2003 (6) TMI 356 - AT - Central Excise

CESTAT overturns order on extended limitation period for flavoured syrup valuation, focusing on disclosed relationship.

The Appellate Tribunal CESTAT, New Delhi, set aside the order in a case concerning the valuation of flavoured ready syrup products. The decision was based ... Demand - Limitation - Extended period - Suppression of facts Issues: Valuation of flavoured ready syrup, Related party transactions, Exclusion of rent on containers, Cost of transportation, Limitation period for show cause noticeValuation of flavoured ready syrup:The judgment revolves around the valuation of flavoured ready syrup (FRS) of Thumps Up and Coca Cola brands manufactured by the appellant. The Commissioner confirmed a duty demand, imposed penalties, and directed confiscation of assets under various provisions. The dispute primarily focused on the valuation aspects of the FRS products.Related party transactions:The show cause notice alleged that the first and second appellants were related persons, impacting the valuation and duty payment. The appellants contested this allegation, arguing that the relationship between the two entities was transparent and known to all concerned, including the department. They presented evidence to show that the holding company relationship was disclosed in balance sheets and other official documents, thus challenging the basis for invoking the extended period of limitation.Exclusion of rent on containers and Cost of transportation:The order impugned raised issues regarding the exclusion of rent on durable/returnable containers and the cost of transportation exceeding actuals. These factors played a role in determining the valuation of the FRS products and were contested by the appellants in their detailed contentions presented during the appeals process.Limitation period for show cause notice:A crucial aspect of the judgment was the contention on the limitation period for the show cause notice dated 26-3-98. The appellants argued that the notice was barred by limitation and should be set aside on those grounds alone. They highlighted that the department was aware of the relationship between the appellants, as evidenced by previous communications and official documents, rendering the invocation of the extended limitation period unjustified. The Tribunal agreed with this argument and set aside the impugned order solely on the grounds of limitation, without delving into other contentions raised in the appeal.In conclusion, the judgment by the Appellate Tribunal CESTAT, New Delhi, focused on the valuation, related party transactions, exclusion of certain costs, and the limitation period for a show cause notice in a case involving flavoured ready syrup products. The decision to set aside the order was based on the unjustified invocation of the extended limitation period due to the known relationship between the appellants, as established through official documents and previous communications.