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2024 (2) TMI 299 - AT - Central ExciseExtended Period of limitation - 100% EOU - Undervaluation of goods while clearing the goods to DTA and related person Triumph - suppression of facts or not - HELD THAT - The view taken by the adjudicating authority is agreed that the appellant is not eligible for any adjustment of CVD paid by them (without availing exemption under Notification No. 30/2004-CE), it is to say that this indicates an inference that the appellant had no intention to evade payment of duty. Apart from making a vague allegation that appellant has suppressed facts with intention to evade payment of duty, there is no positive act brought out by the department to show that the appellant has suppressed facts with intent to evade payment of duty. The present Show Cause Notice is for the period 2/2008 to 5/2010. For the earlier period from 2/2005 to 5/2008, the audit team raised an objection as to undervaluation of goods - However, the said objection did not culminate in any proceeding to issue Show Cause Notice after the appellant filed a reply explaining the facts of their case. The department has failed to establish any grounds for invoking the extended period. The issue on limitation is answered in favour of the appellant and against the Revenue. The impugned order is set aside on the ground of limitation - Appeal allowed.
Issues Involved:
1. Whether the demand, interest, and penalties imposed alleging undervaluation of goods cleared to DTA and related person Triumph is legal and proper. 2. Whether the demand raised is hit by limitation. Summary: Issue 1: Legality of Demand, Interest, and Penalties The appellants, manufacturers of ladies knitted brassieres, briefs, and panties, were accused of undervaluing goods sold to M/s. Triumph International India Ltd., a related party, resulting in short-payment of duty. The department argued that the value for clearances to DTA should be based on the sale value adopted by Triumph as per Rule 7 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 (CVR). The appellants contended that the department did not follow the sequential application of rules as mandated by law, directly applying Rule 7. The Supreme Court's decision in Anilkumar Anand Vs. CCE, Preventive (2019) was cited, emphasizing that valuation rules must be applied sequentially. The Tribunal found that the department failed to apply the rules sequentially, rendering the valuation and subsequent demand against the provisions of law. Issue 2: LimitationThe appellants argued that the Show Cause Notice (SCN) issued on 1.3.2013 for the period 2/2008 to 5/2010 was time-barred. An audit conducted for the period 2005-2008 had raised similar undervaluation objections, which were addressed by the appellants in a reply dated 22.11.2010. The appellants had admitted that Triumph was a related party and explained the correct application of Customs Valuation Rules, not Central Excise Valuation Rules. The department did not issue any SCN within the normal period after the audit. The Tribunal concluded that the department had knowledge of the transactions and failed to establish suppression of facts with intent to evade duty. Thus, the extended period for issuing the SCN was not justified. Conclusion:The Tribunal set aside the impugned order on the ground of limitation, allowing the appeal with consequential relief as per law. (Pronounced in court on 05.02.2024)
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