2019 (5) TMI 452 - AT - Central Excise

Valuation - cost construction method - period July, 2000 to Sept, 2007 - extended period of limitation - HELD THAT - Merely because, the CAS-4 certificates were not produced before the adjudicating authority, in our opinion, the said determination of value and differential duty cannot be said to be incorrect unless contrary certificate is produced by the Revenue to establish that the said method of determination of assessable value is incorrect or CAS-4 certificate produced by the assessee-appellant is incorrect. Extended period of limitation - penalty - HELD THAT - There is merit in the observation of the learned Commissioner (Appeals) in arriving at the assessable value of stock transferred goods adopting CAS-4 method for the entire period. Needless to mention that CAS-4 method for assessing the value of stock transferred goods have been introduced in the year 2003. Before, the said introduction, there were lot of confusion in the determination of value of stock transferred goods and goods captively consumed. In these circumstances, there is no justification to impose penalty on the appellant for not applying CAS-4 method in the determination of assessable value initially. Consequently, the penalty imposed on the appellant is set aside demand limited to the normal period of limitation. The assessee s appeals are remanded to the adjudicating authority to re-quantify the demand for the normal period of limitation.

Issues Involved:
1. Determination of assessable value and payment of excise duty using CAS-4 method.
2. Bar on limitation for demand of differential duty.
3. Imposition of penalty for short payment of duty.
4. Production of CAS-4 certificate as evidence for determining assessable value.

Issue 1: Determination of assessable value and payment of excise duty using CAS-4 method:
The appeals were filed by both the Revenue and the assessee against the Order-in-Appeal passed by the Commissioner of Central Excise, Mumbai-I. The case involved the manufacture of excisable goods and the determination of assessable value on cost construction method. The Department alleged that correct assessable value was not determined, resulting in demands for differential duty. The Commissioner (Appeals) reworked the demand using the CAS-4 method, leading to a reduced demand. The main contention was whether the appellants were required to discharge duty based on the differential value arrived at using the CAS-4 method. The Tribunal observed that the determination of value and duty based on CAS-4 method was justified, especially considering the confusion before its introduction in 2003. The penalty imposed on the appellant for not initially applying the CAS-4 method was set aside, and the demand was limited to the normal period of limitation. The Revenue's appeals were dismissed for lack of merit.

Issue 2: Bar on limitation for demand of differential duty:
The appellant argued that the demand confirmed for a certain period was partly barred by limitation. It was contended that there was no intention to evade payment of duty by applying a different valuation method for stock transferred goods. The Tribunal found that the first show cause notice was issued invoking an extended period of limitation, but the determination of assessable value using CAS-4 method for the entire period was considered appropriate. Consequently, the penalty imposed on the appellant was set aside, and the demand was limited to the normal period of limitation.

Issue 3: Imposition of penalty for short payment of duty:
The appellant challenged the imposition of a penalty almost equivalent to the amount of differential duty confirmed. It was argued that since it was a question of interpretation of law and one of the major demands was beyond the period of limitation, the penalty was unwarranted. The Tribunal agreed and set aside the penalty, emphasizing that the demands confirmed invoking the extended period were unsustainable in law.

Issue 4: Production of CAS-4 certificate as evidence for determining assessable value:
The Revenue contended that the appellant failed to produce the CAS-4 certificate before the original authority to determine the assessable value, affecting the verification of data. However, the Tribunal noted that the CAS-4 certificates produced before the Commissioner (Appeals) were considered in reworking the assessable value and applicable duty. The absence of a certificate challenging the CAS-4 method adopted by the Commissioner (Appeals) led to the Tribunal upholding the determination of correct assessable value and duty based on CAS-4 method.

In conclusion, the Tribunal remanded the assessee's appeals to the adjudicating authority to re-quantify the demand for the normal period of limitation and dismissed the Revenue's appeals for lacking merit.

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