The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a demand of ₹33.78 crore in central excise duty against Sun Home Appliances Pvt. Ltd., holding that the extended period of limitation under Section 11A(4) of the Central Excise Act, 1944 was wrongly invoked. The Tribunal also granted relief to the company’s directors and related parties from penalties imposed under the Central Excise Rules.
The bench of Justice Dilip Gupta (President) and P. V. Subba Rao (Technical Member) has observed that the benefit of area-based exemption could not be denied. It observed that the exemption notification did not prohibit (i) manufacture of new products, (ii) shifting of factory premises within eligible areas, or (iii) transfer of ownership of the unit. The Tribunal noted that all these actions—addition of new product lines, relocation of the unit within a notified area, and transfer of business as a going concern—were permissible under the law and supported by CBEC circulars.
The case arose from an Order-in-Original dated January 31, 2025, passed by the Additional Director General (Adjudication), which had denied area-based exemption under Notification No. 50/2003-CE and confirmed duty demand along with interest and penalties.
The department alleged that the appellant had fraudulently availed the area-based exemption by acquiring M/s Om Sai Enterprises and using it as a proxy arrangement to extend the exemption period beyond what was permissible. Investigations conducted by the Directorate General of GST Intelligence (DGGI) claimed that the transaction was structured to benefit a group entity, Noble Industries, by routing manufacturing through the appellant without payment of duty.
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However, the Tribunal found that all material facts regarding the takeover of Om Sai Enterprises, shifting of factory premises, and continuation of exemption benefits were disclosed to the department as early as 2015. It noted that the department had examined the relevant documents at that time and did not raise any objection. In such circumstances, the Tribunal held that there was no suppression of facts or intent to evade duty, which are essential conditions for invoking the extended limitation period.
Relying on settled Supreme Court jurisprudence, the Tribunal reiterated that mere failure or omission cannot amount to suppression unless it is deliberate and with intent to evade duty. Where facts are already within the knowledge of the department, extended limitation cannot be invoked.
The Tribunal rejected the department’s reliance on statements recorded during investigation, holding that such statements could not be used as evidence without complying with the mandatory procedure under Section 9D of the Central Excise Act. Since the witnesses were not examined before the adjudicating authority, reliance on their statements was legally unsustainable.
The Tribunal concluded that the entire demand, which was based solely on the extended period, was not sustainable in law. Consequently, the duty demand, interest, and penalties imposed on the company and its directors were set aside.
Case Details
Case Title: Sun Home Appliances Private Limited Versus Additional Director General (Adjudication)
Citation: JURISHOUR-1003-CES-2026(DEL )
Case No.: Excise Appeal No. 51564 of 2025
Date: 29.04.2026
Counsel For Appellant: B.L. Narasimhan
Counsel For Respondent: Mihir Ranjan, Special Counsel
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