2016 (7) TMI 1117 - AT - Central Excise

Demand of duty - extended period of limitation - clearances made to Indian Army by the appellant and the hub extension - Held that - we find on fact that ER-I return for May, 2013 has been submitted on 07-06-2013 and acknowledgement receipt thereof obtained on 10-06-2013. This being so, any notice for alleged infraction of law with respect to the aforesaid invoice should have been issued, and served on the respondent within a period of one year from the date of filing of the said return ie. on or before 06-06-2014. The respondent has produced acknowledgement issue dot them having received the impugned show cause notice dated on 13-06-2014. - Demand is hit by limitation. Valuation - receipt of additional consideration - Held that - In any case, to qualify as additional amount, over and above the agreed prices should have passed from the buyer to the manufacturer/respondent of which there has been no proof adduced by the department. Further, even in the Tribunal Final Order dated 30-06-2014 relied upon by the appellant/Revenue treated only project management, documentation, and non-recurring expenditure as includible in the assessable value of missiles etc. Demand set aside - Decided in favor of assessee.

Summary

Issues:
1. Time-barred demands in show cause notices.
2. Dropping of demands related to specific items.
3. Legal grounds for appeal by the Revenue.

Analysis:

Issue 1: Time-barred demands in show cause notices
The case involved a show cause notice issued by the Revenue regarding the non-inclusion of additional consideration in the transaction value of goods cleared during a specific period. The order-in-original confirmed the demand, but on appeal, the Tribunal remanded the case to the adjudicating authority. Meanwhile, the respondent received two more show cause notices for subsequent periods. The final order issued by the adjudicating authority dropped some demands as time-barred, while confirming others. The respondent argued that one demand was time-barred as the notice was served beyond the one-year limitation period from the date of filing the required return. The Tribunal agreed, noting that the notice was served after the limitation period, thus upholding the lower authority's decision to drop the demand.

Issue 2: Dropping of demands related to specific items
The Revenue appealed against the dropping of demands related to specific items like MRLS, SMTs, STE, and ECN. The respondent contended that these items were not integral to the ground support equipment but were bought-out items supplied to the Army at agreed prices. The adjudicating authority found that duty was already paid on these items and they were not liable for duty again. The Tribunal agreed, emphasizing that there was no proof of additional consideration passing from the buyer to the manufacturer. The Tribunal also highlighted that previous orders only included specific expenses in the assessable value of certain items, further supporting the decision to drop the demands related to these specific items.

Issue 3: Legal grounds for appeal by the Revenue
The Revenue appealed on the grounds of dropping demands due to time-barred notices and the exclusion of certain items from duty liability. The Tribunal carefully considered the arguments from both sides and found no legal basis to interfere with the lower authority's decision. Consequently, the appeal was dismissed, affirming the order-in-original's findings and the dropping of certain demands based on legal and factual analysis.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT HYDERABAD highlights the key issues, arguments presented, and the Tribunal's reasoning behind upholding the lower authority's decision in the case.