2013 (8) TMI 386 - AT - Central Excise

Short paid duty - undervaluation of goods - Commissioner confirmed demand - Held that - show cause notices were issued on the ground that the Appellant undervalued their goods in comparison with the assessable value of the goods cleared to others under the Appellant s own name, Yule Shakti , whereas the learned Commissioner confirmed the demand on the ground that the Appellant did not submit a copy of the Agreement. However, the learned Commissioner at Para 8(xvi) of his Order, has recorded that a copy of the Agreement dated 11.6.1982 entered into between the Appellant and M/s. Goodyear, was submitted. Surprisingly, he has not given any finding in regard to the copy of the Agreement produced by the Appellant - It is well-settled principle that the already approved Price Lists cannot be re-opened retrospectively. So far as invoking the extended period is concerned, the Department is required to show that the assessee had suppressed the material facts from the Department - Department could not show that the appellant had suppressed the material facts from the Department - demand-cum-show cause notices are hit by limitation of time and therefore, the impugned Order does not survive - Decided in favour of assessee.

Summary

Issues:
1. Undervaluation of goods leading to short-payment of Central Excise Duty.
2. Allegation of suppression of facts and non-submission of agreement copy by the Appellant.
3. Invocation of extended period for raising demand beyond the normal limitation period.

Issue 1: Undervaluation of goods and Short-payment of Central Excise Duty:
The Appellant, a Public Sector Undertaking, was accused of undervaluing their goods, resulting in short-payment of Central Excise Duty. The proceedings were initiated for the period from April 1983 to July 1984 and August 1984 to March 1988, amounting to Rs. 59,36,050.82. The Appellant contended that they had a contractual agreement with another company to supply goods at a lower price under specific terms. They argued that the Department wrongly compared their prices with wholesale prices, emphasizing the contractual nature of their pricing. The Appellant claimed that all price lists were approved, and demands raised beyond the six-month limitation period were time-barred. The Tribunal noted discrepancies in the Commissioner's findings and held that the demand was beyond the scope of show cause notices, ultimately allowing the appeal based on limitation grounds.

Issue 2: Allegation of Suppression of Facts and Non-submission of Agreement Copy:
The Appellant's defense included submitting that they had provided the agreement copy along with price lists, contrary to the Commissioner's assertion of non-submission. The Commissioner's failure to address this discrepancy raised questions about the basis of the demand. The Tribunal emphasized the importance of approved price lists, which cannot be retrospectively challenged. The Department's failure to demonstrate material fact suppression by the Appellant further weakened the case against them. The Tribunal found that the Commissioner's order exceeded the show cause notice's scope and ruled in favor of the Appellant on the grounds of limitation, without delving into the case's merits.

Issue 3: Invocation of Extended Period for Raising Demand:
The Department invoked the extended period for raising demands, alleging undervaluation by the Appellant. However, the Tribunal highlighted the necessity for the Department to prove material fact suppression to justify invoking the extended period. Citing precedent cases, the Tribunal emphasized that the Department's awareness of the manufacturing process and approved documents indicated no intent to evade duty. The Tribunal concluded that the Department failed to establish material fact suppression, rendering the demand-cum-show cause notices time-barred. Consequently, the Tribunal allowed the appeal solely on limitation grounds, without addressing the case's substantive merits.

This judgment by the Appellate Tribunal CESTAT Kolkata delves into the complexities of undervaluation of goods, allegations of suppression of facts, and the invocation of the extended period for raising demands in the context of Central Excise Duty. The detailed analysis showcases the importance of documentary evidence, approved price lists, and the burden of proof on the Department to establish material fact suppression. Ultimately, the Tribunal's decision to allow the appeal based on limitation grounds highlights the significance of procedural adherence and the scope of show cause notices in legal proceedings.