2008 (3) TMI 558 - AT - Central Excise

Appellant's Duty Short Payment Case: Time-barred demand rejected, remand for requantification

The Tribunal found that the appellant had short paid duty on clearances due to not including the cost of containers in the assessable value of goods. The ... Demand - Limitation, extended period - Valuation Issues:1. Inclusion of cost of containers in the assessable value of goods cleared.2. Time-barred demand invoking a larger period.3. Short payment of duty on clearances of impugned goods.4. Genuine misunderstanding of the assessee regarding valuation of excisable goods.Analysis:1. The appellant cleared spent solvents and used isopropyl alcohol on payment of duty during a specific period. They did not include the cost of drums in the assessable value and invoiced the excisable goods and packing separately. The counsel for the appellants argued that containers in which inputs are received can be cleared without payment of duty as per CBEC clarification. The appellant had filed declarations and invoices with the department, showing the goods as packed in containers. The Tribunal found that the appellant had short paid duty on clearances to the extent of the containers' cost, making the demand sustainable. However, as the relevant information was timely furnished, the demand could only be sustained for the normal period.2. The appellant contended that the demand invoking a larger period was time-barred. The Tribunal, after considering the case records and submissions, held that the demand could be sustained only for the normal period due to the timely submission of relevant information to the department. Therefore, the demand for the larger period was considered time-barred, and the appellant was not penalized for the short levy due to a genuine misunderstanding.3. It was established that the appellant had short paid duty on clearances of the impugned goods to the extent of the containers' cost. The Tribunal acknowledged that the short levy occurred due to a genuine misunderstanding of the assessee regarding the valuation of the excisable goods involving containers in which inputs had been received. Consequently, the Tribunal held that the appellant did not deserve to be penalized for the short payment of duty. The case was remanded to requantify the demand for the normal period, ensuring the appellant's right to an effective hearing before a fresh decision.4. The Tribunal, in its decision, recognized the genuine misunderstanding of the assessee regarding the valuation of excisable goods involving containers. This misunderstanding led to the short payment of duty on clearances of the impugned goods. As a result, the Tribunal decided that the appellant should not be penalized for this error and remanded the case for the demand to be recalculated for the normal period, emphasizing the appellant's right to a fair hearing in the process.