2015 (4) TMI 1028 - AT - Central Excise

Valuation of goods - Inclusion of overhead cost and profit margin - Held that - Personal hearing was granted to the appellant on 28.12.2004 and the Commissioner has relied upon the reports of the AD (Cost) which are dated 23.2.2005 and 14.3.2005 and the order is passed on 31.3.2005. Under the circumstances we find force in the contention of the counsel for the appellant that there has been serious breach of principles of natural justice inasmuch as the order has been passed without supplying the copy of the above mentioned reports. In view of the above position we set aside the impugned order and allow the appeal by way of remand - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Breach of principles of natural justice in passing the order without supplying certain reports.
2. Invocation of extended period of limitation in the show cause notices.

Analysis:

Issue 1: Breach of principles of natural justice
The appellant contended that the order was based on reports by the Assistant Director (Cost) dated 23.2.2005 and 14.3.2005, which were not provided to them, leading to a breach of natural justice principles. They argued that they were not given a chance to respond to the reports, affecting their right to a fair hearing. The appellant requested access to the CAS-4 system assessment to review and contest the findings. The Commissioner's reliance on undisclosed reports without granting the appellant an opportunity to address them was deemed a violation of natural justice.

Issue 2: Invocation of extended period of limitation
The appellant challenged the invocation of the extended period of limitation in the show cause notices. They argued that they had been compliant with filing price declarations as required by law, indicating no intention to conceal information or evade duty payment. Additionally, any additional duty liability could have been offset by the contract manufacturers through cenvat credit. The appellant maintained that the extended period should not have been applied due to their consistent compliance with price declarations, negating any inference of deliberate evasion. The Additional Commissioner defended the decision to invoke the extended period, citing lack of clarity in the price declarations and the CA certificate submitted.

In the final judgment, the Tribunal acknowledged the breach of natural justice in not providing the appellant with copies of the crucial reports before passing the order. Consequently, the impugned order was set aside, and the appeal was allowed by remand. The Commissioner was instructed to furnish all reports of the Assistant Director (Cost) to the appellant and grant them a fair hearing opportunity. The Tribunal refrained from addressing the limitation issue at that stage, leaving it open for the appellant to raise before the Commissioner in subsequent proceedings. The decision highlighted the significance of upholding principles of natural justice and ensuring procedural fairness in adjudicating matters related to duty liabilities and compliance.