2017 (1) TMI 1277 - AT - Central Excise

Valuation - demand of differential central excise duty on the ground that the retained amount is not actually paid as VAT to Government and hence will be additional consideration to be added in value for central excise levy - Held that - reliance placed in the appellant s own case on similar issue, for the earliar period M/s Emsons Organics Pvt Ltd Versus Commissioner of Central Excise, Chandigarh-II 2016 (2) TMI 284 - CESTAT NEW DELHI where it was held that the appellants are liable to pay the Central Excise duty as per the valuation determined in the impugned order the demand for extended period cannot be sustained - the main appellant is liable to pay Central Excise duty as per valuation determined in the impugned order alongwith interest and no penalty is imposable - appeal disposed off - decided against Assessee.

Summary

Issues:
Appeal against confirmed duty demand, penalty imposition, interpretation of sales tax deduction for central excise valuation, applicability of extended period of limitation.

Analysis:
The appellants contested the demand of duty confirmed for the period from January 2008 to October 2008, along with interest and penalty imposed on the co-appellant. The issue arose as the appellants retained a certain amount from VAT received on the sale of finished goods, as per a scheme announced by the Punjab Government. The central excise duty demand was based on the argument that the retained amount was not paid as VAT to the government, leading to additional consideration for central excise levy. The Tribunal examined the case based on the earlier Final Order and Supreme Court judgments regarding sales tax deduction for central excise valuation.

The Tribunal observed that the issue of sales tax deduction for central excise valuation was subject to dispute and interpretation during the relevant time. Referring to previous Tribunal decisions and circulars issued by the Board, the Tribunal highlighted the varying interpretations and legal positions on the matter. The Tribunal also cited a Supreme Court judgment that emphasized the entitlement of industrial units to the benefit of the circular protecting incentive schemes. It was noted that the show cause notice did not elaborate on the reason for invoking the extended period, leading to a lack of clarity on the issue.

Considering the above discussion, the Tribunal concluded that while the appellants were liable to pay central excise duty as per the valuation determined in the impugned order, the demand for the extended period could not be sustained. Therefore, the penalty on the appellants was set aside. The Tribunal emphasized the possibility of a bona fide doubt regarding the quantum of deduction of sales tax due to different interpretations prevalent at the time. Consequently, the appeal was partly allowed, confirming the duty demand with interest against the main appellant but setting aside the penalties imposed on all appellants.

In summary, the Tribunal confirmed the duty demand with interest against the main appellant but set aside the penalties imposed on all appellants. The judgment highlighted the complexity of interpreting sales tax deduction for central excise valuation during the relevant period and the necessity of a bona fide doubt for invoking the extended period of limitation.