2010 (6) TMI 419 - AT - Central Excise

Order contradictory finding demand limitation - Para 6.1 of his order, he has held that the demand in the present case is barred by time. However, surprisingly, in Para 10, he upheld the demand and extended the benefit in respect of penalty only - no appeal by the Revenue against the findings of Commissioner (Appeals) in Para 6.1 - Commissioner (Appeals) having himself held the demand to be time-barred not sustainable - set aside the impugned order appeal is allowed

Summary

Issues:
Interpretation of assessable value in excisable goods sale transaction involving Advance Release Order (ARO); Applicability of Customs duty component in assessable value; Barred by limitation defense in duty demand; Application of longer period of limitation; Liability for interest and penalty; Contradictory findings in Commissioner (Appeals) order.

Interpretation of Assessable Value:
The case involved the sale of excisable goods by the appellants to a buyer against an Advance Release Order (ARO) enabling duty-free raw material import. The department argued that the Customs duty component should be part of the assessable value. The lower authority confirmed the duty demand, interest recovery, and imposed penalties. The Commissioner (Appeals) referenced a Supreme Court judgment and observed that the demand was settled law. However, the appellants contended that the demand was barred by limitation due to the Tribunal's earlier judgment, subsequently reversed by the Supreme Court. The Commissioner (Appeals) acknowledged the appellants' bona fide belief based on the Tribunal's decision, leading to the duty demand being time-barred.

Barred by Limitation Defense:
The Commissioner (Appeals) found that the demand was time-barred as the Tribunal's decision, favoring the appellants, was applicable during the relevant period. He noted that the show cause notice was issued after the normal time limit, indicating no intent to evade payment. The voluntary compliance by the appellants in paying the differential duty further supported the time-bar defense. Consequently, the duty demand was held to fail on the ground of limitation, and the penalties were set aside, with interest recovery upheld.

Contradictory Findings in Commissioner (Appeals) Order:
The impugned order by the Commissioner (Appeals) was contradictory as he held the demand to be time-barred in one part but upheld the duty confirmation and extended penalty benefits in another. The Tribunal noted the absence of a Revenue appeal against the time-bar finding. Therefore, the Commissioner (Appeals) should not have upheld the duty confirmation against the appellant if the demand was considered time-barred. Consequently, the impugned order was set aside, and the appeal was allowed with relief to the appellant.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad, highlighted the key issues of interpretation of assessable value, the barred by limitation defense, and the contradictory findings in the Commissioner (Appeals) order, providing a comprehensive understanding of the legal aspects and reasoning behind the decision.