2019 (12) TMI 545 - AT - Central Excise

Demand of differential duty - export of consignment of cobalt bearing tools - demand on the ground that the duty payable on the said export goods was ₹ 8,21,837/- whereas the appellant has paid a duty of ₹ 19,584/- on the said goods as they had cleared as scrap - extended period of limitation - HELD THAT - In the case of COMMISSIONER OF C. EX., SURAT-I VERSUS NEMINATH FABRICS PVT. LTD. 2010 (4) TMI 631 - GUJARAT HIGH COURT , the suppression was admitted by the assessee and the said suppression came in the knowledge of the department at the time investigation, in that circumstances, the Hon ble High Court held that mere knowledge cannot absolve the assessee not to invoke extended period of limitation. Admittedly the facts of clearance of the said subject goods on lower duty was in the knowledge of the department itself in the year 2000, therefore, the extended period of limitation cannot be invoked in the facts and circumstances of the case - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of differential duty on clearance of goods, invocation of extended period of limitation for demanding differential duty, knowledge of department regarding clearance of goods as scrap.

Analysis:
The appellant, an exporter, appealed against an order demanding differential duty on clearance of cobalt bearing tools. The goods were initially exported but rejected by the foreign buyer, leading to their return to the factory premises. The appellant then informed the Department and cleared the goods as scrap by paying a lower duty. A show cause notice was issued later, invoking the extended period of limitation to demand the differential duty. The appellant contended that since the department was aware of the export rejection and clearance as scrap, the extended period of limitation should not apply. The appellant argued that the goods were meant for export, rejected by the importer, and cleared as scrap out of necessity, hence differential duty should not be demanded.

The Authorized Representative (AR) supported the impugned order, asserting that the appellant had indeed paid a lower duty than the originally payable amount, justifying the demand for differential duty. The AR cited a case to support the invocation of the extended period of limitation, emphasizing that mere knowledge by the department does not preclude its application. After hearing both parties, the Member (Judicial) analyzed the situation. The Member noted a case where suppression was admitted by the assessee, leading to the conclusion that mere knowledge does not prevent the invocation of the extended period of limitation. However, in the present case, the department was aware of the payment of short duty since 2000, rendering the case cited by the AR irrelevant. Given that the facts of the lower duty clearance were known to the department in 2000, the extended period of limitation could not be invoked. Consequently, the Member set aside the impugned order, allowing the appeal with consequential relief.

In conclusion, the judgment centered on the issue of the invocation of the extended period of limitation for demanding differential duty on goods cleared as scrap. The Member ruled in favor of the appellant, highlighting that the department's knowledge of the lower duty payment in 2000 precluded the application of the extended period of limitation. This decision showcases the importance of timely and accurate record-keeping by both exporters and customs authorities to avoid disputes over duty payments and clearance of goods.