2025 (3) TMI 192 - AT - Central Excise

Valuation of goods manufactured by the appellant during the period from 28.08.1986 to 31.03.1989 - HELD THAT - It is an admitted fact that the dispute pertains to the period from 28.08.1986 to 31.03.1989 and the issue is coming up for hearing for the third time. The appellant was following the procedure laid down in Rule 173C (11) of Central Excise Rules 1944 and duty payment was based on value shown in the SDAs. It was further sold by the sister concern of the appellant at higher rate by adding additional items as optional items including battery etc. which are manufactured by other manufactures. Even as per the statement of the Senior Manager dated 30.10.1990 the purchase order was received from sister concern M/s. Keltron controls and transactions were regulated through Sectional Debit Advices (SDAs). He also stated that the appellant was not aware of the original orders of M/s. Keltron controls and has also not verified the invoices of M/s. Keltron controls regarding sale of UPS system including optional items and the excise duty remittance was not based on the realization of the amount by their sister concern M/s. Keltron controls. The original Adjudicating Authority only after considering the above facts held that since the appellant had filed SDAs along with RT-12 Returns and when it is made available to the concerned officer there is a failure on the part of department to probe the matter further and due to that reason the demand invoking the extended period of limitation and penalty proposed in the show cause notice were dropped. Thus in the facts and circumstances of the case invoking extended period of limitation is unsustainable. Considering the above demand if any for the normal period is confirmed in accordance with law. The demand by invoking the extended period of limitation and penalty imposed as per the impugned order on the appellant are set aside. Conclusion - The penalty imposed were not justified due to the lack of evidence of undervaluation or suppression of facts by the appellant. Appeal allowed in part.

Summary

The case involves M/s. Kerala State Electronic Development Corporation, Ltd. (KSEDC) appealing a dispute regarding the valuation of goods manufactured by them during the period from 28.08.1986 to 31.03.1989. The core issue revolves around the procedure followed by the appellant for clearing UPS systems and the valuation of these goods.**Issues Presented and Considered:**1. Whether the appellant undervalued the goods manufactured during the specified period?2. Whether the demand for payment of differential duty and imposition of penalty is justified?3. Whether the extended period of limitation can be invoked in this case?**Issue-wise Detailed Analysis:****Issue 1: Valuation of Goods**- The appellant followed Rule 173C (11) of Central Excise Rules, 1944 for clearing UPS systems.- The Adjudication Authority initially found no suppression of facts by the appellant.- The appellant's Senior Manager admitted to the procedure followed in transactions with sister concern M/s. Keltron Controls.- The Adjudication Authority observed a failure on the part of the department to probe further into the matter.- The Tribunal found that the demand for the extended period of limitation was unsustainable due to lack of evidence of undervaluation.**Issue 2: Differential Duty and Penalty**- The initial demand for payment of differential duty and penalty was based on alleged undervaluation of goods.- The Adjudication Authority confirmed the demand and imposed a penalty under Rule 173Q of Central Excise Rules, 1944.- The Tribunal set aside the demand and penalty, finding no suppression of facts by the appellant.**Issue 3: Extended Period of Limitation**- The dispute spanned multiple years and hearings.- The Tribunal found that invoking the extended period of limitation was unsustainable.- The demand for the normal period was confirmed, while the demand for the extended period and the penalty were set aside.**Significant Holdings:**- The Tribunal concluded that the demand for the extended period of limitation and the penalty imposed were not justified due to the lack of evidence of undervaluation or suppression of facts by the appellant.- The Tribunal partially allowed the appeal, confirming the demand for the normal period and setting aside the demand for the extended period and the penalty.In conclusion, the Tribunal ruled in favor of the appellant, finding no evidence of undervaluation or suppression of facts. The demand for the extended period of limitation and the penalty were set aside, while the demand for the normal period was confirmed.