2015 (9) TMI 150 - HC - Central Excise

Disallowance of deemed credit - Suppression of value of goods - Held that - There is a specific finding of fact that there is nothing on record which would show that the processors had personal knowledge regarding inflation of valuation of goods. Perusal of the impugned Judgment would also reveal that the learned Tribunal has found that except the statement of the Dyeing Master, no material was placed on record by the Revenue to substantiate their contention with regard to fraud or suppression. As to whether the Dyeing Master has a specialised knowledge regarding valuation of goods or not is also purely a question of fact. It also appears that nothing has been placed on record to substantiate the contention that the Dyeing Master has expertise in valuation of goods. In that view of the matter, it cannot said that the view taken by the learned Tribunal is either an impossible or perverse. - Decided against Revenue.

Summary

Issues:
- Disallowance of deemed credit for grey fabric valuation
- Allegations of overvaluation and excess credit by processors
- Confirmation of duties and penalties by Commissioner
- Tribunal's decision on setting aside duty for certain periods
- Appeal against Tribunal's decision by Revenue
- Invocation of extended period of limitation
- Question of fraud or suppression for earlier period
- Tribunal's findings on lack of evidence for fraud
- Lack of substantial question of law in the appeal

Issue 1: Disallowance of deemed credit for grey fabric valuation
The Revenue challenged the CESTAT's order directing the adjudicating authority to quantify demands for December 2002 by disallowing deemed credit for grey fabric valuation. The CESTAT limited the disallowance to the actual extent of inflation in the value of grey fabric cleared for export under bond, setting aside the rest of the duty demand and penalties on processors and other entities.

Issue 2: Allegations of overvaluation and excess credit by processors
The Revenue alleged that merchant exporters overvalued grey fabrics supplied to processors by producing fake bills, leading to excess deemed credit availment by processors. The processors were accused of not following the correct procedure by declaring higher assessable values, contravening Central Excise Act and Cenvat Credit Rules.

Issue 3: Confirmation of duties and penalties by Commissioner
The duties and penalties confirmed by the Commissioner were partially set aside by the Tribunal, upholding duty for December 2002 but setting aside duty for other periods and consequential penalties. This led to the Revenue's appeal against the Tribunal's decision.

Issue 4: Tribunal's decision on setting aside duty for certain periods
The Revenue argued that the Tribunal erred in setting aside duty for periods other than December 2002. The contradictory findings in the Tribunal's order were highlighted, questioning the justification for a different view for earlier periods when the department's stand was upheld for December 2002.

Issue 5: Invocation of extended period of limitation
The respondent contended that demands for periods other than December 2002 were beyond the period of limitation unless fraud or suppression was proven. The question of invoking the extended period of limitation was considered a factual matter, relying on precedent judgments for dismissal of the appeal.

Issue 6: Question of fraud or suppression for earlier period
The authority's jurisdiction for earlier periods was disputed due to falling beyond the normal limitation period without evidence of fraud or suppression. The determination of fraud or suppression was deemed a factual issue based on evidence, with reliance on the Division Bench's judgment for supporting arguments.

Issue 7: Tribunal's findings on lack of evidence for fraud
The Tribunal's specific finding indicated a lack of evidence showing processors' personal knowledge of valuation inflation. The absence of material substantiating fraud or suppression, except for the Dyeing Master's statement, raised questions on the lack of expertise in valuation and the absence of conclusive evidence.

Issue 8: Lack of substantial question of law in the appeal
Upon reviewing the material and judgment, it was concluded that no substantial question of law arose in the appeal. The Tribunal's decision was deemed reasonable, with no grounds for interference identified. Consequently, the appeal was rejected.