2018 (2) TMI 278 - AT - Central Excise

Whether the show cause notice is maintainable as it invoked the extended period of limitation? Held that - it is evident that the SCN has been only issued by way of change of opinion on the part of the Revenue, there being no mala fide, contumacious conduct, suppression of fact on the part of the respondent-assessee - the SCN is not maintainable - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Maintainability of show cause notice invoking extended period of limitation.

Analysis:
The issue in this appeal revolves around the maintainability of the show cause notice invoking the extended period of limitation due to a change of opinion by the Revenue. The case involves the valuation of unprocessed grey fabrics cleared from one unit to another for processing. The respondent followed a cost construction method based on the latest available financial statements, while the Revenue argued for using the cost data of the current period. The show cause notice was issued for the periods 1997-98 and 1998-99, alleging undervaluation and evasion of Central Excise duty.

Upon examination of the records, it was found that the show cause notice was issued solely due to a change of opinion by the Revenue, without any evidence of mala fide intent or suppression of facts by the respondent. The respondent had paid duty based on declared values and had not resorted to provisional assessment as required by Valuation Rules. The Revenue contended that the respondent suppressed information regarding the revision of prices due to finalization of costing, leading to evasion of duty.

The Tribunal held that the show cause notice was not maintainable as it was issued based on a change of opinion without any evidence of deliberate misconduct by the respondent. The Tribunal dismissed the appeal by the Revenue, stating that the respondent was entitled to consequential benefits. The judgment emphasizes the importance of transparency in valuation practices and the obligation of the assessee to disclose relevant information to tax authorities.

In conclusion, the Tribunal's decision highlights the significance of adherence to valuation rules and the duty of the assessee to provide complete and accurate information to tax authorities. The case underscores the need for clarity and consistency in tax assessments, ensuring fairness and compliance with legal provisions.