2024 (3) TMI 178 - AT - Central Excise

Method of valuation of physician samples supplied free of cost - determination of assessable value - confirmation of demand invoking of extended period of limitation - suppression of facts or not - HELD THAT - The appellant during the said period, cleared the goods on payment of duty by determining its assessable value applying Rule 8 of the Central Excise Valuation Rules, 2000 by adopting Cost Construction Method as was clarified by the CBEC in its Circular dated 01/07/2002. The later Circular dated 25/04/2005 directed that the assessment should be under Rule 4 of the Valuation Rules, 2000. Even though the appellant has submitted the monthly Returns from time to time indicating clearance of the said goods adopting Cost Construction Method, but no objection was raised by the Department during the course of audit or during the visit of the preventive officers to their factory. Under these circumstances, allegation of suppression or mis-declaration of facts by the Revenue cannot be sustained. A similar view has been expressed by this Tribunal in Bora Pharma Pvt. Ltd. case 2017 (11) TMI 1509 - CESTAT MUMBAI wherein it is observed that in the absence of any evidence to support the allegation of suppression, misrepresentation, extended period of limitation cannot be invoked. There are no merit in the impugned order to the extent of confirming demand invoking extended period of limitation - Consequently, the impugned order is set aside and the appeal is allowed on limitation.

Summary

Issues involved:
The issues involved in the judgment are the determination of assessable value of physician samples under Central Excise Valuation Rules, 2000, and the invocation of the extended period of limitation for recovery of duty.

Issue 1: Determination of assessable value of physician samples:
The appellant, engaged in the manufacture of medicaments, cleared physician samples by determining the assessable value using the Cost Construction Method under Rule 8 of the Central Excise Valuation Rules, 2000. The dispute arose when the Revenue demanded recovery of differential duty, interest, and penalty, contending that the assessment should have been done under Rule 11 read with Rule 4 of the Valuation Rules. The appellant argued that they followed the Circular prevailing earlier and submitted returns periodically to the Department without suppressing any facts. They also highlighted that their records were audited and preventive officers visited their unit, during which no objections were raised regarding the valuation method. The appellant cited relevant judgments to support their position. The Tribunal noted that the appellant did not dispute the valuation method but contested the demand invoking the extended period of limitation. Referring to a similar case, the Tribunal held that without evidence of suppression or misrepresentation, the extended period of limitation cannot be invoked. Consequently, the impugned order confirming the demand based on the extended period of limitation was set aside, and the appeal was allowed on limitation.

Issue 2: Invocation of the extended period of limitation:
The appellant challenged the demand raised by the Revenue, arguing that the invocation of the extended period of limitation was not sustainable as they had not suppressed any facts or mis-declared the assessable value of physician samples. The appellant provided evidence of submitting returns, audits, and interactions with the Department, where the valuation method was not objected to. The Tribunal, after considering the submissions from both sides, found that the Revenue's allegation of suppression or mis-declaration was not supported by evidence. Citing a previous case, the Tribunal emphasized that without proof of suppression, the extended period of limitation cannot be invoked. Therefore, the impugned order confirming the demand based on the extended period of limitation was set aside, and the appeal was allowed on limitation.