2024 (11) TMI 987 - AT - Central Excise

Time Limitation - suppression of facts or not - concessional rate of duty - Interpretation of Notification No. 12/2012-CE and subsequent amendments regarding concessional rates of duty for goods falling under Chapter 85 - short payment of Central Excise duty due to misinterpretation of notification - HELD THAT - The appellant had bonafide belief that goods attract 10% as per the rate prescribed under the Notification No.12/2012-CE dated 17.03.2012 even the notification was time bound wherein, the closure date was prescribed of31.12.2014. By amendment in the said notification, the appellant s goods i.e. falling under85441190was excluded by Notification dated 11.07.2014. Since, the notification otherwise prescribed the time limit upto31.12.2014,the appellant had bonafide belief that 10% rate is effective till 31.12.2014. It is only because of the appellant was not aware of the notification, they continued to pay the duty at the rate of 10%. Appellant s bonafide further get reinforced on the ground that the appellant have been declaring the goods with Chapter heading and the rate of duty, at the rate of 10% in their all ER-1 monthly return for the period July, 14 to December,14. The changes were brought by statutory amendment which is otherwise known to the department also. The department was also aware that the appellant prior to 11.07.2014 had been paying the duty at the rate of 10%. The officers have verified those documents while processing the rebate claim and/ or the clearance is under bond. Therefore, all the facts were available on record before the department and nothing was prevented from the department to initiate the action for demanding the differential duty within the normal period. However, the show cause notice for the period July,14 to December, 2014 was issued only on 18.10.2017 by way of show cause notice. Therefore, the entire demand is within the extended period. Since there is no suppression of fact on the part of the appellant, the demand for extended period shall not sustain. Accordingly, the demand of duty confirmed by the lower authorities is set aside on the ground of the time bar itself. The appeal is allowed.

Summary

Issues:
Interpretation of Notification No. 12/2012-CE and subsequent amendments regarding concessional rates of duty for goods falling under Chapter 85; Payment of duty at a concessional rate of 10% for goods falling under CETH 85441190; Allegation of short payment of Central Excise duty due to misinterpretation of notification; Time limitation for demanding duty payment; Bonafide belief of the appellant regarding the applicable rate of duty; Department's awareness of the duty payment discrepancy; Appellant's compliance with declaration of goods and duty rate in ER-1 returns and export documents.

Analysis:
The case involves the appellant's engagement in the manufacture of finished goods falling under Chapter Subheading 85441190 and their payment of Central Excise duty at a concessional rate of 10% based on Notification No. 12/2012-CE. Subsequently, an amendment through Notification No. 12/2014-CE excluded goods falling under CETH 85441190 from the concessional rate, requiring duty payment at 12%. The appellant, unaware of the amendment, continued to pay duty at 10% until 31-12-2014. An audit revealed the discrepancy, leading to a demand for short payment of duty amounting to Rs. 97,59,229/- for the period July to December 2014.

The appellant contested the demand primarily on the grounds of limitation, asserting a bonafide belief in the applicability of the 10% rate until the specified closure date of 31-12-2014. They argued that the department was aware of their duty payment declarations and exports at the 10% rate, indicating no suppression of facts on their part. The appellant cited various judgments to support their claim of time limitation for the demand.

Upon careful consideration, the Tribunal acknowledged the merit of the duty rate being 12% during the relevant period but sided with the appellant on the limitation issue. The Tribunal found that the appellant's bonafide belief in the continued applicability of the 10% rate until 31-12-2014 was reasonable, given their consistent declarations and the department's awareness of the situation. The Tribunal concluded that since there was no suppression of facts by the appellant, the demand for the extended period was not sustainable. Consequently, the demand for duty payment was set aside on the grounds of time limitation, and the appeal was allowed.

The Tribunal's decision highlighted the importance of bonafide belief, departmental awareness, and compliance with declaration requirements in determining the validity of duty demands within the prescribed time limits. The case serves as a reminder of the significance of timely communication of statutory changes and the impact of departmental actions on duty liabilities.