2015 (11) TMI 707 - AT - Central Excise

Duty demand u/s 11A - Abatement of duty - since the value of Anode Slime had been determined on the value of its silver content and since during the period of dispute, there was no duty on silver, while determining the value of silver content, its excise duty element could not be abated - Bar of limitation - Held that - In the order-in-original passed by the Assistant Commissioner, he has given clear finding that he does not find any evidence of wilful mis-statement, fraud or collusion, suppression of facts on the part of the assessee which resulted in short payment of duty and for this reason, while confirming he duty demand, he has not imposed any penalty under section 11AC. Since the duty demand is for the period beyond the normal limitation period of one year, it would be sustainable only if the proviso to section 11A(1) could be invoked which can be invoked only if non-payment or short payment of duty is on account of fraud, wilful mis-statement, collusion, suppression of facts or contravention of any provisions of the Central Excise Act, 1944 or of the rules made therein with intent to evade the payment of duty on the part of the assessee. In exactly the identical situations, the penal provisions of section 11AC are attracted. When with regard to the penal provisions of section 11AC, the Assistant Commissioner has given a finding that he does not find any evidence of wilful mis-statement, fraud or collusion on the part of the assessee etc. and for this reason, he has not imposed any penalty on the assessee under section 11AC, he cannot confirm the demand beyond the normal limitation period by invoking proviso to section 11AC. Therefore, without going into the merits of the case, we are of the view that duty demand is time barred - Decided against Revenue.

Summary

Issues:
1. Valuation of Anode Slime for duty determination.
2. Abatement of excise duty element on silver content.
3. Applicability of Central Excise Valuation Rules.
4. Time-barred duty demand and imposition of penalty.

Analysis:

Valuation of Anode Slime for duty determination:
The case involved the valuation of Anode Slime, a by-product rich in precious metals, mainly silver, emerging during the manufacture of refined copper ingots. The dispute arose regarding the determination of the value of Anode Slime cleared to a refining unit in Jharkhand. The assessing officer invoked Rule 11 of the Central Excise Valuation Rules by best judgment method, basing the value on the silver content of the Anode Slime. However, a contention arose regarding the deduction of the duty element on silver, which was fully exempted during the period in question. The Department challenged the abatement of duty, leading to a duty demand against the respondent.

Abatement of excise duty element on silver content:
The main ground of appeal by the Revenue was that since there was no duty on silver during the period, the excise duty element should not have been abated while determining the value of silver content in the Anode Slime. The Revenue argued that the abatement of duty, which was exempt and not payable, should not have been allowed. The appeal sought to set aside the order-in-appeal passed by the Commissioner on these grounds.

Applicability of Central Excise Valuation Rules:
The dispute also involved the applicability of the Central Excise Valuation Rules, specifically Rule 8, which could not be invoked due to the inability to determine the cost of production of the by-product based on CAS-IV standard. The value of the Anode Slime was determined by the assessing officer under Rule 11 by best judgment method, leading to the duty demand.

Time-barred duty demand and imposition of penalty:
The Tribunal examined the duty demand raised beyond the normal limitation period of one year. The Assistant Commissioner did not find evidence of wilful misstatement, fraud, or collusion by the assessee, leading to the confirmation of duty demand without imposing a penalty under section 11AC. The Tribunal held that since the duty demand was time-barred and the penal provisions were not attracted due to lack of evidence of intent to evade duty, the order of the Commissioner setting aside the demand was upheld. Consequently, the Revenue's appeal was dismissed.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the time-barred nature of the duty demand and the absence of evidence to support penal provisions, thereby upholding the order setting aside the duty demand.