2014 (8) TMI 533 - AT - Central Excise

Extended period of limitation - Valuation of goods - Job work - delay in finalization of provisional assessment - adjudicating authority has held that such finalisation was got done by the appellants with the ulterior motive of evasion of central excise duty - Held that - We really fail to understand the above reasoning of the adjudicating authority. - The finalisation of the provisional assessments has to be done by the Central Excise authorities and not by the appellants. It is also a fact that the Central Excise authorities having jurisdiction over the appellants factory were keeping the assessments provisional in as much as the assessments at the end of M/s. GSK were provisional. They were aware of the said fact as also of the fact that the assessable value at the appellants end has to be based upon the value of the raw-materials manufactured by M/s. GSK and supplied by them. As such, the entire facts were in the knowledge of the Revenue. As soon as the provisional assessments at the end of M/s. GSK were finalised, the Central Excise authorities having jurisdiction over the appellants factory also finalised their assessments. As such, finalisation has to be held as having been done by the Central Excise officers after verifying all the facts at the appellants end as also at the end of M/s. GSK. The said finalised assessments never stands appealed against by the Revenue and as such have attained finality. In this scenario, invocation of longer period of limitation against the appellants on the ground that they got the assessments finalised from the Central excise authorities by mis-representing the facts cannot be appreciated. - Demand barred by limitation - Decided in favour of assessee.

Summary

Issues:
1. Finalization of provisional assessments for the manufacturing of Boost.
2. Allegation of evasion of central excise duty by the appellants.
3. Dispute regarding the limitation period for raising the demand of duty.

Analysis:

Issue 1: Finalization of Provisional Assessments
The appellants were engaged in manufacturing malt extracts and food preparations, including "Boost" on a job work basis for another company. The assessable value of Boost was determined based on raw materials supplied by the other company, manufacturing cost, and profit. The assessments were kept provisional at both ends until the finalization of raw material production costs by the other company. The appellants' assessments for the years 2000-2002 were finalized after the other company's costs were determined. However, a subsequent inquiry revealed that the other company had raised the cost of raw materials, leading to a duty demand against the appellants.

Issue 2: Allegation of Evasion of Central Excise Duty
A Show Cause Notice was issued against the appellants for a demand of duty for the period 2000-2003, alleging non-inclusion of increased raw material costs in the assessable value of the final product. The lower authorities confirmed the demand, along with interest and penalties, citing intentional evasion of duty by the appellants. The Commissioner invoked the extended period of limitation, attributing the evasion to the appellants' intentional misrepresentation during the finalization of provisional assessments.

Issue 3: Dispute Regarding Limitation Period
The appellants contested the demand on the grounds of limitation, arguing that the assessments were finalized in 2002-2003, making the demand raised in 2005 time-barred. The Commissioner, however, upheld the demand, stating that the extended limitation period was valid due to the appellants' alleged intent to evade duty. The appellants challenged this reasoning, emphasizing that the finalization of assessments was done by the Central Excise authorities after verifying all facts, and the assessments had attained finality without any appeal from the Revenue.

In conclusion, the appellate tribunal sided with the appellants, holding that the demand was indeed barred by limitation. They set aside the demand and allowed the appeal, providing consequential relief to the appellants. The judgment highlighted the importance of proper assessment finalization procedures and the significance of adhering to statutory limitations in raising duty demands.