2020 (9) TMI 646 - HC - Central Excise

Extended period of Limitation - suppression of relevant facts or not - Section 11A of Central Excise Act - valuation under Rule 8 of the Central Excise (Valuation) Rules 2000 - HELD THAT - The extended period of limitation in the present case was not available to the Revenue Authorities and therefore, the Show Cause Notice issued to the Assessee on 19.8.2010 could not cover the period in question viz., 2007-2008 to 2009-2010 except to the extent of one year from the date of issuance of Show Cause Notice on 19.8.2010 and therefore, the learned Tribunal was justified in holding in favour of the Assessee to that extent. We fail to understand that when the Assessee had changed its method of valuation on the advice of the Department's Authority himself based on some Audit objection as indicated in the communication dated 17.1.2008, how by turning the tables on the Assessee, the Adjudicating Authority, without referring to the said communication dated 17.1.2008, could invoke the extended period of limitation and hold that the Assessee is guilty of suppression of relevant facts viz., the Steel Bars were supplied to their Sister Concerns for the construction work and not for further manufacture of excisable goods, and thereby impose the duty following the Rule 4 Valuation and not Rule 8 Valuation as advised by the Department's Authority itself, while the Assessee had followed the said advice/suggestion of the Department and changed its valuation method from Rule 4 to Rule 8 (110%) of the cost of transfer of goods - The Revenue Authority cannot be allowed to take a different stand at different point of time to suit their convenience and impose Additional Duty on the Assessee without establishing any suppression of facts on the part of the Assessee. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Extended period of limitation under Section 11A of the Central Excise Act.
2. Allegations of suppression of facts by the Assessee.
3. Valuation method for goods transferred to Sister Concerns.

Analysis:
1. Extended period of limitation: The Tribunal held that the Assessee could not be attributed with any suppression of relevant facts in regard to the valuation under Rule 8 of the Central Excise (Valuation) Rules 2000. As per Section 11A of the Central Excise Act, only one year prior to the issuance of the show cause notice can be covered. The Tribunal found that there was no suppression of facts by the Assessee, and thus the extended period of limitation of 5 years could not be applied.

2. Allegations of suppression of facts: The Revenue contended that the Assessee did not disclose that the goods were transferred to their Sister Concerns for captive construction. The Revenue argued that this non-disclosure constituted suppression of material facts, allowing the extended period of limitation to be invoked. However, the Respondent's counsel pointed out a communication from the Superintendent of Central Excise advising the Assessee to adopt a specific valuation method for transferred goods. This advice was followed by the Assessee, indicating no suppression of facts on their part.

3. Valuation method for goods transferred: The communication from the Superintendent of Central Excise directed the Assessee to adopt the CAS 4 valuation method for goods transferred to Sister Concerns. The Assessee changed its valuation method based on this advice, which was documented in the communication dated 17.1.2008. The Tribunal found that the Assessee had followed the Department's advice and changed the valuation method accordingly. The Tribunal concluded that the extended period of limitation was not applicable in this case, as the Assessee had acted in accordance with the Department's instructions.

In the judgment, it was established that the Assessee had not suppressed any material facts, as they had followed the advice provided by the Department regarding the valuation method for transferred goods. The Tribunal ruled in favor of the Assessee, stating that the extended period of limitation could not be invoked by the Revenue. The judgment highlighted the importance of following official instructions and the consequences of disregarding such advice.