2019 (6) TMI 870 - AT - Central Excise

Adjustment of excess amount of central excise duty paid by appellant - period March 2011 to March 2013 - Short payment of duty as per ER-1 return filed by appellant for the month of February 2012 - Time limitation - HELD THAT - The case of the appellant can be decided on the ground of limitation inasmuch as the period in dispute is March 2011 to March 2013 for which the SCN has been issued in August 2016 by invoking extended period of limitation. The fact regarding the adjustment of excess duty was always in the knowledge of the department as it appears from the audit proceedings when the audit Para was dropped. The SCN has been issued on the basis of change in opinion without taking into cognizance of the practice already followed by assessee in which case there cannot be said to be any suppression on the part of the assessee. Further, on perusal of the entire SCN, except the allegation of suppression to invoke extended period of limitation, I do not find any specific instance to show that the assessee deliberately suppressed any information from the Department. Moreover the whole issue has arisen due to lack of knowledge in complying with the central excise procedure since the levy of central excise duty was introduced for the first time with effect from March 2011 and the assessee was new to the subject. In the instant case, the appellant is a PSU and will not have any reason to evade payment of duty - the appeal on the ground of limitation. Appeal allowed.

Summary

Issues:
1. Whether demand is sustainable when the excess amount of central excise duty paid by the appellant is suo-moto adjusted during a specific period.
2. Whether there is a short payment of central excise duty as per the ER-1 return filed by the appellant for a particular month.

Analysis:
1. The appellant, a coal washery plant, paid excess central excise duty due to lack of knowledge about the duty introduction. The appellant made a suo-moto adjustment of the excess duty for a specific period. However, a Show Cause Notice (SCN) was issued alleging a short payment of duty for a particular month. The impugned order upheld the demand, relying on a Tribunal decision that the appellant could not make the adjustment without seeking the department's consent. The appellant argued that the audit objection regarding self-adjustment was dropped, as per the audit report, and no action was proposed against them. The appellant also referred to a circular mentioning the procedure for settling audit objections. The appellant contended that the decision to drop the audit para prevented the issuance of the SCN. The appellant cited precedents where excess duty payment could be claimed as a refund. The appellant challenged the reliance on the Tribunal's decision and argued for setting aside the impugned order.

2. The appellant contested the alleged short payment of duty, stating that the demand was based on differences in the original and revised ER-1 returns. The appellant argued that the correct net duty liability was provided in the revised return, and the allegation of fraud or suppression was unfounded. The appellant maintained that the extended period of limitation could not be invoked as the relevant details were always available with the department. The appellant also argued that the Ld. Commissioner (Appeals) erred in stating there was no provision for filing a revised return. The appellant further contended that as a PSU, there was no intent to evade duty payment, citing relevant legal precedents. The appellant also raised an alternate plea based on the activities undertaken not amounting to manufacture, as per a Supreme Court decision.

3. The Department argued that the appellant was not entitled to suo-moto adjustment based on a Tribunal decision. The Department contended that the proper course would have been to apply for a refund instead of adjusting the duty amount. The Department maintained that the appellant could not subsequently reduce the duty amount by filing a revised return as there was no legal provision for it. The Department supported the impugned order's reliance on the Tribunal's decision regarding the adjustment of excess duty.

4. The Tribunal found that the case could be decided on the ground of limitation, as the SCN was issued invoking the extended period of limitation without specific instances of suppression by the appellant. The Tribunal noted the appellant's lack of knowledge about central excise procedures due to the duty introduction. The Tribunal considered the appellant being a PSU with no reason to evade duty payment. Therefore, the appeal was allowed on the ground of limitation, setting aside the impugned demand.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive overview of the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.