2024 (6) TMI 124 - AT - Central Excise

Determination of assessable value - inclusion of landed cost of the raw materials, processing charges, and all other relevant charges as per Section 4 of the Central Excise Act, 1944 - mis-declaration and suppression of facts or not - time limitation. Determination of assessable value - HELD THAT - As per the Supreme Court s decision in the case of Ujagar Prints 1989 (1) TMI 124 - SUPREME COURT and based on CBEC circular No.619/10/2002-CX dated 19.2.2002 and No. 643/34/2002-CX dated 1.7.2002, it is a settled issue that the job worker has to discharge duty based on the landed cost and the processing charges and therefore, on merits the demand is upheld. From the records placed, it is seen that the selling price of KHDC at times it is higher than the landed cost and the duty has been discharged on this higher value which has not been disputed by the department, however, the differential duty has been demanded in all those cases where the landed cost is higher than the selling price declared by KHDC. Time Limitation - suppression of facts or not - HELD THAT - It is also on record that the appellants have been filing all these documents before the department in terms of monthly RT-12 Returns and price declarations, therefore, it cannot be alleged that the appellant had mis-declared or suppressed the facts in as much as they had cleared the processed goods on payment of duty at the selling price declared by KHDC and it is also on record that the selling price declared by KHDC is more than the landed cost plus processing charges in some of the cases. Therefore, the fact that the material facts were suppressed or the value was mis-declared is not justified. In the case of Uniworth Textiles Ltd. vs. Commissioner of Central Excise, Raipur 2013 (1) TMI 616 - SUPREME COURT the Supreme Court while dealing with the proviso to Section 11A on limitation observed that in order to attract the proviso to Section 11-A(1) it must be shown that the excise duty escaped by reason of fraud, collusion or willful misstatement of suppression of fact with intent to evade the payment of duty. In the present case, since the facts were known to the department and there is no evidence placed on record for wilful evasion of duty with intent to evade, the question of invoking proviso to Section 11A does not arise. The impugned order is allowed to the extent of confirmation of duty only for the normal period - appeal allowed in part.

Summary

Issues:
- Determination of assessable value based on landed cost and processing charges
- Allegation of mis-declaration and suppression by the Department
- Contest on the issue of time bar for the appellant
- Interpretation of Section 11A for limitation on duty demand

Analysis:
1. The case involved the determination of the assessable value of processed fabrics by M/s. Minerva Mills, considering the landed cost of raw materials, processing charges, and profit, as per Section 4 of the Central Excise Act, 1944. The Department alleged that the appellant mis-declared the value, leading to a re-determination of assessable value based on the principle specified by the Hon'ble Supreme Court. The Commissioner (A) upheld the re-determined value, with the appellant contesting only the issue of time bar, claiming they followed the cost construction method and filed statutory price declarations.

2. The appellant argued that they declared the selling price based on the price declared by Karnataka Handloom Development Corporation (KHDC) for the processed fabric, paying excise duty accordingly. They claimed the processed fabric was not for sale but for free distribution, and the price declared by KHDC included the real cost. The Department objected to the valuation only after issuing specific circulars, leading to a show-cause notice for differential duty. The appellant contended that they had not suppressed any facts, as they consistently filed price declarations and RT-12 returns.

3. The Department's Authorized Representative supported the lower authorities' findings, leading to a re-determination of duty demand by the Commissioner (A) based on the Supreme Court's decision in Ujagar Prints and relevant CBEC circulars. The Tribunal observed that the appellant had discharged duty based on the selling price declared by KHDC, which was higher than the landed cost in some cases. The Tribunal emphasized that there was no evidence of deliberate suppression or mis-declaration by the appellant, citing legal precedents on the interpretation of Section 11A for limitation on duty demand.

4. The Tribunal highlighted that for invoking the extended period of limitation, there must be evidence of fraud, collusion, willful misstatement, or suppression of facts with intent to evade duty payment. Since there was no evidence of deliberate evasion by the appellant, the proviso to Section 11A did not apply. The impugned order was partially allowed, confirming duty demand only for the normal period, as the Department failed to prove intentional evasion of duty by the appellant.

Conclusion:
The judgment focused on the determination of assessable value, allegations of mis-declaration and suppression, contest on the time bar issue, and the interpretation of Section 11A for limitation on duty demand. The Tribunal ruled in favor of the appellant, emphasizing the lack of evidence for intentional evasion of duty, leading to a partial allowance of the appeal.