2014 (8) TMI 701 - AT - Central Excise

Invocation of extended period of limitation - Suppression of facts - Malafide intention - whether extended period of time could have been invoked to confirm the demand in the instant case where the respondent-assessee had not included the cost of dies in the value of the motor vehicle parts manufactured and supplied by them to M/s. Bajaj Auto Limited - Held that - From the statements of the concerned officials of M/s Bajaj Auto Ltd., who got the vehicle parts manufactured through the respondent-asssessee, it is seen that the respondent were receiving dies/moulds on loan/returnable basis from M/s. Bajaj Auto Limited for manufacture of different motor vehicle parts. The amortised cost of these dies was not considered while finalizing purchase orders and determining the terms and conditions of supply. This it is evident from the statement of Shri S.R. Malpani, and Shri S.G. Naniwadekar, Thus, it is clear that the respondent-assessee knew that the cost of the dies had not been included in the value of the motor vehicle parts mentioned in the purchase orders. Yet they never took any action to ascertain in these costs and include the same in the assessable value of motor vehicle parts manufactured and cleared by them to M/s. Bajaj Auto Ltd. As per the provisions of Rule 173F of the Central Excise Central Excise Rules, 1944, it was the responsibility of the assessee to ascertain the correct value of the goods and discharge duty on such value. There is also no evidence available on record to show that the assessee disclosed to the department the non-inclusion of the amortised cost of moulds/dies in the value of the motor vehicle parts manufactured and supplied by them. In these circumstances, the only conclusion that can be drawn is that the respondent-assessee suppressed the information in spite of knowledge that the amortised cost of moulds/dies did not form part of the value of the motor vehicle parts manufactured and supplied by them. It is in this context, the decisions of the hon ble High Court of Gujarat in the case of Neminath Fabrics Pvt. Ltd. (2010 (4) TMI 631 - GUJARAT HIGH COURT) and Salasar Dyeing & Printing Mills (P) Ltd. (2013 (8) TMI 151 - GUJARAT HIGH COURT) become relevant. - Decided in favour of Revenue.

Summary

Issues:
1. Whether the demand raised is time-barred.
2. Whether the extended period of time could have been invoked to confirm the demand where the cost of dies was not included in the value of manufactured goods.

Detailed Analysis:
1. The appeal was against an Order-in-Appeal dated 29/07/2004 passed by the Commissioner of Central Excise & Customs, Aurangabad. The lower appellate authority found the demand sustainable on merits but time-barred due to the audit team's failure to check all aspects of valuation. The Revenue argued that there was no evidence of the department's awareness of relevant facts. The Additional Commissioner relied on precedents to establish the necessity of the department's specific knowledge for invoking the extended period of time. The respondent did not appear but requested a decision on merits based on a previous case. The Tribunal considered the submissions and concluded that the lower authority's decision on the time-bar question was incorrect and set it aside, allowing the appeals.

2. The key issue was whether the extended period of time could be invoked to confirm the demand where the cost of dies was not included in the value of manufactured goods. It was found that the respondent received dies on loan basis but did not consider their cost in purchase orders. The respondent knew about this discrepancy but did not take action to include the costs in the assessable value. The Tribunal noted the assessee's responsibility to ascertain the correct value of goods and discharge duty accordingly. Since there was no evidence of disclosure to the department regarding the non-inclusion of die costs, it was concluded that the respondent had suppressed information. Relying on legal precedents, including decisions from the High Court of Gujarat, it was established that the department's knowledge was not a relevant factor for time-limit computation. Therefore, the lower appellate authority's decision was deemed unsustainable, and the original order was restored.

Overall, the Tribunal allowed the appeals by addressing the time-barred issue and the invocation of the extended period of time for confirming the demand, emphasizing the legal principles related to the department's knowledge and the assessee's responsibility in disclosing relevant information.