2005 (3) TMI 337 - AT - Central Excise

Summary

Issues:
1. Time limitation for issuance of show cause notices.
2. Inclusion of extra charges in assessable value for Central Excise duty determination.
3. Disclosure of information by the assessee to the Revenue Department.
4. Burden of proof on Revenue for establishing suppression of facts.

Issue 1: Time limitation for issuance of show cause notices

The appeals were filed against the Order-in-Original passed by the Commissioner of Central Excise, Kolkata-II, confirming the amount involved in three show cause notices. The Appellants contended that the show cause notices in Appeal No. 836/2002 and 837/2002 were issued beyond the 5-year time limit from the relevant date. The Appellants argued that a letter from the Superintendent in 1999 could not extend the limitation period. Citing the Supreme Court decision in Metal Forgings & Anr. v. UOI & Ors., it was emphasized that the issuance of a show cause notice in a specific format is a mandatory legal requirement. The Tribunal held that the demands in these cases were time-barred as they were beyond the 5-year limit.

Issue 2: Inclusion of extra charges in assessable value for Central Excise duty determination

The Appellants were engaged in the manufacture of petroleum products and were accused of not including siding/shunting charges and free delivery zone (FDZ) charges in the assessable value for Central Excise duty determination. The Appellants argued that the FDZ charges were disclosed in their Central Excise invoices and that they believed these charges were transportation costs on an equalized basis, not liable to be included in the assessable value. The Appellants maintained that there was no intention to evade Central Excise duty and cited various Supreme Court decisions to support their stance. The Tribunal found that the Appellants had disclosed information about the FDZ charges to the Revenue Department, and the Revenue failed to prove deliberate withholding of information by the Appellants to evade duty. Consequently, the extended period of limitation was not applicable to the Revenue, and the appeals were allowed on the point of limitation.

Issue 3: Disclosure of information by the assessee to the Revenue Department

The Appellants had disclosed the details of FDZ charges in their Central Excise invoices and RT-12 returns up to September 1996. The Appellants argued that they believed the FDZ charges were transportation costs and not to be included in the assessable value. The Tribunal noted that the Appellants had provided information to the Revenue Department, and the Revenue did not refute this submission. The burden of proof was on the Revenue to establish suppression of facts, which they failed to do.

Issue 4: Burden of proof on Revenue for establishing suppression of facts

In a series of judgments, the Supreme Court held that for invoking the longer period of limitation of 5 years, the assessee must be proven to have deliberately withheld information with the intent to evade payment of duty. The Tribunal found that the Revenue did not establish that the Appellants were guilty of withholding information deliberately to evade duty, as required for invoking the extended limitation period. Citing various Supreme Court decisions, the Tribunal concluded that the extended period of limitation was not available to the Revenue, and therefore, the appeals were allowed on the point of limitation.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Kolkata covers the issues of time limitation for show cause notices, inclusion of extra charges in assessable value, disclosure of information by the assessee, and the burden of proof on the Revenue for establishing suppression of facts.