2014 (9) TMI 187 - HC - Central Excise

Extended period of limitation - jurisdiction - dispute regarding valuation was settled by the larger bench of tribunal - clearances of cement to their own units - valuation under Rule 8 read with Rule 9 of the Central Excise Valuation Rules, 2000. - Held that - Larger Bench in the case of Ispat Industries 2007 (2) TMI 5 - CESTAT, MUMBAI had concluded that the provision of Rule 8 of the Valuation Rules would not apply in a case where some part of the production of goods were cleared to the independent buyers. Admittedly, in the instant case, there is a sale of loose cement to the independent buyers at a value higher than arrived at by the respondent for the discharge of the duty liability of the cement. Noticing the fact that regular monthly returns were being filed by the respondent from March, 2008 onwards, which were accepted by the authorities without any murmur, while fixing the higher value at which the sale was made to the independent buyers being the assessable value of goods transferred to another plant, extended period of limitation was not sustained by the Tribunal. Thus on both the counts, firstly that there came a decision explaining and clearing the doubts as to in what manner the valuation requires to be done in the event of captive consumption of goods as also in case of goods transferred to sister concern or to another factory of the same assessee and till then, board circular governed the field. And, also because from March, 2008 onwards. On regular basis, the monthly returns have been filed by the assessee respondent indicating all possible details. Thus, the Tribunal rightly turned down the demand of duty prior to the period of one year from the date of issuance of show cause notice dated 9-11-2009, holding the same to have been hit by the law of limitation. - Decided against the revenue.

Summary

Issues:
1. Whether the Tribunal was correct in setting aside the demand of duty prior to the period of one year from the date of issuance of show cause notice?
2. Whether the Tribunal was justifiable in holding the differential duty demanded and confirmed by CCE as an adjudicating authority on clearances made from NCMU unit without jurisdiction?

Analysis:
Issue 1:
The case involved the central excise duty on cement cleared by the respondent to their own units. The Revenue alleged undervaluation by the respondent. The show cause notice issued led to the confirmation of the demand by the adjudicating authority. However, the Tribunal found the demand raised in the notice to be barred by limitation since it included a period of one year prior to its issuance. The respondent had filed regular monthly returns and followed a department circular, leading to the Tribunal's decision.

Issue 2:
The Tribunal's decision was based on the Larger Bench's ruling in a previous case where it was held that Rule 8 of Valuation Rules does not apply if part of the production is sold to independent buyers. In this case, the respondent sold cement to independent buyers at a higher value than assessed for duty. The Tribunal found that the extended period of limitation was not valid due to the respondent's compliance with the circular and regular filing of returns. The Tribunal's decision was in line with legal principles and supported by previous judgments.

The judgment highlighted the importance of department circulars, their binding effect, and the need for deliberate acts of suppression to establish liability. The Court agreed with the Tribunal's findings, emphasizing that the demand of duty prior to the limitation period was rightly set aside. The case was dismissed, affirming the Tribunal's decision.