2015 (8) TMI 244 - HC - Central Excise

Suppression of facts - Extended period of limitation - Valuation - Job work - Held that - Tribunal found that whenever grey fabrics were received for processing from Kandivli Unit of assessee the price lists were filed. The name of the assessee as owner of manufacturer of grey fabrics was indicated in the remarks column. The grey fabrics received from third party at Dombivli unit for processing were indicated in the price list in that behalf in the similar column. Further, the assessee never suppressed that it adopted a certain method of valuation and the formula emerging from the judgment of the Supreme Court in Ujagar Prints (1989 (1) TMI 124 - SUPREME COURT OF INDIA). That method or formula may have been incorrect or not the applicable one, but the revenue proceeded to approve the price list. The revenue had several options and remedies so also courses open in law and precisely under the Central Excise Act, 1944. The Tribunal indicates as to how the Revenue could have insisted on the revision of the price list if the Ujagar formula was inapplicable. If this was the course adopted by the Revenue while scrutinizing and verifying the records and for purpose of assessment, then, the Tribunal rightly concluded that nothing prevented the Revenue from questioning the stand of the assessee. If the Ujagar formula was inapplicable or was misapplied to the given facts and circumstances, then, the revenue could have proceeded and in accordance with law. If it has omitted to do it, then, it cannot turn around and allege suppression or mis declaration on the part of the assessee. This is a finding of fact emerging from the materials produced on record. - The adjudication by the Tribunal in the appeal is within the four corners of Section 11A and the ingredients thereof required to be established by the Revenue. This is how it proceeded and held in favour of the assessee, then, the order in that behalf cannot be held to be vitiated and to such an extent as would enable us to answer the substantial question of law in favour of the Revenue. - Decided against Revenue.

Summary

Issues:
Challenge to order passed by Customs, Excise and Service Tax Appellate Tribunal - Allegations of wilful misstatement and suppression by the assessee - Interpretation of relevant legal provision (Section 11A of the Central Excise Act, 1944) - Consideration of findings by Tribunal - Dispute over extended period of limitation for duty recovery - Assessment of factual materials and allegations against the assessee.

Analysis:
The judgment by the High Court of Bombay pertains to an appeal challenging the order passed by the Customs, Excise and Service Tax Appellate Tribunal. The primary issue revolves around the allegations of wilful misstatement and suppression by the assessee, which are crucial for invoking the extended period of limitation for duty recovery under Section 11A of the Central Excise Act, 1944. The Revenue contends that the Tribunal failed to consider the specific allegations in the show cause notice related to wilful misstatement of facts or suppression by the assessee. It argues that if the foundation for the notice fell within the legal provisions, the extended period of five years could have been applied.

On the other hand, the assessee's representative supports the findings of the Tribunal, emphasizing that the factual materials presented by the Revenue did not establish suppression, hence rendering the extended period of limitation unavailable. The Court carefully analyzed the show cause notice issued in 1996, detailing the allegations of evasion of central excise duty by misdeclaring and suppressing actual sale values of fabrics. The Tribunal's decision hinged on whether the demand raised in the notice was barred by limitation.

The Tribunal found that the assessee had not suppressed its valuation method, even though it might have been incorrect. It highlighted that the Revenue had various options to challenge the valuation method, including revising the price list if necessary. The Tribunal concluded that the Revenue's failure to act on discrepancies in valuation did not justify alleging suppression or misdeclaration by the assessee. The judgment emphasized that the Tribunal's decision aligned with the requirements of Section 11A and the burden on the Revenue to establish the necessary ingredients for duty recovery.

In summary, the High Court upheld the Tribunal's decision in favor of the assessee, dismissing the Revenue's appeal. The Court found no legal infirmities or perversity in the Tribunal's assessment of the factual materials and concluded that the allegations of suppression were not proven, thereby rejecting the Revenue's challenge to the order.