2011 (6) TMI 588 - AT - Central Excise

Under-valuation of the product by not including the cost of inlay card, jewel box, royalty, advertising expenses, overhead expenses - contention of the learned advocate that show-cause notice dated 22/09/2004 demanding duty for the period May, 2000 to February, 2002 by invoking the extended period is barred by limitation is having some force as in the first show-cause notice of October, 2001, the demands proposed were for the prospective period Held that - in the case of Jet Speed Audio Pvt. Ltd. (2005 (9) TMI 193 - CESTAT, MUMBAI) this Tribunal has held that extended period is not invokable when show-cause notice issued for the same subject prior to present notice, demands for the period prior to 19/02/2002 are not sustainable, show-cause notice is barred by limitation and the demands are not sustainable, order is set aside and the appeals are allowed

Issues:
1. Central Excise duty confirmation under Section 11A(2).
2. Determination of assessable value under Section 4(1)(b) read with Central Excise Valuation Rules.
3. Allegation of under-valuation and issuance of show-cause notice.
4. Barred by limitation - subsequent show-cause notice.
5. Interpretation of Board's circular dated 19/02/2002.
6. Allegation of suppression of facts and extended period of limitation.
7. Adjudication on the sustainability of demands and show-cause notice.

Analysis:
1. The appellants contested the confirmation of Central Excise duty under Section 11A(2) by the Commissioner of Central Excise, Mumbai - I, concerning the manufacture of Audio and Video Compact Discs. The issue revolved around the determination of assessable value under Section 4(1)(b) with reference to the Central Excise Valuation Rules. The Commissioner's order included various elements in the assessable value, leading to a penalty on the company and its Director.

2. The show-cause notice issued in October 2001 alleged under-valuation due to the exclusion of certain costs in the assessable value. The Commissioner (Appeals) later set aside the order, directing a detailed examination of costing elements. A subsequent show-cause notice in 2004 demanded duties for a specific period, alleging suppression of value in invoices. The appellants challenged this notice before the Tribunal.

3. The appellant argued that the 2004 show-cause notice was time-barred as it pertained to the same issue raised in the earlier notice. Citing precedents, the appellant contended that demands for the period before a specific date were not sustainable post the Board's clarification in 2002. The Tribunal agreed, holding that the extended period of limitation could not be invoked for demands already proposed in the previous notice.

4. The Tribunal analyzed the Board's circular of 2002 and the subsequent conduct of the appellants. It found that the allegations of suppression in the 2004 notice were not supported by the facts, given the earlier proceedings and the knowledge of the department regarding the assessable value components. The Tribunal, relying on legal precedents, concluded that the demands in the 2004 notice were not valid due to being time-barred and not in line with the Board's clarification.

5. Ultimately, the Tribunal set aside the impugned order, allowing the appeals with consequential relief. The judgment highlighted the importance of adherence to legal principles, precedents, and procedural fairness in adjudicating matters related to Central Excise duty and valuation rules, ensuring that demands are made within the prescribed limitations and based on valid grounds.

← Previous Next →