2023 (7) TMI 356 - AT - Central Excise

Undervaluation of goods - non-inclusion of the VAT amount collected under the Assam Value Added Tax Act, 2003 and retained by them in violation of Section 4 of the Central Excise Act, 1944 - period May 2010 to April 2012 - Suppression of facts or not - extended period of limitation - HELD THAT - The present issue has arisen on account of the decision of the Hon ble Supreme Court in the case of Super Synotex (India) Ltd. Vs. CCE Jaipur 2014 (3) TMI 42 - SUPREME COURT , wherein the Hon ble Apex Court has approved the inclusion of the Sales Tax retained in the assessable value. It is observed that after the decision of the Hon ble Supreme Court, many High Courts and Tribunals have decided that in this issue there was no suppression involved and hence extended period of limitation not applicable. The Appellants particularly cited the decision of Hon ble Punjab and Haryana High Court in the case of Microtek Forgings 2016 (9) TMI 784 - PUNJAB AND HARYANA HIGH COURT and subsequent clarification issued by Board vide Circular No. 1063/2/2018-CX dated 16/02/2018, in support of their contention that extended period not invocable in this case. After carefully considering the Board s Circular, the decision of Hon ble Punjab and Haryana High Court in the case of Microtek Forgings and the decision of the Hon ble Supreme Court in the case of Super Synotex, it is observed that there is no suppression involved in these cases and accordingly, extended period cannot be invoked to demand the duties - the demand in the appeal filed by Appellant 1 pertains to the period from April 2010 to March 2015 and the Notice was issued on 05/05/2015. Thus, after excluding the extended period of limitation, the Appelant 1 is liable to pay the duty for the normal period along with interest. In respect of Appellant 2, since the entire demand is set aside, their application for cancellation of Registration can be considered by the department now. the demands in respect of normal period is confirmed - demand pertains to the extended period set aside - appeal disposed off.

Summary

Issues involved:
The issues involved in the judgment are the demand of Central Excise duty on account of undervaluation of goods by non-inclusion of VAT amount collected under the Assam Value Added Tax Act, 2003 and retained by the appellants in violation of Section 4 of the Central Excise Act, 1944.

Details of the judgment:

Issue 1 - Demand of Central Excise duty on Appellant 1:
The Appellant 1, a Private Limited Company engaged in the manufacture of Plastic products, was issued a Show-cause Notice demanding Central Excise duty for undervaluation of goods. The demand was confirmed by the adjudicating authority. The Appellant argued that they had availed remission under the Assam Industries Scheme and should have excluded only 1% VAT paid to the State Government from the transaction value. The Tribunal observed that after the decision of the Supreme Court in a similar case, there was no suppression involved, and hence the extended period of limitation could not be invoked. The demand for the normal period was upheld, and Appellant 1 was liable to pay the duty along with interest.

Issue 2 - Demand of Central Excise duty on Appellant 2:
Appellant 2, engaged in the manufacture of plastic furniture, was also issued a Show-cause Notice for undervaluation of goods. The demand was confirmed by the adjudicating authority. The Appellant cited the decision of the Punjab and Haryana High Court and a Board Circular in support of their contention that the extended period of limitation was not applicable. The Tribunal found that the entire demand was time-barred and set it aside. Consequently, Appellant 2's application for cancellation of Registration could be considered by the department.

Issue 3 - Appeals against the orders:
Both Appellants filed appeals against the orders confirming the demands. The Commissioner (Appeals) upheld the demands, leading to the present appeals. The Tribunal, after considering various legal precedents and circulars, confirmed the demands for the normal period and set aside the demands for the extended period for both Appellants. As a result, all three appeals were disposed of accordingly.

This judgment clarifies the application of the Central Excise Act regarding the inclusion of VAT amount in the assessable value for the levy of Central Excise duty, the relevance of legal precedents in determining suppression of facts, and the implications of extended periods of limitation in tax demands.