2015 (5) TMI 204 - AT - Central Excise

Valuation of goods - Valuation u/s 4 or u/s 4A - While the appellant was clearing the goods u/s 4A of the above Act, in December'98, it wrote a letter to the department for clarification as to the section under which levy shall be made - whether the conduct of the appellant can be appreciated to be bonafide and it was under such belief in the light of the Board's circular No.625/16-2002 dt. 28.2.2002 - Held that - The circular has ground that there was persisting confusion in industry which has prevented the appellant to bring the goods under Section 4A of Central Excise Act, 1944. In view of the fact that there is no whisper in the show cause notice as to malafide of appellant, it would be proper to rely on the decision cited by learned consultant in the case of Jaiprakash Industries Ltd. (2002 (11) TMI 92 - SUPREME COURT OF INDIA). - appellant has not acted malafide and its bonafides has come to public record - Decided in favour of assessee.

Summary

Issues:
- Clarification on duty liability for bulk pack clearances under Section 4 or 4A of the Central Excise Act, 1944.
- Bonafide belief of the appellant regarding duty liability.
- Interpretation of Board's Circular No. 625/16-2002.
- Applicability of the decision in Jaiprakash Industries Ltd. case.
- Revenue's contention on duty liability for bulk packs under Section 4.

Analysis:

The judgment addresses the issue of duty liability for bulk pack clearances under Section 4 or 4A of the Central Excise Act, 1944. The appellant had a bonafide belief that the goods were not liable to duty under Section 4 due to industry confusion, leading to payment under Section 4A. The Board's Circular No. 625/16-2002 clarified the confusion, stating that such clearances fall under Section 4. The appellant sought clarification from the department in December '98, and the department requested documents in March '99.

The appellant's contention of bonafide belief is supported by the decision in the Jaiprakash Industries Ltd. case, emphasizing that there was no suppression to evade revenue. The Revenue argued that bulk packs were not covered under Section 4A but were liable under Section 4, citing the Standards of Weights & Measures Act. The Tribunal examined both sides and the records to determine the appellant's conduct.

The judgment highlights the importance of the appellant's bonafide belief and the impact of the Board's circular on industry confusion. Citing the Jaiprakash Industries Ltd. case, the Tribunal emphasized that the extended period of limitation for demand under Section 11A is inapplicable when there is a scope for believing goods are not excisable to duty. The absence of malafide intent on the appellant's part led to the appeal being allowed, as the bonafides were evident in the public record.

In conclusion, the Tribunal found in favor of the appellant, considering the bonafide belief, industry confusion, and the clarifications provided by the Board's circular. The judgment emphasizes the significance of bonafide conduct and the absence of malafide intent in determining duty liability under the Central Excise Act, 1944.