2016 (1) TMI 273 - AT - Central Excise

Duty demand - Under-valuation - Imposition of penalty - Held that - Commissioner (Appeals) has observed that assessee has informed about the merger of the units, and has submitted periodical returns, clarification and price declarations to the department. After 01/4/2000 the submission of classification and price declaration was dispensed with by the amendment brought forth in Rule 173B and 173C of erstwhile Central Excise Rules. The conclusion of the Commissioner (Appeals) in para 21 of the impugned order is that therefore, after 01/4/2000 the assessee failed to submit price declaration in respect of goods cleared to sister concern and other buyers and have suppressed the facts of comparable value. We are not able to agree with this conclusion arrived by the lower authority. It is seen from records that alongwith the declarations the appellants had enclosed copy of agreement dated 25/10/1999 entered between assessee and sister unit M/s Aksh India Ltd. The goods were supplied as per this agreement and they were filing monthly returns also. Further it is seen that the Hon ble High Court has granted order of merger with effect from 01/04/2000. In such circumstances, we do not find any evidence to establish conscious with holding of information or suppression of facts on the part of the assessee with intention to evade payment of duty. Therefore the notice issued invoking the extended period is therefore not sustainable. In view thereof, the impugned order is liable to be set aside - Decided in favour assessee.

Summary

Issues:
Challenging impugned order passed by Commissioner (Appeals), under-valuation of goods, extended period of limitation, suppression of facts, willful misstatement, penalty reduction, merger of units, conscious withholding of information.

Analysis:
The case involved an appeal by both the assessee and the Revenue against the impugned order passed by the Commissioner (Appeals). The Revenue alleged under-valuation of goods by the assessee when clearing goods to a related entity at a lower value compared to other buyers. The show cause notice raised the issue of under-valuation, leading to a duty demand, interest, and penalty. The Commissioner (Appeals) confirmed the duty demand but reduced the penalty, prompting the Revenue to appeal against the penalty reduction.

The assessee's counsel argued on the merits of the case and the issue of limitation. They contended that the extended period of limitation invoked was not sustainable due to lack of evidence of suppression, willful misstatement, or fraud to evade duty payment. The counsel highlighted the provisions of the Central Excise Act applicable during the relevant period and emphasized the absence of mutuality of interest between the parties. Moreover, post-merger of units, the demand raised was deemed irrelevant. Regarding limitation, the counsel asserted that no facts were suppressed, and the show cause notice issued after one year was time-barred.

On the other hand, the Revenue's representative supported the Commissioner (Appeals)'s findings on the merits and argued against the penalty reduction, citing the failure to submit price declarations as suppression of facts.

After hearing both parties and examining the records, the Tribunal disagreed with the Commissioner (Appeals)'s conclusion that the assessee had suppressed facts post the merger of units. The Tribunal noted that the appellants had provided declarations and a copy of the agreement with the sister unit, along with monthly returns. The High Court's merger order further supported the lack of conscious withholding of information or suppression of facts by the assessee to evade duty payment. Consequently, the Tribunal held that the notice invoking the extended period was unsustainable, leading to setting aside the impugned order in favor of the assessee. The Tribunal did not delve into the substantial issue due to the favorable decision on limitation.

In conclusion, the impugned order was set aside, allowing the appeal filed by the assessee, while the Revenue's appeal was dismissed.