2017 (10) TMI 1046 - AT - Central Excise

Valuation - CTD/TMT bars and MS round - job-work - non-inclusion of actual cost of raw materials - main point that has been raised by the department is that the Commissioner (Appeals) has erred in holding that the show cause notice dated 3.1.2007 issued is barred by limitation for the reason that the earlier show cause notice was issued for the very same period - Held that - though the period covered is the same, the issue raised in both the show cause notices are different. The Commissioner (Appeals) ought to have considered and given a finding on the merits of the case instead of being carried away by the fact that the second show cause notice have been issued for the very same period - Further, merely because the show cause notice is for the very same period, it cannot be said that the second show cause notice is barred by limitation. It must be shown that the facts alleged in subsequent show cause notice was well within the knowledge of department - there is sufficient ground for remanding the matter for reconsideration by the Commissioner (Appeals) - appeal allowed by way of remand.

Summary

Issues:
Department's appeal against order setting aside demand, interest, and penalties on grounds of limitation.

Analysis:
The department appealed against the Commissioner (Appeals) order setting aside the demand, interest, and penalties imposed on the grounds of limitation. The department contended that the respondents were involved in converting steel ingots into CTD/TMT bars and MS round based on job work agreements with steel ingot manufacturers. The department observed discrepancies in the value adopted for clearance of CTD/TMT bars manufactured on a job work basis, leading to a show cause notice proposing duty recovery, interest, and penalties. The original authority confirmed the demand and penalties, which the Commissioner (Appeals) later set aside as barred by limitation, prompting the department's appeal.

The department argued that the Commissioner (Appeals) erred in linking a previous show cause notice to the current one, asserting that the current notice was based on different grounds discovered from the appellant's balance sheet. They highlighted that the assessable value calculation did not consider the actual cost of raw materials, as required by Rule 11 of Valuation Rules, 2000. The department referenced the Ujagar Prints case, emphasizing the need to include job charges and material costs in determining assessable value, which the Commissioner (Appeals) allegedly overlooked. The department sought a remand for rehearing the appeal by the Commissioner (Appeals).

The respondent's counsel countered, arguing that the Commissioner (Appeals) correctly analyzed the issue on merits and limitation. They contended that the show cause notice lacked basis, as it relied on the appellant's balance sheet figures. Moreover, they highlighted a previous show cause notice on valuation issued in 2005, suggesting that the current notice on the same issue was time-barred. The counsel emphasized that since the department had all relevant facts on valuation, the Commissioner (Appeals) rightly deemed the subsequent notice as barred by limitation.

After hearing both sides and reviewing the records, the Tribunal noted that while the periods covered by the show cause notices were the same, the issues raised were distinct. The Tribunal criticized the Commissioner (Appeals) for not delving into the merits of the case and merely focusing on the temporal aspect of the notices. The Tribunal emphasized that for a notice to be time-barred, the department must have prior knowledge of the alleged facts, which was not conclusively established. Consequently, the Tribunal set aside the impugned order and remanded the appeal to the Commissioner (Appeals) for a fresh consideration on merits, allowing both parties a fair hearing.

In conclusion, the Tribunal's decision centered on the nuanced distinction between the issues raised in the show cause notices, emphasizing the necessity for a thorough evaluation of the case on its merits beyond mere temporal considerations. The remand to the Commissioner (Appeals) aimed to ensure a comprehensive review of the matter, underscoring the importance of a fair and detailed assessment in resolving the dispute effectively.