2008 (12) TMI 509 - AT - Central Excise

Summary

Issues: Valuation of goods for Central Excise duty, Profit margin discrepancy, Time bar limitation

Valuation of goods for Central Excise duty:
The appellants were using goods manufactured by them and paying Central Excise duty. However, a discrepancy was found in their method of valuation for the period April to September 1998. The margin of profit adopted by them was 24.45%, whereas it should have been 28.05% for the relevant year, 1997-98. A show cause notice was issued for recovery of Rs. 15,812, which the original adjudicating authority dropped based on a Tribunal decision setting the profit margin at 10%. On appeal, the Commissioner (Appeals) ruled against the appellant, stating that the Tribunal decision did not apply universally and that the profit margin discrepancy was valid.

Profit margin discrepancy:
The key issue revolved around the profit margin adopted by the appellants for the valuation of goods. The Tribunal had previously set the profit margin at 10%, but the appellants had used a different margin for the year in question. The Commissioner (Appeals) rejected the appellant's argument that the Tribunal decision did not specify the period for the 10% profit margin, upholding the demand for the higher profit margin. The discrepancy in profit margin calculation was central to the dispute over the valuation of goods for Central Excise duty.

Time bar limitation:
The appellants raised the issue of time bar limitation concerning the show cause notice issued in 2003 for the 1998 demand. The Commissioner (Appeals) acknowledged the merit in the appellant's time bar argument but rejected it due to being raised belatedly. The appellants contended that since the issue of profit margin had been previously litigated before the Tribunal, the department was aware of the matter, and the small amount in question further supported their claim of time limitation. The Tribunal agreed with the appellants, allowing the appeal on the basis that the show cause notice for the 1998 demand was indeed barred by limitation.

In conclusion, the Appellate Tribunal CESTAT, Ahmedabad, in the judgment delivered by Ms. Archana Wadhwa and Shri B.S.V. Murthy, allowed the appeal with consequential relief on 11-12-2008, emphasizing the importance of correct valuation of goods for Central Excise duty, addressing the profit margin discrepancy, and upholding the appellants' argument regarding the time bar limitation for the show cause notice issued in 2003.