2016 (3) TMI 945 - AT - Central Excise

Suo moto availement of credit of duty - excess paid duty adjusted against short paid duty - extended period of limitation invoked - Demand of differential duty - Held that - As on pointed out by the audit team, the appellant have discharged the differential duty of bonfide belief that excess paid duty can be adjusted against short paid duty, difference is the amount for which the show cause notice was issued. It is pertinent to mention that demand of show cause notice arises from differential duty paid by the appellant, in such case department could have issued the show cause notice within one year from the date of payment of differential duty i.e. from September, 2007. Show cause notice issued was after almost two years from the date of payment of differential duty. In my view, even the payment of differential duty was made at the right time as the same stands payable only after finalization of cost audit report. Cause of action started from the date when the differential duty paid by the appellant, nothing has prevented the department to issue a show cause notice within one year from the date of payment of excise duty. There is no suppression of fact, fraud and mis-statement etc on the part of the appellant therefore demand is patently time bar. Therefore set aside the impugned order on limitation and allow the appeal of the appellant. - Decided in favour of assessee

Summary

Issues:
1. Appeal against Order-in-Appeal No. SR/142/NGP/2010 by Commissioner of Customs & Central Excise (Appeals), Nagpur.
2. Discrepancy in excise duty payment for goods cleared during 2006-07.
3. Applicability of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
4. Adjustment of excess duty paid against short paid differential duty.
5. Provisional assessment under Rule 7 of Central Excise Rules, 2002.
6. Time limitation for issuing show cause notice.

Analysis:
1. The appellant, engaged in manufacturing "Parts of Lifts," paid excise duty based on costing of goods from the preceding financial year. Upon calculating the cost as per CAS-4 certificate, a differential duty was identified. The appellant adjusted excess duty paid against short paid duty, leading to a show cause notice alleging no provision for suo moto credit adjustment, which was contested by the appellant.
2. The appellant argued for provisional assessment under Rule 7 of Central Excise Rules, 2002, stating they informed the department of their intention. The differential duty was paid based on audit observations, with the show cause notice issued almost two years later, contending it was time-barred due to no suppression of facts or malafide intentions.
3. The Revenue contended that the appellant suppressed the fact of short payment, invoking extended period for issuing the show cause notice. They relied on various judgments to support their stance.
4. The Tribunal found the case hinged on the issue of limitation. The appellant had informed the department in advance about provisional assessment, paying duty based on provisional price and adjusting differential duty upon audit findings. The show cause notice issued after two years from the payment of differential duty was deemed time-barred, as there was no suppression of facts or fraud on the appellant's part.
5. The judgment highlighted that the demand arose from the differential duty paid, and the department should have issued the notice within one year from the payment. As the notice was delayed, the demand was considered time-barred, and the impugned order on limitation was set aside, allowing the appeal of the appellant.

This detailed analysis of the judgment covers the issues involved, arguments presented by both sides, legal provisions applied, and the Tribunal's reasoning leading to the decision.