2019 (5) TMI 1455 - AT - Central Excise

Valuation - for some un-used excess cylinder appellant have raised debit notes towards liquidator damages to the buyers - demand of duty on value of the debit notes considering the same as extra consideration towards supply of finished goods - HELD THAT - Though the CA certificate was produced before the lower authority the books of account such as parties ledger profit-loss account balance sheet etc. were not produced for this reason the lower authority has not accepted the CA certificate - We agree with the lower authority that merely with the CA certificate it cannot be established that the amount of debit notes was not recovered. The matter needs to be re-considered for verification of the facts that whether the appellant has cancelled the debit notes and consequently no amount was recovered by them from the buyers - Appeal allowed by way of remand.

Summary

Issues:
1. Demand of excise duty on value of debit notes issued for un-used excess printing cylinders.
2. Rejection of CA certificate as evidence of cancellation of debit notes.
3. Invocation of extended period for demand.

Analysis:

Issue 1: Demand of excise duty on value of debit notes
The appellant, engaged in manufacturing Printed Flexible Laminate, faced a demand for excise duty on the value of debit notes issued for un-used excess printing cylinders. The department considered the debit notes as extra consideration towards the supply of finished goods. The Commissioner upheld the demand, leading to the appeal.

Issue 2: Rejection of CA certificate
The appellant's counsel submitted that the debit notes were cancelled, and the amount was not recovered from buyers, supported by a CA certificate. However, the lower authority did not accept the certificate as conclusive evidence due to the lack of supporting documents like ledger, profit-loss account, or balance sheet. The Tribunal agreed that the mere CA certificate was insufficient to establish non-recovery of the debit note amount, emphasizing the need for further verification.

Issue 3: Invocation of extended period
The appellant contested the invocation of the extended period for demand, arguing that discrepancies were identified during audits conducted earlier, indicating no suppression of facts. Citing relevant case laws, the appellant claimed that the demand for the extended period was time-barred. The Tribunal acknowledged the argument and kept the issue of limitation open for reconsideration.

In conclusion, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh decision after verifying the records to determine whether the appellant had indeed cancelled the debit notes and not recovered the amount from buyers. The issue of limitation regarding the demand was also left open for further examination.