2018 (7) TMI 851 - AT - Central Excise

Time limitation - Revenue held that the demand for the period 01.04.2004 to 31.03.2006 as time barred, but, demand from April 2006 onwards was maintained - case of appellant is that once the fact of the transaction has come to the notice of the Audit and the said period was held time barred, for the subsequent period it cannot be said that there is any suppression of fact - Held that - The Ld. Commissioner has admitted that the issue was raised in the Audit Report dated 20.10.2008 in respect of the Audit conducted for the period April 2006 to August 2008. On the basis of this Audit Report, the Ld. Commissioner (Appeals) held the demand for period 01.04.2004 to 31.03.2006 as time barred - We failed to understand why the demand for remaining period should not be held time barred on the same analogy. The ld. Commissioner (Appeals) observed that the last Audits conducted on 28.08.2006 to 30.08.2006, and if the Audit officers have not raised this issue for the subsequent period, no suppression of fact cannot be alleged against the appellant. Therefore, we do not agree with the discriminative finding given by the Commissioner (Appeals) in as much as the demand for 01.04.2004 to 31.03.2006 was held time barred and for the subsequent period, the demand was held within time - Since, Audit has been conducted right from 28.08.2006 to 30.08.2006 and show cause notice was issued on 13.04.2009 the entire demand stand time barred. The entire demand is time barred - appeal allowed on the ground of limitation.

Summary

Issues:
1. Classification of software for excise duty
2. Inclusion of software value in the assessable value of machines
3. Time bar on demand of excise duty

Issue 1: Classification of software for excise duty

The case involved the classification of software for excise duty purposes. The appellant contended that the software supplied separately should not be included in the assessable value of the machines they manufactured. The appellant argued that the software was independently classified under Chapter Heading No. 8524 and should be exempt from duty as per Notification No. 6/2006-CE. The appellant claimed that the software was customized for specific machines and not packaged or canned software. The lower authorities had classified the software as packaged software, leading to the duty demand. The appellant cited various decisions to support their argument.

Issue 2: Inclusion of software value in the assessable value of machines

The contention was whether the value of the software should be included in the assessable value of the machines manufactured by the appellant. The appellant argued that since the software was separately declared and sold under a different invoice, it should not be considered a part of the machine's manufacture. The appellant emphasized that the software was specific to individual machines and should be exempt from duty. The lower authorities had proposed adding the software value to the machine's assessable value, leading to a demand for excise duty.

Issue 3: Time bar on demand of excise duty

The primary issue for disposal of the appeal was the time bar on the demand for excise duty for the period in question. The Ld. Commissioner (Appeals) had held that the demand for a majority of the period was time-barred based on audit reports. The audit reports indicated that the issue was raised only during the audit for the period from April 2006 to August 2008, not in the earlier audit for the period from April 2004 to March 2006. The appellant argued that if the issue was not raised in the earlier audit, the demand for the subsequent period should also be considered time-barred. The Tribunal agreed with the appellant, holding that the entire demand was time-barred as the issue was not raised in the earlier audits, and there was no suppression of facts on the part of the appellant.

In conclusion, the Tribunal allowed the appeal on the ground of being time-barred without delving into other issues. The judgment highlighted the importance of audit reports in determining the time bar on excise duty demands and emphasized the need for consistency in applying such limitations.