2024 (9) TMI 835 - AT - Central Excise

Valuation of Excise Duty - non-inclusion of VAT realized from the customers in the assessable value - demand alongwith interest and penalties - invocation of extended period of limitation - penalty. Includability of the sales tax concession retained by the Appellant in the assessable value for the purpose of levy of Central Excise duty - HELD THAT - The issue is no more res integra as the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS 2014 (3) TMI 42 - SUPREME COURT , has held that the sales tax concession retained by the assessees is required to be added in the assessable value for the purpose of levy of Central Excise duty - By relying on the above decision of the Hon ble Supreme Court, it is held that the sales tax concession retained by the Appellant is required to be added in the assessable value for the purpose of levy of Central Excise duty. Extended period of limitation - Penalty - HELD THAT - In the present case, it is observed that the ld. adjudicating authority has failed to show any positive act of suppression on the part of the Appellant. The details of VAT collected and retained by the Appellant are reflected in the audited Profit Loss account and balance sheet of the impugned periods. Accordingly, by following the above Circular issued by the Board, it is held that extended period is not invokable in this case and for the same reason, penalty under Section 11AC of the Central Excise Act, 1944 is also not imposable. Appeal disposed off.

Summary

Issues:
1. Confirmation of demand of Central Excise duty and penalty by invoking extended period of limitation.
2. Inclusion of sales tax concession in the assessable value for levy of Central Excise duty.
3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

The Appellate Tribunal CESTAT Kolkata heard an appeal against an Order-in-Original confirming a demand of Rs. 68,60,128/- for non-inclusion of VAT in the assessable value, invoking the extended period of limitation and imposing a penalty under Section 11AC of the Central Excise Act, 1944. The Appellant argued citing a Supreme Court decision and a Board Circular that the demand should only be for the normal period of limitation. The Revenue representative supported the penalty imposition. The Tribunal noted the previous decision by the Supreme Court requiring inclusion of sales tax concession in the assessable value for Central Excise duty levy. The Appellant agreed to pay for the normal period but contested the extended period demand and penalty, citing lack of suppression of facts. The Tribunal found no evidence of suppression and set aside the demand under the extended period and the penalty, in line with a Board Circular disallowing extended period invocation without evidence of suppression. The appeal was partially allowed, with duty payment for the normal period and the penalty under Section 11AC being set aside.

In the present appeal, the main issue was the inclusion of sales tax concession retained by the Appellant in the assessable value for Central Excise duty levy. The Tribunal referred to a Supreme Court decision that mandated such inclusion. Despite the Appellant agreeing to pay for the normal period, the demand was confirmed using the extended period of limitation. However, as there was no evidence of suppression of facts and previous tribunal decisions supported the Appellant's stance, the Tribunal held that the extended period demand should be set aside. The Tribunal also highlighted a Board Circular stating that the extended period should not be invoked without clear evidence of suppression, leading to the setting aside of the penalty under Section 11AC as well.

The Tribunal's decision was based on the issue of includability of sales tax concession in the assessable value for Central Excise duty. While the Appellant agreed to pay for the normal period, the demand was confirmed using the extended period of limitation. However, as there was no evidence of suppression of facts and the Appellant had followed previous tribunal decisions, the Tribunal set aside the extended period demand and the penalty under Section 11AC. This decision was in line with a Board Circular that disallowed the invocation of the extended period without clear evidence of suppression, providing relief to the Appellant.