2019 (5) TMI 911 - AT - Central Excise

Valuation - inclusIon of wastage/shrinkage - mis-declaration of goods - demand on the ground that it had only taken the value of length of the processed cloth i.e. embroidered cloth of 13.88 metres and did not consider the value of end pieces of cloth (additional 0.62 metres), which was required to hold the fabric in the embroidery machine - conflicting issues - invocation of Extended period of limitation - HELD THAT - The law is well settled that when there were conflicting views which necessitated reference to Larger Bench, the extended period of limitation cannot be invoked - In the present case, since the adjudged demand confirmed pertains to the period from 01.04.2003 to 07.07.2004 and the show cause notice was issued on 26.03.2008, the said notice, is barred by limitation of time, having been issued beyond the normal period prescribed under Section 11A of the Central Excise Act, 1944. Demand of duty of ₹ 5,81,187/- on the ground that the appellant had undervalued the cloth in some cases and not taken the value of cloth in some other cases - HELD THAT - No such bifurcation or evidence had been provided in the show cause notice to substantiate that the value of cloth taken was less than the actual value considered for the purpose of valuation of duty liability. Since the said demand was confirmed solely based on the audit objection and no supporting evidences were produced by the department, alleging undervaluation of the cloth, the extended period of limitation cannot be sustained for confirmation of the adjudged demand. The appeal filed by the appellant is allowed only on the ground of limitation.

Summary

Issues:
Extension of stay granted by Tribunal, Central Excise duty demand, Valuation of processed cloth, Undervaluation of cloth, Period of limitation for show cause notice.

Extension of Stay Granted by Tribunal:
The applicant filed miscellaneous applications seeking an extension of stay granted by the Tribunal. However, since the main appeal was listed for hearing, the miscellaneous applications were deemed infructuous and dismissed.

Central Excise Duty Demand:
The appeal was against an order passed by the Commissioner of Central Excise (Appeals) regarding duty demand on the appellant for embroidery on fabrics. The department alleged short payment of duty due to undervaluation and not including the value of unembroidered cloth. A show cause notice was issued, leading to confirmation of duty demand and imposition of a penalty. The Commissioner (Appeals) upheld the adjudication order.

Valuation of Processed Cloth:
The appellant was charged duty for not including the value of unembroidered cloth in the assessable value. The Tribunal referred to previous cases and concluded that the extended period of limitation cannot be invoked for the confirmed demand due to conflicting views and the time frame of the notice.

Undervaluation of Cloth:
Regarding the duty demand for undervaluation of cloth, the Tribunal found that the show cause notice lacked evidence to substantiate the claim. As the demand was solely based on audit objections without supporting evidence, the extended period of limitation could not be upheld for confirming the demand.

Period of Limitation for Show Cause Notice:
The Tribunal set aside the impugned order and allowed the appeal on the ground of limitation, as the show cause notice was issued beyond the normal period prescribed under the Central Excise Act, 1944. The decision was pronounced in court, favoring the appellant based on the limitation issue.