2015 (11) TMI 514 - AT - Central Excise

Valuation - Appellant collected the cost of the moulds and dyes from their customers and it was not included in the assessable value - Held that - Commissioner (Appeals) observed that balance sheet for the year 2004-05 could not have been available on 25.07.2005 which was prepared in October/November after closure of financial year. We do not find any material on record that the Department had initiated any enquiry for getting the figures despite their knowledge of non-inclusion of the value in the finished goods. All the facts are within the knowledge of the Department, when first show cause notice was issued on 25.07.2004. So the demand of duty for extended period of limitation by show cause notice dt.18.09.2006 and 26.09.2006 cannot be sustained. However, the demand of duty for the normal period by Show Cause Notice dt.26.09.2006 is liable to be upheld. But it is required to examine the quantification of demand by the lower authorities as per earlier order dt.22.06.2011 of the Tribunal. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Invocation of extended period of limitation for demand of duty.
2. Inclusion of cost of moulds and dyes in assessable value.
3. Quantification of demand of duty based on balance sheet figures.

Analysis:

Issue 1:
The main contention revolved around the invocation of the extended period of limitation for the demand of duty. The Appellant argued that the show cause notices issued in 2006 were barred by limitation as the Department was aware of the issue due to a previous notice in 2004. Citing the decision in the case of Nizam Sugar Factory Vs CCE, the Appellant emphasized that there was no suppression of facts on their part. The Tribunal agreed with the Appellant, stating that all relevant facts were already known to the authorities in 2004, and thus, the demand of duty for the extended period could not be sustained.

Issue 2:
The dispute also involved the inclusion of the cost of moulds and dyes in the assessable value. The Appellant collected the cost from customers but did not include it in the assessable value. The Adjudicating authority confirmed the demand of duty, which was upheld by the Commissioner (Appeals). However, the Tribunal found that the balance sheet for the relevant year was prepared after the issuance of the show cause notice, and there was no evidence of malafide on the part of the Appellant. Therefore, the demand of duty for the extended period was set aside.

Issue 3:
Regarding the quantification of demand based on balance sheet figures, the Tribunal directed the Adjudicating authority to quantify the demand for the normal period in accordance with the Tribunal's previous order. The Tribunal upheld the demand of duty for the normal period but required a reexamination of the quantification based on the earlier directive.

In conclusion, the Tribunal set aside the impugned order in one appeal and allowed it with consequential relief. In the other appeal, the demand of duty for the extended period was set aside, while the demand for the normal period was upheld, subject to reevaluation based on the Tribunal's previous order.