2004 (12) TMI 538 - AT - Central Excise

Issues:
1. Confirmation of duty demand and imposition of penalties under various provisions.
2. Assessment of assessable value based on average price and subsequent adjustment of duty.
3. Show cause notice challenging the adjustment of excess duty paid and contesting the demand of duty.
4. Lack of resorting to provisional assessment and guidance by revenue.
5. Application of Supreme Court decision and justification of duty adjustment.
6. Bar of limitation and absence of mala fide intention by the appellant.
7. Imposition of penalty despite acknowledgment of bona fide conduct by the Commissioner.

Analysis:
1. The judgment dealt with the confirmation of duty demand and imposition of penalties under Section 11AC of the Act and Rule 9(2) and 173Q(1) of Central Excise Rules, 1944. The Commissioner confirmed the demand of duty against the appellant along with the imposition of personal penalties, leading to the appeal before the Appellate Tribunal.

2. The appellants, engaged in the manufacture of Pesticides, cleared their products on a Stock Transfer Basis. They adopted a modus operandi of declaring assessable value based on the average price of the previous year and subsequently adjusting the duty based on actual sale prices. The appellant paid additional duty of Rs. 1.62 crores due to the differential pricing but adjusted Rs. 26,92,358.06 for stock cleared at lower prices from the factory gate.

3. The show cause notice alleged that the appellant was not entitled to adjust the excess duty paid at the time of clearance, emphasizing the value declared at the factory gate as the assessable value. The appellant contested the notice on merit and limitation grounds, but the Commissioner upheld the demand and penalties.

4. The Tribunal highlighted the need for provisional assessment in such cases and noted that the appellant had informed the Assistant Commissioner about their pricing methodology. The Tribunal found that the assessable value was subject to realization at the distributor's premises, justifying the duty adjustment made by the appellant.

5. Referring to a Supreme Court decision, the Tribunal distinguished the case at hand from the precedent, emphasizing the adjustment of duty based on actual sale prices. The Tribunal criticized the revenue's objection to adopting lower sale prices as unjustified.

6. The Tribunal observed that the demand was raised beyond the normal limitation period, invoking Section 11A. The appellant's letter clarified their procedures, indicating no mala fide intent, supported by the payment of substantial differential duty. Consequently, the Tribunal held the demand as time-barred.

7. Despite acknowledging the appellant's bona fide conduct, the Commissioner imposed penalties invoking a longer limitation period. The Tribunal found this action contradictory and set aside the impugned order, allowing the appeal with consequential relief to the appellant.

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