2018 (7) TMI 844 - AT - Central Excise

Time Limitation - suppression of facts/intent to evade present or not? - Short payment of duty - Two methods of valuation of the converted goods have been stated in the purchase order and the appellant paid duty by following a method, however, collected the entire amount of conversion charges by issuing debit notes, resulting into short payment of duty. Held that - No doubt, issues of valuation relating to transfer of finished goods to their depots have been raised by the visiting audit team and settled, but recovery of the excess amount by way of debit notes towards conversion charges from M/s Pfizer Ltd. has not been an issue raised by the audit team - Also, it is not borne out from the records that the relevant credit notes were placed before the Audit party. It is difficult to appreciate that such facts and evidences i.e. debit notes were placed before audit team who, after, analyzing the same raised no objection on the issue. In absence of such evidences, it is difficult to accept that the appellant had not suppressed the fact of recovery of the excess amount by way of issuance of debit note, after the job-worked goods were cleared to the raw material supplier i.e. M/s Pfizer Limited. - impugned order upheld - appeal dismissed - decided against appellant.

Summary

Issues:
- Appeal against Order-in-Appeal No. VAD-EXCUS-001-APP-137/2015-16 passed by the Commissioner (Appeals-I) Central Excise Vadodara.
- Barred by limitation - Demand notice for recovery of duty for the period February 2009 to February 2010.
- Allegation of suppression of facts.
- Recovery of excess amount through debit notes.
- Knowledge of the Department regarding under-valuation.

Analysis:

The appeal was filed against an order passed by the Commissioner (Appeals-I) Central Excise Vadodara. The case involved the appellant, engaged in manufacturing bulk drugs and undertaking job work for M/s Pfizer Limited, Mumbai. The appellant availed Cenvat Credit on raw materials supplied by M/s Pfizer Limited, cleared finished goods after processing, and collected excess conversion charges through debit notes, resulting in short payment of duty. The under-valuation was detected during a CERA Audit, leading to the payment of differential duty. A show cause notice (SCN) was issued for recovery of the differential duty, interest, and penalty, which was confirmed upon adjudication. The appellant contended that the demand notice for recovery of duty from February 2009 to February 2010 was barred by limitation, citing multiple audits where no objection was raised on the issue.

The appellant argued that the Department had knowledge of the facts as audits were conducted, and no objection was raised regarding the under-valuation issue during those audits. The appellant referred to various judgments to support their contention. On the other hand, the Revenue argued that the appellant had suppressed facts by collecting excess amounts through debit notes without disclosing it to the Department. The Revenue cited a judgment to support their stance. The Tribunal carefully examined the submissions and records, acknowledging the short payment of duty and the collection of excess conversion charges through debit notes. The Tribunal noted that while issues of valuation were raised in audits, the recovery of excess amounts through debit notes was not highlighted. Without evidence that the debit notes were presented during audits, the Tribunal found it difficult to accept the appellant's claim of no suppression of facts. Relying on legal precedent, the Tribunal upheld the impugned order, rejecting the appeal.

In conclusion, the Tribunal upheld the decision, emphasizing the importance of disclosing all relevant facts and evidence to the Department, especially regarding the collection of excess amounts through debit notes. The judgment highlighted the significance of transparency and compliance with valuation regulations to avoid disputes and penalties.