2007 (7) TMI 174 - AT - Central Excise

Demand raised on account of non-mention of brand name of yarn in declaration filed u/r 173-B assessment under a particular notification also mentioned in declaration - also filed monthly RT-12 returns - if the authorities needed separate RT-12 return in regard to each variety/brand, they could have sought that information as well, rather than raising delayed demands, alleging suppression of facts against the appellant demand & penalty set aside

Summary

Issues:
1. Short levy of Excise duty on bulked yarn.
2. Allegations of suppression of facts and intent to evade payment of duty.
3. Application of extended period of limitation for duty demand.
4. Assessment based on correct valuation of goods.

Analysis:

Issue 1: Short levy of Excise duty on bulked yarn
The appellant, a manufacturer of textile yarn, was alleged to have underpaid Excise duty on bulked yarn. The first show cause notice claimed a significant short levy, but after considering Modvat credit, it was found that the appellant had actually overpaid. A subsequent notice alleged a further short levy, which the appellant contested on grounds of incorrect duty calculation. Despite objections being partially accepted, a lower demand was confirmed, leading to the present appeal against the order.

Issue 2: Allegations of suppression of facts and intent to evade payment of duty
The appellant argued that all relevant information, including declarations and monthly returns, clearly indicated the processing of yarn, such as bulking, and the duty paid in accordance with applicable notifications. The contention was that there was no intent to evade duty, and any discrepancies were due to incorrect computation by the Revenue. The appellant emphasized that the duty demand was based on the wrong valuation method, contrary to previous assessments.

Issue 3: Application of extended period of limitation for duty demand
The appellant challenged the second notice issued by the Revenue, citing Supreme Court judgments that prohibit a second demand when facts were known during the first notice. The appellant argued that the Revenue had full knowledge of the relevant details, and any alleged suppression was unfounded. The extended period of limitation was deemed inapplicable, as the demand fell outside the normal recovery period under Section 11A.

Issue 4: Assessment based on correct valuation of goods
The Commissioner found the appellant guilty of misdeclaring goods in monthly returns, leading to the imposition of penalties under Section 11AC. However, the appellant contended that the identification of yarn for assessment was clear from declarations and returns, and any discrepancies did not amount to suppression of facts. The Tribunal concluded that the duty demand was unsustainable due to incorrect valuation and lack of intent to evade payment, setting aside the impugned order and allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the duty demand was beyond the normal recovery period and unsustainable due to incorrect valuation, thereby setting aside the order and providing consequential relief.