2015 (10) TMI 1134 - AT - Central Excise

Demand of differential duty - Section 11A - Held that - Audit has raised objection on the clearance of capital goods on the ground that they have paid excise duty on the lesser value instead of working out correct depreciation value and accordingly demanded differential duty of ₹ 65,043/-. From the above record, it is clearly evident that audit report was communicated by the jurisdictional Range Superintendent on 6.8.2004 only demanding differential duty of ₹ 65,043/- whereas the show cause notice was issued on 6.10.2005. Therefore, it is clearly evident that there is no suppression of facts. The department was well aware of the facts on 6.8.2004 itself when the return was filed in April 2003. Even by taking into account letter dt. 6.8.2004, the demand should have been issued within one year whereas it is clearly established that demand is hit by limitation. It is evident from the records that capital goods have been imported on 9.8.95 under EPCG scheme and subsequently cleared to their sister unit on payment of duty. As clearly seen from audit para raised by the department, which was communicated by the jurisdictional Superintendent by demanding only differential duty on account of wrong calculation of depreciation value. There is no allegation of any contravention of provisions of rules. Accordingly, there is no suppression of facts or intention to evade payment of duty. The impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Consideration of communication dated 6.8.2004 by the Tribunal.
2. Determination of whether the show cause notice is barred by limitation.
3. Assessment of the demand for duty and interest based on the audit report.
4. Evaluation of the facts to establish suppression or intention to evade payment of duty.

Analysis:
The judgment stems from a directive of the Hon'ble High Court to the Tribunal to reevaluate the case considering a specific communication dated 6.8.2004. The High Court highlighted the importance of this communication in determining the limitation period for a show cause notice. The Tribunal, as per the High Court's direction, examined the letter from the Range Superintendent dated 6.8.2004, which demanded a differential duty based on an audit report. The audit report raised concerns about the calculation of depreciation value on capital goods. It was observed that the department was aware of the facts since 6.8.2004, and there was no suppression of information. The demand for duty and interest was solely related to the incorrect valuation of goods, without any contravention of rules. The Tribunal concluded that the demand was time-barred as it should have been issued within one year of the department's knowledge, which was established to be on 6.8.2004. Hence, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the absence of any intent to evade duty payment.

This judgment underscores the significance of timely issuance of demands in indirect tax matters and the necessity of considering all relevant communications and reports in determining the limitation period for show cause notices. It also highlights the importance of factual assessment in cases involving duty demands to ascertain any suppression or evasion of duty. The Tribunal's decision to set aside the order and allow the appeal showcases the adherence to legal principles and the requirement for proper evaluation of evidence in tax disputes to ensure justice and fairness in adjudication.