2023 (9) TMI 62 - AT - Central Excise

Extended period of limitation - suppression of true nature of the goods manufactured - area based exemption under N/N. 50/2003 - HELD THAT - In the instant case, the respondents have informed the Department as early as on 28.03.2003, their intention to change the classification; though the intent of extending area-based exemption was made public by the Ministry of Commerce in the month of January 2003, actual notification, exempting the goods by the Finance Ministry, was issued on 10.06.2003; it cannot be inferred that the appellants have changed the classification with a view to avail undue benefit; even if such a proposition is accepted, the intent to change the classification was informed to the department in March 2003 itself; the Department was free to cause necessary verification and to change the classification; the argument that verification took long time because of the procedures involved like testing by the agencies, cannot be a reason to allege suppression of fact; there should be a positive act of suppression, wilful mis-statement with an intent to evade payment of duty so as to attract the provisions of Section 11A for invoking the extended period - the Department has not produced any such evidence to that effect. This being a matter of fact, needs to be decided on case to case basis. The respondents have produced the copies of the invoices issued by them. The sample invoices show the total assessable value at a lower level say X ; right of CENVAT and CENVAT paid are shown at NIL rate; CST/ GST @ 1% are included along with freight; thus, the total invoice price is Y , which is equivalent to X plus CST/ GST plus freight charges. Therefore, it is to be understood that the CENVAT duty is not paid and is not recovered - the total invoice value subsumes the CENVAT duty. Accordingly, the value adopted requires to be considered as a cum-duty price. For this reason, the benefit of cum-duty is available to the respondents. The extended period is not invokable and cum-duty benefit is available to the respondent - Appeal allowed.

Summary

Issues involved:
Classification of products under different CETSH codes, invocation of extended period for show-cause notices, availability of cum-duty benefit, interpretation of value under Section 4 of CEA,1944.

Classification Issue:
The case involved a dispute over the classification of products under different CETSH codes. The respondents applied for amendment of classification from CETSH 28.25 to 26.15, leading to conflicting decisions by the Commissioner, Commissioner (Appeals), and CESTAT. The Department challenged the classification under CETSH 26.15. The respondents claimed to have informed the Department of their intent to change the classification in advance. The Tribunal found that the Department failed to prove suppression of facts or deliberate intent to evade duty, thus upholding the classification under CETSH 26.15.

Extended Period Invocation:
The Department invoked the extended period for show-cause notices, alleging suppression of facts by the respondents. However, the Tribunal held that the extended period was not invokable as there was no evidence of deliberate suppression to evade duty. Citing the ruling in Pushpam Pharmaceuticals, the Tribunal emphasized that mere omission does not constitute suppression unless there is a deliberate act to conceal information.

Cum-Duty Benefit Issue:
Regarding the cum-duty benefit, the Department relied on the decision in Amrit Agros, while the respondents argued that the decision was rendered in the context of the un-amended Section 4. The Tribunal analyzed the principles laid down in Amrit Agros and held that the claimant must demonstrate that the price includes duty payable or paid. By examining the invoices provided by the respondents, the Tribunal concluded that the value shown in the invoices already subsumed the CENVAT duty, thus upholding the cum-duty benefit for the respondents.

Value Interpretation under Section 4 of CEA,1944:
The Tribunal discussed the interpretation of value under Section 4 of CEA,1944 in light of the case law and arguments presented. While the Department argued for the application of the decision in Bata India Limited, the Tribunal evaluated the invoices and determined that the value shown already included the duty, supporting the respondents' claim for cum-duty benefit. The Tribunal's decision favored the respondents on this issue.

Conclusion:
The Tribunal ruled in favor of the respondents, upholding the classification under CETSH 26.15, rejecting the invocation of the extended period, and confirming the availability of cum-duty benefit based on the analysis of the invoices provided. The appeal was allowed in favor of the respondents on these grounds.