2014 (4) TMI 799 - AT - Central Excise

Duty demand - Bar of limitation - Held that - period involved in this case is 1995-96 and during the relevant period, the assessee was required to file monthly RT-12 returns along with all the copies of the invoices which were issued from their factory premises. It is undisputed in this case that the appellant had filed the RT-12 returns regularly with the authorities along with the invoices. It is also undisputed that the invoices which were issued by the appellants indicated deduction from the value as permissible deduction under Section 4. In our considered view, when these invoices were filed along with the RT-12 returns with the authorities, the range authorities should have called for an explanation from the appellant as to what were the deductions that was claimed in the said invoices. The range authorities as well as the divisional authorities, kept quiet and did not ask any explanation from the appellant and issued a show cause notice on 23.04.2000 demanding the differential duty. In our view, the appellant has made out the case in his favour on the ground of limitation as the revenue authorities cannot allege suppression of facts, misstatement with intend to evade payment of duty as the RT-12 returns as well as the invoices indicated the discharge of duty liability after the deduction as claimed by the appellant - Decided in favour of assessee.

Summary

Issues:
- Whether the demand of the differential duty can be sustained against the appellant for the period 1995-96 on the ground of ineligibility for deductions under Section 4 in respect of cash discount and packing charges.

Analysis:
The case involved two appeals raising a common issue regarding the appellant's liability for the demand of the differential duty for the period 1995-96. The appellant had issued central excise invoices under Rule 52A of the Central Excise Rules, 1944, for their final product, texturised yarn, to customers. The departmental authorities observed that the appellant had collected extra charges from customers in the name of permissible reductions under Section 4, including transportation, octroi, cash discount, and packing charges. The lower authorities concluded that while transportation and octroi charges were permissible, other deductions were not. A show cause notice was issued proposing to demand the differential duty from the appellant. The appellant contested the notice on grounds of merit and limitation, but the adjudicating authority confirmed the demands, imposed interest, and penalties. The first appellate authority upheld the lower authorities' decision.

The appellant argued that the authorities did not consider their limitation arguments properly. They contended that during the relevant period, they filed RT-12 returns with copies of invoices, which were to be scrutinized, assessed, and approved. The appellant claimed to have shown admissible deductions in the central excise invoices, indicating they were permissible reductions under Section 4, and it was the authorities' responsibility to verify their eligibility during that period. The departmental representative reiterated the findings of the lower authorities.

Upon review, the tribunal found that the crucial issue was whether the demand for the differential duty could be upheld against the appellant for the period 1995-96 due to alleged ineligibility for deductions under Section 4. The tribunal noted that during that period, the appellant regularly filed RT-12 returns with invoices indicating deductions as permissible under Section 4. The tribunal criticized the range and divisional authorities for not seeking explanations from the appellant regarding the claimed deductions before issuing the show cause notice. As the appellant had filed returns and invoices indicating the discharge of duty liability after deductions, the tribunal held that the revenue authorities could not allege suppression of facts or misstatement to evade duty payment. Consequently, the tribunal ruled in favor of the appellant on the grounds of limitation, allowing the appeals and setting aside the impugned orders with any consequential relief.

In conclusion, the tribunal's decision focused on the appellant's compliance with filing returns and invoices, highlighting the revenue authorities' failure to question the claimed deductions before issuing the demand notice. The tribunal's ruling favored the appellant on the limitation aspect, emphasizing the importance of proper assessment procedures by the authorities in such cases.