The extended period of limitation for demanding excise duty cannot be invoked when the assessee acted on a reasonable belief based on supplier classifications and prior tribunal rulings, absent any evidence of fraud or willful suppression.

FINAL ORDER NO. A/85816/2026

PER: S.K. MOHANTY

Heard both sides and perused the case records.

2. Brief facts of the case are that the appellant is engaged inter alia, in the process of converting ‘manganese ore lumps’ into ‘powder form’ and selling the same to the buyers in pack of 50 kg. bags. The appellant did not pay excise duty on the said activity for the period prior to 2014 on the ground that the supplier of manganese ore lumps had classified the said goods under Chapter sub-heading 2602 0010, which were exempted from payment of duty in terms of Notification No. 05/1998-CE dated 02.06.1998. However, the appellant had started paying Central Excise duty and obtained the Central excise registration post the period 2014, on the ground that the supplier of the said goods had changed the classification from 2602 0010 to 2820 1000, for which there is no duty exemption being provided by way of issuance of any notification. Since the appellant did not discharge the Central Excise duty liability on the manganese lumps sold in powder form during the period November 2010 to February 2014, the Department had initiated show-cause proceedings against them, seeking confirmation of the Central Excise duty demand in respect of such excisable goods manufactured/ processed by them in their factory premises. The Show Cause Notice (SCN) dated 16.11.2015 issued in this regard was adjudicated vide the impugned order dated 30.06.2016, wherein the learned Commissioner of Central Excise & Service Tax, Goa has confirmed the adjudged demands, holding that manganese lumps powder manufactured and cleared by the appellant should be classifiable under Tariff Item 2820 1000 of the Central Excise Tariff Act, 1985. Feeling aggrieved with the impugned order dated 30.06.2016, the appellant has preferred this appeal before the Tribunal.

3. The preliminary objection raised by the appellant is that show-cause proceedings initiated by the Department is barred by limitation of time, inasmuch as the SCN dated 16.11.2015 was issued, seeking confirmation of the Central Excise duty demand for the period November 2010 to February 2014. The appellant has contended that since there is no element of fraud, suppression, willful misstatement etc., with intent to evade payment of Central Excise duty, the SCN should have been issued within the normal period of one year from the relevant date and since the SCN was issued beyond the normal period, the same should be barred by limitation of time.

4. On examination of the case records, more particularly the Bills of Entry available in the case file, we find that the overseas supplier had supplied “High grade manganese ore” classifying the same under Tariff sub-heading 2602 0010, which does not attract payment of Central Excise duty in terms of Notification No. 05/1998-C.E. dated 02.06.1998. However, subsequently, the overseas suppliers have changed the nomenclature of the goods from “High grade manganese ore” to “Manganese Dioxide of High Standard” falling under Tariff Item 2820 1000 and on the basis of the commercial invoices and the Bills of Entry, the appellant had obtained the Central Excise Registration from their jurisdictional Central Excise authorities and discharged the Central Excise duty liability post the period February 2014. Further, we also find that the appropriate classification of the product in dispute was also dealt with by the co-ordinate Bench of the Tribunal and vide Final Order No. A/1851-1852/WZB/2005/C-II dated 20.07.2005 had upheld the classification of the product under Chapter 2602 of the Tariff Act. Since the proper classification of