2024 (12) TMI 1190 - AT - Central Excise

Determination of assessable value of Lubricating Oils and other products - requirement to adopt value as provided under Rules 7 of Central Excise Valuation Rules, 2000 read with section 4 of the Central Excise Act, 1944 - extended period of limitation. Vlauation of goods - HELD THAT - It is a matter of record that they have adjusted the duty payments considering sale price on which Central Excise duty have been discharged at the factory gate and the sale price on which the goods have actually been cleared ex-C F depot. There have been differences both on positive and negative sides, the appellant have paid excess Central Excise Duty on certain goods that is where the price at factory gate has been taken at higher side than the prices on which the goods ex-C F depot have been cleared and that amount has been adjusted by them towards the short payment of duty taking ex-C depot price. The appellant vide their letter dated 18.11.2009, 04.04.2010, 12.08.2011, 05.09.2011, 23.12.2011 and 20.01.2012 have submitted all the relevant information of the prices on which goods were cleared at the factory gate as well as the ex- C F depot price. The show cause notice dated 16.04.2013 has been issued demanding short payment of Central Excise Duty for Financial year 2008-09 to December 2012. Extended period of limitation - HELD THAT - For invoking extended time proviso under section 11A(4), the elements of fraud, collusion, willfull mis-statement, suppression of facts or contravention of any provisions of this act or rules with an intention to evade payment of Central Excise Duty need to be presented. The facts of the matter clearly speak that the appellant on their own informed the department since 18.11.2009 giving all the details of ex-factory prices as well as ex-C F depot prices. In such circumstances it is wrong on the part of the department to invoke the extended time proviso under section 11A(4) of the Central Excise Act, 1944 - the impugned show cause notice and the orders issued confirming the show cause notices are legally not sustainable on the point of time limitation. The impugned order-in-appeal is not sustainable and therefore set aside - appeal allowed.

Summary

Issues Involved:

1. Determination of assessable value under Central Excise Act and Rules.
2. Adjustment of excess duty payment against short payment.
3. Invocation of extended time proviso under Section 11A(4) of the Central Excise Act, 1944.
4. Imposition of penalties under Section 11AC and Rule 26 of Central Excise Rules, 2002.
5. Bar of limitation for issuing show cause notice.

Issue-wise Detailed Analysis:

1. Determination of Assessable Value:
The appellant, engaged in the manufacture of lubricating oils and other products, was required to determine the assessable value of their products as per Section 4 of the Central Excise Act, 1944, read with Rule 7 of the Central Excise Valuation Rules, 2000. The appellant cleared goods from their factory to their C & F depots, which necessitated adopting the value as per the aforementioned legal provisions. The appellant argued that they had paid excess duty on some goods, which was adjusted against short payments.

2. Adjustment of Excess Duty Payment:
The appellant contended that they had made excess payments of duty on certain goods cleared for sale from the C & F depot and adjusted these against short payments. They provided detailed information to the jurisdictional Assistant Commissioner, asserting that the excess payments should offset any short payments, thus negating any short payment of duty.

3. Invocation of Extended Time Proviso:
The department issued a show cause notice demanding Central Excise Duty, invoking the extended time proviso under Section 11A(4) of the Central Excise Act, 1944. The appellant argued that the extended time proviso could not be invoked as there was no fraud, collusion, willful misstatement, suppression of facts, or contravention of provisions with intent to evade duty. The tribunal agreed, noting that the appellant had informed the department of their pricing and duty payment practices since 2009, negating any basis for invoking the extended time proviso.

4. Imposition of Penalties:
The adjudicating authority imposed an equal amount of penalty under Section 11AC and a personal penalty on the Assistant General Manager under Rule 26 of the Central Excise Rules, 2002. The tribunal found these penalties unsustainable due to the absence of any willful misstatement or suppression of facts by the appellant.

5. Bar of Limitation:
The appellant argued that the demand was barred by the normal period of limitation as the department was aware of their sales practices since 2009. The tribunal agreed, citing that the show cause notice issued in 2013 was beyond the permissible period, and there was no justification for invoking the extended period of limitation. The tribunal set aside the impugned orders, holding that the demand was time-barred.

In conclusion, the tribunal allowed the appeals, setting aside the impugned order-in-appeal and confirming that the show cause notice and subsequent orders were legally unsustainable due to the bar of limitation and lack of grounds for invoking the extended time proviso.