2019 (5) TMI 812 - HC - Central Excise

Whether the impugned order passed by CESTAT confirming the assessment of the Respondent without appreciating the monthly submission of ER-1 Form by the Appellant valid through the eye of law? - HELD THAT - An appeal before this Court challenging the correctness of the order passed by the Tribunal can be entertained only if this Court is satisfied that there is a substantial question of law to be decided in the appeal. In other words, this Court cannot act as a third appellate authority and examine the factual details as recorded by the first appellate authority and the Tribunal, re-appreciating the same to come to a different conclusion. Thus, unless and until the assessee is able to convince the Court that there is a substantial question of law arising for consideration, the appeal cannot be entertained. On facts, the original authority, the first appellate authority and the Tribunal noted the conduct of the assessee and recorded a factual finding that there is suppression of fact with an intent to evade payment of duty. The entire matter revolves on factual issues which have been considered by the original authority, affirmed by the first appellate authority and the Tribunal. Thus, there is no question of law, much less a substantial question of law arising for consideration in this appeal. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Validity of CESTAT's order confirming the assessment without considering the monthly ER-1 Form submissions.
2. Legality of the statement that sale is not the sole consideration for goods supplied free of cost.
3. Whether the appellant suppressed the value of free supplies of materials, amounting to suppression of facts.
4. Validity of imposing a penalty despite the payment of duty before the service of the show cause notice.
5. Whether the show cause notice issued by the Respondent is barred by the limitation of one year.

Issue-wise Analysis:

1. Validity of CESTAT's Order Confirming the Assessment:
The appellant contended that the Tribunal erred in confirming the assessment without appreciating the monthly returns filed by the assessee in Form ER-1. The Tribunal, however, held that the assessee had deliberately not included the value of free supplies while arriving at the aggregate value of clearances to avail the benefit of Notification No.9/2002. This omission resulted in a short payment of duty. The Tribunal's decision was based on the factual findings that the assessee's conduct amounted to suppression of facts with an intent to evade duty.

2. Legality of the Statement Regarding Sale Consideration:
The appellant argued that the respondent's statement that the sale is not the sole consideration for goods supplied free of cost is not sustainable in law. The Department maintained that for arriving at the transactional value, the value of the moulds supplied free of cost by the Oil Companies must be included in the assessable value for excise duty purposes. The Tribunal upheld this view, noting that the assessee's practice of excluding these costs when calculating the aggregate value of clearances was improper.

3. Suppression of Value of Free Supplies:
The appellant contended that there was no suppression of facts as the information was derived from documents submitted by them. However, the Tribunal found that the assessee had not declared the fact that they excluded the cost of free supplies while availing the SSI exemption. The Tribunal concluded that the assessee's actions constituted suppression of facts with the intent to evade duty, justifying the invocation of the extended period of limitation.

4. Imposition of Penalty:
The appellant argued that imposing a penalty despite the payment of duty before the show cause notice was invalid. The Tribunal, however, noted that the payment of differential duty by the assessee was made after the Department's verification and not voluntarily. The Tribunal upheld the penalty, finding that the assessee's actions warranted penal action under Section 11AC of the CEA, 1944, due to the suppression of facts.

5. Limitation of Show Cause Notice:
The appellant claimed that the show cause notice was barred by the limitation of one year. The Tribunal, however, held that the extended period of limitation was applicable due to the suppression of facts by the assessee. The Tribunal found that the assessee had not included the amortised cost of free items in the aggregate value of clearances, which would have disqualified them from the SSI exemption. This deliberate omission justified the extended limitation period.

Conclusion:
The High Court held that the entire matter revolved around factual issues that were thoroughly examined and confirmed by the original authority, the first appellate authority, and the Tribunal. The Court found no substantial question of law arising from the appeal and dismissed it, affirming the Tribunal's decision. The appeal was dismissed with no costs, and the connected miscellaneous petition was closed.