2015 (7) TMI 180 - HC - Central Excise

Refund / Abatement of duty - Commissioner (Appeals) was of the view lower Authority had passed an erroneous order while finalising the provisional assessment and failed to consider that Duty paid as per RT12 return - Held that - Revised demand for higher duty is merely based on a presumption that one or other factor has not been considered by the Original Authority. When the show cause notice itself clearly demanded a sum of ₹ 13,16,071.25, which was based on the records already available, we find no justification how such a demand should be amended without issuing a corrigendum, as rightly pointed out by the Tribunal. When the facts relevant for the purpose of finalising the provisional assessment were already available with the Original Authority and the demand was based on such data, we find justification in the assessee s plea that the Commissioner (Appeals), at the behest of the Department, has proceeded to travel beyond the show cause notice to claim higher duty. The Department s plea that no fresh grounds have been brought in appeal before the Commissioner (Appeals) is erroneous, as we have already pointed out, in the appeal, as a first ground, they have raised a plea that RT12 returns were not considered, which is factually incorrect. - Decided against Revenue.

Summary

Issues Involved
1. Provisional assessment and determination of correct assessable value.
2. Jurisdiction of Commissioner (Appeals) in demanding higher differential duty than what was demanded in the show cause notice.
3. Eligibility of abatements towards quantity discount, freight, cash discounts, and turnover tax.

Issue-wise Detailed Analysis

Provisional Assessment and Determination of Correct Assessable Value
The first respondent/assessee, engaged in manufacturing medicines, claimed abatements for quantity discount, freight, cash discounts, and turnover tax from the assessable value during 1992-93 to 1996-97. As the actual abatements were known only at the end of the financial years, provisional assessments were resorted to. The Department found the abatements claimed excessive and issued a show cause notice on 12.09.2000, questioning the assessable value and proposing re-determination. The Jurisdictional Officer, after objections from the assessee, finalized the assessments, concluding that the cash discount should be allowed only when claimed in the price lists and upheld the Department's working. However, he accepted the assessee's contention on established practices for finalizing provisional assessments and found excess duty payment, which was not refundable as per the assessee's affirmation.

Jurisdiction of Commissioner (Appeals) in Demanding Higher Differential Duty
The Department filed an application under Section 35E(4) of the Central Excise Act, 1944, challenging the Jurisdictional Authority's order. The Commissioner (Appeals) found discrepancies in the RT-12 Returns and the working sheet attached to the final assessment order, remanding the matter back for re-examination. The Tribunal, however, held that the Commissioner (Appeals) had traveled beyond the scope of the show cause notice, which had demanded a differential duty of Rs. 13,16,071.25. The Tribunal emphasized that any higher demand should have been based on a corrigendum to the show cause notice, not through an application under Section 35E(4). The Tribunal allowed the appeal, stating that the Department's action was not permissible in law.

Eligibility of Abatements Towards Quantity Discount, Freight, Cash Discounts, and Turnover Tax
The Commissioner (Appeals) had also addressed the eligibility of various abatements. He held that cartage and freight on depots were eligible abatements as long as they represented freight incurred from depot to the point of delivery. However, freight on export clearances and packing and forwarding charges were not entitled to abatement. The Tribunal did not specifically address these abatements but focused on the procedural correctness of the demand raised by the Department.

Conclusion
The High Court upheld the Tribunal's decision, agreeing that the Commissioner (Appeals) had overstepped by demanding a higher differential duty than what was specified in the show cause notice without issuing a corrigendum. The Court found that the original demand of Rs. 13,16,071.25 was based on available records, and the Department's revised demand was unjustified. The Court answered the questions of law in favor of the assessee and dismissed the Civil Miscellaneous Appeal, with no costs.