. It was opined :

(a)“As regards penalty on KRCL under Rule 209A, since the manufacturing activity was undertaken by M/s. L & T and there is no evidence of their mala fides in the matter, further they have also alerted the contracting party about discharge of central taxes etc. as seen from clause 47 of contract, I refrain from imposing any penalty on them.

(b)“As regards confiscation of 75 Nos. of PSC girders, though M/s. L & T were given a notice in writing informing them the grounds on which it is proposed to confiscate the goods and they were also given an opportunity of making a representation within reasonable time against the said proposed confiscation and a reasonable opportun