2025 (1) TMI 528 - AT - Central Excise

Failure to pay duty as per the amended provision of law - demand with interest and penalty - extended period of limitation - reduction of the demand of the duty by extending the benefit of cum duty. HELD THAT - It is an admitted fact that there is an omission on the part of appellant to pay excise duty as per the prevailing rate and for that reason the demand is sustainable and they have paid said amount. As regarding the demand against Appeal No. E/27329/2013, it is evident that the appellant was filing ER-1 return from time to time and the omission on the part of appellant to pay the duty as per the Notification was not noticed by the department and only when it is noticed, they failed to demand within the statutory period. Thus considering the delay of issuing the notice, the demand under Appeal No. E/27329/2013 is barred by limitation. As regarding the Appeal No. E/27330/2013, it is found that the appellant is liable to pay duty for the relevant period. However, as regarding the cum duty benefit, the issue was considered by this Tribunal in the matter of Shri Chakra Tyres Ltd., 1999 (3) TMI 100 - CEGAT, NEW DELHI and it is held that ' assessable value is required to be determined in terms of Section 4 of the Act. Sub-section 4(d)(ii) envisages deduction of aggregate effective duty payable on the goods under the Act, and all other Acts, if the wholesale price at which goods are sold includes all such excise duties. Wholesale price is the total consideration received by an assessee against sale of excisable goods in wholesale trade.' The original consideration (including duty, if any) received by the appellant, has to be taken as cum-duty price for the purpose of demand of higher duty, subsequently. Conclusion - i) Total duty proposed to be demanded shall have to be abated from the cum-duty price actually received and liable to be received as a consideration for sale of goods. ii) Excess duty with interest is payable by the appellant. iii) No penalty is explicitly imposed. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the appellant is liable to pay excess duty with interest due to non-compliance with amended provisions of law.
Whether a penalty can be imposed on the appellant for the short payment of duty.
Whether the demand for duty in Appeal No. E/27329/2013 is barred by limitation.
Whether the appellant is entitled to a reduction in the demand of duty by extending the benefit of cum-duty.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Liability to Pay Excess Duty with Interest

Relevant Legal Framework and Precedents: The appellant was required to pay excise duty as per various notifications under the Central Excise Act, 1944. The relevant notifications changed the duty rate over time, which the appellant failed to comply with.
Court's Interpretation and Reasoning: The court found that there was an omission by the appellant to pay the correct excise duty rate, making the demand for the differential duty sustainable.
Key Evidence and Findings: The appellant admitted to the omission and paid the differential duty upon receiving the Show Cause Notice (SCN).
Application of Law to Facts: The appellant's failure to pay the correct duty rate was established, and the demand for excess duty was justified.
Treatment of Competing Arguments: The appellant argued that the omission was due to a lack of awareness of the notification, but the court held the demand valid based on the appellant's admission.
Conclusions: The appellant is liable to pay the excess duty with interest.

Issue 2: Imposition of Penalty

Relevant Legal Framework and Precedents: Penalties under the Central Excise Act, 1944, are typically imposed for non-compliance with duty payment obligations.
Court's Interpretation and Reasoning: The judgment does not explicitly address the imposition of a penalty, focusing instead on the duty liability and cum-duty benefit.
Key Evidence and Findings: The omission was acknowledged by the appellant, but no specific findings on penalties were discussed.
Application of Law to Facts: The court did not apply penalty provisions explicitly in this case.
Treatment of Competing Arguments: Not applicable as the penalty issue was not directly addressed.
Conclusions: The judgment does not impose a penalty on the appellant.

Issue 3: Demand Barred by Limitation (Appeal No. E/27329/2013)

Relevant Legal Framework and Precedents: Section 37C of the Central Excise Act, 1944, governs the service of notices and the limitation period for demands.
Court's Interpretation and Reasoning: The court found that the SCN was not served within the statutory period, rendering the demand time-barred.
Key Evidence and Findings: The SCN was received by the appellant after the statutory period had lapsed, as evidenced by the dates of filing and receipt.
Application of Law to Facts: The court applied Section 37C to determine that the notice was not served in time, thus barring the demand by limitation.
Treatment of Competing Arguments: The appellant's argument regarding the timing of the SCN was accepted by the court.
Conclusions: The demand in Appeal No. E/27329/2013 is barred by limitation.

Issue 4: Entitlement to Cum-Duty Benefit

Relevant Legal Framework and Precedents: Section 4 of the Central Excise Act, 1944, and related case law, including the decision in Shri Chakra Tyres Ltd., address the concept of cum-duty pricing.
Court's Interpretation and Reasoning: The court followed the precedent set in Shri Chakra Tyres Ltd., determining that the original consideration received by the appellant should be treated as a cum-duty price.
Key Evidence and Findings: The appellant's sale prices included the duty element, and the court found that additional duty demands should be abated from this cum-duty price.
Application of Law to Facts: The court applied the principles from the precedent to grant the appellant the benefit of cum-duty pricing.
Treatment of Competing Arguments: The appellant's reliance on the precedent was upheld, countering the respondent's position.
Conclusions: The appellant is entitled to the cum-duty benefit for the differential duty demand.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes of Crucial Legal Reasoning: "Total duty proposed to be demanded shall have to be abated from the cum-duty price actually received and liable to be received as a consideration for sale of goods."
Core Principles Established: The judgment reinforces the principle that demands for additional duty must consider the cum-duty price and that demands not served within the statutory period are barred by limitation.
Final Determinations on Each Issue:
- Excess duty with interest is payable by the appellant.
- No penalty is explicitly imposed.
- The demand in Appeal No. E/27329/2013 is barred by limitation.
- The appellant is entitled to the cum-duty benefit for the demand in Appeal No. E/27330/2013.