2024 (4) TMI 1090 - AT - Central Excise

Short payment of Excise Duty - clearance of rough marble slabs - less quantity has been shown by the appellant by way of adopting the incorrect formula for converting the quantity of square feet (Sq. Ft.) of rough marble slabs into Square Meter (Sq. Mtr.) - suppression of facts - invocation of Extended period of Limitation - HELD THAT - The appellant is admittedly a manufacturer of marble slabs out of the marble blocks. Thus it is clear that appellant is converting irregularly shaped rough marbles into the marble slabs of specific length, breadth and width. The area of slabs with specific dimensions can readily be calculated into Square Feet/ Sqr. Meters. However for the rough block/irregular shaped marble it is only the volume in cubic meters which can be ascertained to some extent of precision. It is appellant s case that the production quantity of marble slabs has been calculated by adopting the aforesaid option given - it cannot be denied by the reasonable prudence that once a particular volume of marble block will be converted into slabs of different thicknesses, the area in Sq. Ft./Sq. Mtr. For the slab having more thickness will be less. From the given standards it can be judicially noticed that the area for a slab of 16 mm thickness shall be 175 Sq Ft. per ton of the marble whereas for 18 mm Thick slab it will be 165 Sq, Ft. per ton and for 20 mm thickness slab it will be 150 Sq. Ft. per Ton. There are no basis of the formula as has been impressed upon by ld. D.R. On the contrary the formula admittedly applied by the appellant is the formula as mentioned in the Central Excise Tariff. No evidence is produced by the department to even demonstrate as to how the formula has wrongly been applied. In the absence of the evidence, the said calculation cannot be held to be a wrong calculation. Extended period of Limitation - the only ground taken for the same is that the right quantity was not mentioned in the ER-1 Returns and had no audit would be conducted the short-payment by the appellant would not have come to the notice of the department - HELD THAT - It is a matter of fact that all details were available in the records of appellant whatever was mentioned by the appellant in the ER-1 Returns was as per their records maintained by applying the formula given in the Tariff Act. It is opined that the above all mere oral allegations. There is no evidence to prove that the intent of the appellant was to evade duty. Admittedly the appellant as per selfassessment has discharged his duty liability. The returns have also been furnished. It was now for the Department to scrutinize the returns and to ascertain if the service tax had been paid correctly or not. Mere omission is not sufficient to be called as suppression of facts to invoke the extended period. Department has to prove that the act was deliberate to not to pay or to short pay the duty - there is no evidence for the same - thus, even extended period has wrongly been invoked. Resultantly, the Show Cause Notice itself is barred by time. The demand under challenge does not sustain on its merits. It also stands hit by the bar of limitation. Hence the demand is held to have wrongly been confirmed. The order under challenge is therefore set aside - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the incorrect calculation of excise duty liability by a manufacturer of marble slabs, the application of the correct formula for converting square feet of rough marble slabs into square meters, and the invocation of the extended period of limitation for duty recovery.

Incorrect Calculation of Excise Duty Liability:
The appellant, engaged in manufacturing marble slabs, was found to have short-paid excise duty due to an incorrect formula used for converting quantities of rough marble slabs into square meters. The Department alleged a short payment of Rs. 357302/- and issued a Show Cause Notice for recovery. The appellant contended that they correctly applied the formula provided in Chapter Note 5 of the Central Excise Tariff Act, treating one cubic meter of marble blocks as equivalent to 30 square meters of marble slabs. The Tribunal observed that the Department's findings were presumptive, as the appellant's calculation was in line with the tariff formula.

Application of Correct Conversion Formula:
The Department argued that the appellant's formula for converting square feet to square meters was erroneous, stating the correct conversion factor as 0.0929. The appellant maintained that their method was accurate, converting irregularly shaped rough marbles into slabs of specific dimensions. The Tribunal noted that the area of slabs with different thicknesses would vary, and the appellant's application of the tariff formula was found to be correct based on the evidence presented.

Invocation of Extended Period of Limitation:
The Department invoked the extended period of limitation, alleging that the appellant failed to reflect the correct information in their returns, leading to the short payment of duty going unnoticed. However, the Tribunal found that all details were available in the appellant's records, and there was no evidence of intent to evade duty. Citing legal precedents, the Tribunal held that the extended period was wrongly invoked, and the Show Cause Notice was time-barred. Consequently, the demand for duty recovery was set aside, and the appeal was allowed.

This summary provides a detailed overview of the issues involved in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's findings on each issue.