2016 (9) TMI 1131 - AT - Central Excise

SSI Exemption - Valuation - Notification No. 8/2003-CE dated 1.3.2003 - retail prices charged to customers in the shop - Held that - appellant pleaded that the department added the value of even non-excisable goods and exempted excisable goods which are to be excluded as per the Notification No. 8/2003-CE. In this regard, we observe that the assessee/appellant is correct that for deciding on the eligibility of exemption Notification No. 8/2003-CE the turnover is to be computed after excluding the value of non excisable and exempted excisable goods. Revenue has to follow this principle that value of non-excisable and non exempted goods are not to be added when the turnover is computed to decide on the entitlement to benefit of Notification No. 8/2003-CE. Assessee has been manufacturing various kind of items and some of these items may not have the facility of abatement under Central Excise law. Assessable value has to be determined by reducing the sale price in such a manner so as to arrive at the price on which the manufacturer would have sold the said goods in wholesale. It is to be noted that value has been defined in Explanation (c) to the Notification No. 8/2003; therefore, total turnover to decide on eligibility is to claim benefit of Notification No. 8/2003 to be computed by totalling the value of specified goods only. The submission of the assessee for giving them the benefit of abatement is correct; and assessable value of excisable items being manufactured by the assessee/appellant is to be arrived at after giving them the benefit of abatement. The appellants have referred to a copy of Notification No. 14(NT) dated 1.3.2008 claiming the facility of abatement, whereas the goods have been assessed at the retail sale price of subject items. This aspect has not been discussed by the lower authorities, when it is so then the department has to consider/give abatement as admissible for the goods being manufactured by the assessee before arriving at the liability of central excise duty against the assessee. The matter, therefore, deserves to be remanded to the original adjudicating authority for deciding afresh the liability of Central Excise duty of the appellant unit after calculating the correct turnover (i.e. after deducting the value of non-excisable and exempted excisable goods) and further after giving the benefit of abatement as applicable in respect of the items manufactured, which are under abatement facility. Proper opportunity of being heard shall be provided to the appellant as per law. Invokation of extended period of limitation - assessee has been in correspondence with the department since the year 1998 - numerous letters and correspondence between the assessee and department on the problems faced by them - regular returns with the department on the goods manufactured were filed by the assessee - Held that - it is established that there has not been any suppression of facts or wilful misstatement on the part of the appellants. Therefore, for the present facts law of Central Excise does not permit the Revenue to invoke extended period of limitation. In other words, Deptt. cannot issue demand for the period beyond one year from the relevant date, which is the date of Show Cause Notice (SCN). Therefore, demand for the period beyond one year is set aside and demand for the period of one year preceding the relevant date which is 29.12.2006, the date of SCN, is sustained. Imposition of penalty - Held that - it is clear that the appellant No. 2 Shri Atul Tandon, partner in the appellant No. 1 firm has not knowingly been involved in any manner in contravention of laws of Central Excise with reference to the subject goods making the said goods liable to confiscation under the law of Central Excise. Therefore, the penalty of ₹ 5 lakhs imposed on the appellant No. 2 Shri Atul Tandon, partner of the appellant No. 1 assessee under Rule 26 of Central Excise Rules, 2002 is hereby set aside. - Appeal disposed of

Summary

Issues:
1. Valuation of goods and admissibility of benefit of exemption Notification No. 8/2003-CE dated 1.3.2003.
2. Invocation of extended period of limitation.
3. Levy of penalty.

Valuation of goods and admissibility of benefit of exemption Notification No. 8/2003-CE dated 1.3.2003:
The appellant argued that non-excisable and exempted excisable goods should be excluded from turnover calculation for claiming the benefit of the notification. The tribunal agreed, emphasizing that the turnover should be computed by excluding the value of such goods. The assessable value must consider abatement under Central Excise law, as supported by relevant case law. The department was directed to reevaluate the central excise duty liability after deducting the value of non-excisable and exempted excisable goods and providing the benefit of abatement.

Invocation of extended period of limitation:
The tribunal found that there was no suppression of facts or wilful misstatement by the appellants, as evidenced by their correspondence with the department since 1998 and regular return filings. Therefore, the Revenue could not invoke the extended period of limitation beyond one year from the date of the Show Cause Notice. The demand for the period beyond one year was set aside, and the demand for the preceding one year was sustained.

Levy of penalty:
Regarding the penalty imposed on one of the appellants, it was noted that there was no knowing involvement in contravention of Central Excise laws. As a result, the penalty was set aside. The matter was remanded to the original adjudicating authority for quantification of the demand for one year and any potential penalty against the main appellant within three months.

In conclusion, the tribunal set aside the demand for the period beyond one year, confirmed the demand for the preceding year, and dropped the penalty imposed on one of the appellants. The main appellant's case was remanded for further assessment, while the appeal of the second appellant was allowed.