2017 (2) TMI 881 - AT - Central Excise

Valuation - job work - packing machinery provided by principal to appellant - time limitation - Held that - the issue was not free from doubt - during the period of demand i.e. October, 98 to February, 99 the judgment of Marathwada Glass was prevailing according to which the appellant was not required to include the amortization cost of the packing machine supplied free of cost by the principal. Therefore, the extended period of limitation is not invokable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Limitation period for demand of duty related to job-work basis manufacturing for a specific period.

Analysis:
The case involved the appellant engaged in manufacturing goods on job-work basis for a principal company and discharging excise duty based on cost data. The dispute arose when the department argued that the value of packing machinery provided by the principal company should be included in the assessable value of the goods. The original authority upheld this view, leading to the appellant filing an appeal before the Commissioner (Appeals) who confirmed the demand of duty, interest, and penalty. The appellant then appealed to the tribunal, challenging the limitation period for the demand.

The appellant's appeal primarily focused on the limitation aspect, contending that the demand pertained to a period from October 1998 to February 1999, while the show-cause notice was issued on March 1, 2002, making it time-barred. The appellant argued that the inclusion of the amortization cost of the packing machine in the assessable value was a matter of debate, citing relevant tribunal judgments. Notably, the appellant highlighted a specific case where a Larger Bench of the tribunal had ruled on a similar issue, indicating the lack of clarity in the legal position during the relevant period.

In its analysis, the tribunal acknowledged that the issue of including the amortization cost of free supplied goods in the assessable value was not free from doubt, especially considering the conflicting tribunal judgments. The tribunal emphasized that the legal position was only clarified by a subsequent ruling of a Larger Bench, establishing that the appellant could not be faulted for any alleged suppression of facts. Given the prevailing legal ambiguity during the period in question, the tribunal ruled in favor of the appellant, setting aside the demand as time-barred without delving into the merits of the case. Consequently, the tribunal allowed the appeal, overturning the impugned order.

In conclusion, the tribunal's decision primarily revolved around the issue of limitation concerning the demand for duty on job-work manufacturing. By considering the legal uncertainties and the evolving interpretations through tribunal judgments, the tribunal ruled in favor of the appellant, highlighting the lack of clarity during the relevant period and ultimately setting aside the demand as time-barred.