2013 (4) TMI 644 - AT - Central Excise

Valuation - inclusion of charity/dharmada in the valuation for the purpose of excise duty - Extended period of limitation - held that - Held that - A ordinary citizen, in our view, under the ordinary course of circumstances cannot be expected to keep track of the judgment of various Courts. He is not expected to know about the law laid down by judicial pronouncement unless he comes across the judgment itself. The judgment of Supreme Court in the matter of Panchmukhi Engineering Works 2002 (11) TMI 122 - SUPREME COURT was published in the year 2003 - Even Central Board of Excise & Customs issued clarificatory circular pursuant to aforesaid judgment on 21-11-2003, therefore, it would be unfair to infer that the appellant was aware the law laid down by the Supreme Court in the matter of Panchmukhi Engineering Works (supra) immediately after the pronouncement of judgment on 28-11-2002. There is no reason to impute mala fide intention on the party of the appellant to evade the excise duty by deliberately not included the Dharmada charges in the transaction value. Undisputedly, it is not a case of fraud or dishonest concealment of fact. - Demand set aside being beyoind the normal period of limitation - Decided in favor of assessee.

Summary

Issues:
- Whether the Department was justified in invoking the extended period of five years for raising the duty demand.
- Whether the appellant deliberately concealed and suppressed facts to evade excise duty liability.
- Whether the demand raised by the Department is barred by limitation.

Analysis:
1. Extended Period of Five Years: The central issue in this case was whether the Department was justified in invoking the extended period of five years for raising the duty demand. The Tribunal examined Section 11A(1) of the Central Excise Act, which allows for the extension of the limitation period to five years in cases of fraud, collusion, or suppression of facts with the intent to evade excise duty. The Tribunal noted that the Department was aware of the appellant's practice regarding "Dharmada charges" as previous show cause notices on the same issue had been decided in favor of the appellant. Additionally, legal interpretations and precedents supported the appellant's position. The Tribunal concluded that there was no fraud, concealment, or suppression of facts by the appellant, and thus, the demand raised beyond the one-year period was not sustainable and barred by limitation.

2. Concealment of Facts: The second issue revolved around whether the appellant deliberately concealed and suppressed facts to evade excise duty liability. The Department argued that the appellant had not included "Dharmada charges" in the transaction value for excise duty purposes, which was discovered during an audit. However, the Tribunal found that the appellant had been following a consistent practice based on legal interpretations prevailing at the time. The Tribunal emphasized that the appellant was not obligated to track judicial judgments unless directly affected by them. The Tribunal rejected the contention that the appellant deliberately concealed the non-inclusion of "Dharmada charges" post the Supreme Court judgment, as it was unreasonable to expect immediate awareness of legal changes without explicit notification.

3. Limitation Bar: The final issue centered on whether the demand raised by the Department was barred by limitation. The Tribunal held that since there was no evidence of fraud or intentional concealment by the appellant, the demand raised beyond the one-year period was not justifiable. The Tribunal highlighted that the Department's awareness of the appellant's practices and legal interpretations supported the appellant's position. Consequently, the Tribunal concluded that the demand was indeed barred by limitation and set aside the impugned order, ruling in favor of the appellant.

In conclusion, the Tribunal found that the Department was not justified in invoking the extended period of five years, as there was no evidence of fraud, concealment, or suppression of facts by the appellant. The demand raised beyond the one-year period was deemed barred by limitation, leading to the acceptance of the appeal and the setting aside of the impugned order.