2014 (3) TMI 84 - AT - Central Excise

Demand of differential duty - Duty on transactional value - Rule 8 of the Central Excise (Valuation, Determination of Prices) Rules, 2000 - Invocation of extended period of limitation - Held that - It is very clear from CERA objection raised that the department was aware that these goods were being cleared to other Units for construction activity. Apparently, at that time, the cost of production was higher than the transaction cost and the department had a point to demand differential duty in such a situation. Against such a background, it cannot be said that the department was not aware that the goods were being cleared to other units was being cleared for some other purpose, in a situation where the other Unit were not of a type, where these materials can be raw materials for them is submitted by the learned Counsel for the applicant. Therefore, we see a strong prima facie case on time bar issue as argued by the learned Counsel for the applicant also - Stay granted.

Summary

Issues:
1. Early hearing application dismissal
2. Valuation of goods for excise duty
3. Time bar aspect of demand

Analysis:

1. Early hearing application dismissal:
The judgment begins with the dismissal of the department's early hearing application as the appeal itself is taken up for hearing. This procedural aspect is dealt with promptly at the outset.

2. Valuation of goods for excise duty:
The case revolves around the valuation of goods for excise duty purposes. The applicant took over a factory and transferred goods to other units for construction activities. Initially, duty was paid based on the Cost Construction Method under Rule 8 of the Central Excise Rules. However, the Revenue later contended that Rule 8 did not apply as the goods were not used in further manufacturing. This led to a Show Cause Notice and a demand of Rs.4,92,93,111 for a specific period. The applicant argued that the demand was time-barred, citing previous audit objections and compliance with them.

3. Time bar aspect of demand:
The time bar aspect of the demand is a crucial issue in the judgment. The applicant contended that the demand should be barred by limitation due to the delayed issuance of the Show Cause Notice. The Revenue, on the other hand, argued that the applicant had suppressed crucial information regarding the use of goods in construction activities at sister units. The Tribunal analyzed the submissions and found a strong prima facie case for the applicant on the time bar issue. Consequently, the Tribunal directed the applicant to make a deposit within a specified timeframe, with the balance dues waived pending the appeal's disposal.

In conclusion, the judgment addresses the procedural dismissal of an early hearing application, delves into the complexities of valuing goods for excise duty, and thoroughly examines the time bar aspect of the demand, ultimately providing a directive based on the arguments presented by both parties.