2013 (12) TMI 278 - AT - Central Excise

Provisional assessment - Principle of unjust enrichment - Adjustment of the excess paid with the short-paid duty Held that - Excel Rubber Ltd. v. CCE, Hyderabad 2011 (3) TMI 527 - CESTAT, NEW DELHI (LB) - even in respect of provisional assessments, no adjustments can be held to be permissible at the time of finalization of the assessment - the assessment were not provisional and as such the benefit of neutralization cannot be extended. Admissibility of the Notification No. 53/2001 Held that - The benefit of the notification in respect of the differential demand of duty could not have been availed by them at the time of original clearance of the goods - The appellant had availed the benefit, without any objection, at the time of the original clearance of the processed fabrics, relatable to the duty paid by them at that time - If the Revenue is subsequently making a demand of the differential duty, the same has to be subject to the benefit of the notification available. Extended period of Limitation Held that - An assessee is required to pay duty on the correct assessable value at the time of clearance of the goods - the variation in job charges amount was known to the assessee prior to the clearance of the processed fabrics - the less payment of duty was not intentional and was on account of error on the part of the assessee - Had it been intentional, the appellant would not have paid higher duty on the other clearances - it is clear that there was no ulterior motive on the part of the assessee to evade payment of duty - the extended period of limitation would not be available to the Revenue order set aside and the matter remanded back to the adjudicatory authority for recalculation of duty demand within the period of limitation and by extending the benefit of Notification No. 53/2001- there was no mala fide intention on the part of the appellant, imposition of any penalty on them is not justified Decided in favour of Assesse.

Summary

Issues Involved:
- Calculation of duty on processed fabrics based on job work charges
- Variations in job charges leading to excess or short payment of duty
- Show cause notice for demand of duty and penalty
- Adjustment of excess paid duty against short-paid duty
- Availability of deemed credit notification
- Legal position on adjustment of duty payments
- Limitation period for issuing show cause notice
- Intentional evasion of duty
- Decision on setting aside the impugned order
- Recalculation of duty demand within the limitation period
- Imposition of penalty based on mala fide intention

Analysis:

Calculation of Duty on Processed Fabrics:
The appellant was engaged in processing fabrics on a job work basis, paying excise duty based on the Ujagar Prints formula. This formula included the cost of raw material, processing charges, and the appellant's profit margin.

Variations in Job Charges:
The appellant faced issues when job charges for fabrics changed after the initial agreement with the manufacturer, leading to excess or short payment of duty. Central Excise officers identified instances of short payment during a factory visit, resulting in the issuance of a show cause notice.

Adjustment of Excess Paid Duty:
The appellant admitted to the excess payment of duty due to not adjusting job charge variations, offering to deposit the balance amount. However, the Adjudicating Authority ruled against adjusting excess paid duty against short-paid duty, suggesting the appellant file a refund claim.

Availability of Deemed Credit Notification:
The appellant sought to avail the benefit of Notification No. 53/2001 for deemed credit on excess duty paid. The Tribunal agreed that the benefit of the notification should apply to the additional duty confirmed against the appellant.

Limitation Period and Intentional Evasion:
The Tribunal analyzed the limitation period for issuing the show cause notice and concluded that the Revenue's claim fell beyond the limitation period. They also found no intentional evasion of duty by the appellant, considering the circumstances of excess duty payment.

Decision and Recalculation of Duty Demand:
The Tribunal set aside the impugned order, remanding the matter for recalculation of duty demand within the limitation period, extending the benefit of the notification. They also ruled out imposing a penalty due to the absence of mala fide intention.

Conclusion:
The Tribunal's decision favored the appellant, emphasizing the lack of intentional evasion and the need for a fair assessment of duty demand within the legal framework. The case highlighted the importance of correctly calculating duty payments and addressing variations in job charges to avoid discrepancies and ensure compliance with excise regulations.