2011 (4) TMI 854 - AT - Central Excise

Misdeclaration of the value - appellants manufactures cotton yarn stock transferred yarn to their consignment agents by adopting lesser price by misdeclaration of the value in the declaration filed under Rule 173C of the Central Excise Rules 1944 - extended period invoked - Held that - The Commissioner (Appeals) has held that the information regarding adoption of correct prevailing value by the consignment agents was not revealed to the department and this was done with intention to evade payment of duty - Hence the extended period of limitation is available to the department and as a consequence interest liability arises and the assessees are also liable to penalty - Decided against the assessee.

Summary

Issues: Misdeclaration of value in declaration under Rule 173C of Central Excise Rules, 1944 leading to evasion of duty and imposition of penalty.

Analysis:
The judgment by the Appellate Tribunal CESTAT, CHENNAI involved a case where the appellants, manufacturers of cotton yarn, were found to have stock transferred yarn to their consignment agents by misdeclaring the value in the declaration filed under Rule 173C of the Central Excise Rules, 1944. The issue at hand was whether the appellants intentionally adopted a lesser price to evade payment of duty. The Tribunal referred to proviso (i)(a) of Section 4 read with sub-section 4(b)(iii) and 4 (ba) of the Act, which required the adoption of the price prevailing at the consignment sale point at the time of removal from the factory gate for duty payment. The show-cause notice was issued, leading to a demand of Rs.60,911/- along with interest and penalty, which was adjudicated by the Joint Commissioner. The lower appellate authority upheld the demand and interest but reduced the penalty, prompting the appeal.

The Tribunal, in its analysis, noted that both lower authorities had established the guilt of the assessees in suppressing information with the intention to evade duty payment. The Commissioner (Appeals) specifically highlighted that the correct prevailing value adopted by the consignment agents was not disclosed to the department, indicating a deliberate attempt to evade duty payment. Consequently, the extended period of limitation was deemed applicable, leading to interest liability and imposition of penalty. The assessees did not contest the duty demand, accepting the same. Therefore, the Tribunal upheld the impugned order and dismissed the appeal, affirming the findings of the lower authorities regarding the intentional evasion of duty through misdeclaration of value in the declaration filed under Rule 173C of the Central Excise Rules, 1944.

In conclusion, the judgment underscores the importance of adhering to the prescribed valuation norms in excise matters to prevent evasion of duty. The case serves as a reminder that deliberate misdeclaration of value can attract penalties and interest liabilities, highlighting the need for transparency and compliance with statutory provisions to avoid legal repercussions in matters concerning duty payment and valuation under the Central Excise Rules, 1944.