2019 (4) TMI 1198 - AT - Central Excise

Extended period of limitation - suppression and mis-statements of facts involved or not - Valuation - assessment of duty in accordance with section 4A of Central Excise Act, 1944 for the period from April 2003 to March 2007 - HELD THAT - There is no doubt that the contravention of any of the provisions of Central Excise Act, 1944 or the rules framed thereunder can also be cause for invoking the extended period of limitation provided for in section 11 A of Central Excise Act, 1944. Nonetheless, while that may be a necessary limb, it does not suffice in the absence of the second limb, viz., intent to evade duty. It is a well-settled in law that mere non-payment of duty cannot be equated with evasion and, even less so, with intent to evade. That has to be established by circumstances. The practice by the appellant between 2003 and 2007 to discard applicability of section 4A of Central Excise Act, 1944 may not be easily amenable to labelling as intended to evade duty. In matters concerning the invoking of the extended period, which is also attended by a penalty of like amount under section 11AC of Central Excise Act, 1944, mere presumption will not suffice. The ingredients must be clearly established and benefit of doubt, if any, must go to the assessee. We are unable to accept the contention of Revenue that the adjudicator authority had failed to appreciate the circumstances appropriately while dropping the demand for the extended period - Appeal dismissed - decided against Revenue.

Summary

Issues involved:
Assessment under section 4A of Central Excise Act, 1944 for the period from April 2003 to March 2007, invoking the extended period under section 11A of Central Excise Act, 1944, intent to evade duty, method of assessment, tagging of disputes for constitution of a Larger Bench, applicability of penalty under section 11AC of Central Excise Act, 1944.

Assessment under Section 4A of Central Excise Act, 1944:
The Commissioner of Central Excise & Customs held that goods cleared by M/s Schneider Electrical India (P) Ltd should be assessed to duty under section 4A for the period from April 2003 to March 2007. The Revenue appealed against this order, arguing that the extended period under section 11A should have been invoked due to certain circumstances.

Invoking the Extended Period under Section 11A:
The Revenue contended that the adjudicating authority did not appropriately consider the circumstances justifying the extended period of limitation. They argued that the intent to evade duty should have been established based on circumstances such as fraud, collusion, wilful misstatement, suppression of facts, or contravention of provisions of the Act. The Tribunal emphasized that mere non-payment of duty does not automatically imply evasion and intent to evade must be proven.

Intent to Evade Duty:
The Tribunal noted that the consistent refusal by M/s Schneider Electrical India (P) Ltd to adopt the prescribed assessment method and their resort to writ remedies could indicate intent to evade duty. However, the appellant argued that they believed the assessment should be based on section 4 of the Act and not on retail selling price unless the goods were meant for direct sale to normal household consumers.

Method of Assessment and Controversy:
The issue of the method of assessment was highlighted, with references to judicial decisions and the need for a Larger Bench to consider the matter. The Tribunal observed that the controversy surrounding the assessment method, especially the applicability of section 4A, was not free of doubt. The Tribunal emphasized that in matters of invoking the extended period and imposing penalties, the ingredients must be clearly established, and any doubt should benefit the assessee.

Decision and Dismissal of Appeal:
After considering the arguments and circumstances, the Tribunal found that the Revenue's contentions were not sufficient to prove that the adjudicating authority had erred in dropping the demand for the extended period. Consequently, the appeal of the Revenue was dismissed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT MUMBAI covers the issues of assessment under specific sections of the Central Excise Act, invoking the extended period, establishing intent to evade duty, the method of assessment, controversies surrounding assessment methods, and the final decision to dismiss the appeal of the Revenue based on the lack of sufficient evidence to support their contentions.