2003 (12) TMI 378 - AT - Central Excise

Tribunal rules in favor of appellant on time bar issue, extended limitation period not applicable without evidence of fraud.

The Tribunal allowed the appeal on the time bar issue regarding the demand for duty, ruling that the extended period of limitation could not be invoked ... Demand - Limitation - Valuation Issues:1. Valuation of goods captively consumed.2. Time bar issue regarding demand of duty.Valuation of goods captively consumed:The appeal involved a dispute over the valuation of goods captively consumed by the appellant. The appellant argued that the adjudicating authority erred in determining the value of captively consumed goods based on Circular No. 258/92/96-Cx, which the appellant claimed was neither binding nor correct in law. The appellant contended that the percentage of profit normally earned on the sale of such goods should be considered, as per Rule 6(b)(ii) of the Central Excise Rules, rather than the profit percentage of the final product as adopted by the Commissioner. The appellant emphasized that there was no evidence to support that the goods were sold in the market, and hence, determining profit based on the balance sheet was unjustified. The appellant also raised the issue of time bar, arguing that the demand for duty was barred by time, as there was no suppression of information or mis-declaration on their part. The appellant maintained that the extended period of limitation could not be invoked without evidence of intention to defraud, citing a Tribunal decision in a similar case.Time bar issue regarding demand of duty:The appellant contended that the demand for duty was time-barred, as there was no suppression of information or mis-declaration. The appellant argued that they had disclosed the profit margin in their declaration, and the department failed to ask for further data or balance sheets to verify the information provided. The appellant referenced a Tribunal decision that stated the extended period of limitation could not be invoked without evidence of intention to defraud, especially in cases of revenue neutrality. The Tribunal found merit in the appellant's argument on the time bar issue, emphasizing that the declarations filed were not mis-declarations, as the appellant had no knowledge of the profit they would have earned on unsold goods. The Tribunal concluded that the larger period of limitation could not be invoked in the absence of findings relating to intention to defraud, and therefore, allowed the appeal on the time bar issue.This detailed analysis of the judgment highlights the key legal issues involved, the arguments presented by the parties, and the Tribunal's findings on both the valuation of goods captively consumed and the time bar issue regarding the demand for duty.