Appeal allowed, impugned order set aside. Excess Sales Tax recovery not assessable. Penalty waived for Public Sector Undertaking.

The appeal was allowed, and the impugned order was set aside with consequential relief. The excess recovery of Sales Tax was not considered part of the assessable value, and the demand was barred by limitation. The penalty was set aside as there was no malafide intention to evade duty, especially considering the appellant's status as a Public Sector Undertaking.

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Issues Involved:
1. Whether the proposal in the show cause notice was only in respect of interest and penalty or also related to the confirmation and appropriation of demand of duty already deposited.
2. Whether an order is required to be passed on duty confirmation or the dispute is only of interest and penalty.
3. Whether the excess recovery of Sales Tax made by the appellant is required to be added in the assessable value of their final product.
4. Whether the excess recovery of Sales Tax than the actual quantum of tax paid to M/s Reliance has to be held as profit on non-manufacturing activity.
5. Whether the appellants have to be held as guilty of suppression or mis-statement with intent to evade payment of duty.
6. Whether the extended period is invocable against the appellant.
7. Whether the interest is required to be confirmed against the appellant.
8. Whether the penalty has to be imposed on the appellant.
9. Whether the appeal has to be rejected or allowed.

Issue-wise Detailed Analysis:

1. Proposal in the Show Cause Notice:
The show cause notice proposed the confirmation and appropriation of demand of duty already deposited by the appellant, contrary to the view that it was only in respect of interest and penalty. The notice demanded differential Central Excise duty allegedly short-paid by not discharging duty liability on sales tax collected from their purchaser.

2. Order on Duty Confirmation:
An order is required to be passed on duty confirmation as the proposal in the show cause notice included the confirmation and appropriation of the demand of duty. The appellant contested the duty demand on the grounds of limitation and suppression of facts.

3. Excess Recovery of Sales Tax:
The excess recovery of Sales Tax made by the appellant is not required to be added to the assessable value of their final product. The Supreme Court's decision in Baroda Electric Meters Ltd. and other Tribunal decisions established that excess recovery of freight or insurance amounts collected from buyers than the amount actually incurred is not required to be added to the assessable value.

4. Profit on Non-Manufacturing Activity:
The excess recovery of Sales Tax than the actual quantum of tax paid to M/s Reliance should be held as profit on non-manufacturing activity. The Tribunal's decisions and the Supreme Court's judgment in Baroda Electric Meters Ltd. support this view, indicating that excess recovery is not additional consideration flowing from buyers to be included in the assessable value.

5. Suppression or Mis-statement:
The appellants cannot be held guilty of suppression or mis-statement with intent to evade payment of duty. The excess charges were shown on Central Excise invoices, and the entire case was based on verification of Central Excise records during the audit. The appellant, being a Public Sector Undertaking, had no malafide intention to evade duty.

6. Extended Period of Limitation:
The extended period is not invocable against the appellant. The demand is hit by the bar of limitation as the show cause notice was issued beyond the normal period, and there was no suppression of facts or mis-statement with intent to evade duty.

7. Confirmation of Interest:
Since the demand of duty is barred by limitation and not liable on merit, the interest cannot be confirmed against the appellant. The Tribunal's decision in similar cases supports this view.

8. Imposition of Penalty:
The penalty is not justified as there was no malafide intention to evade duty. The Tribunal's decisions in cases involving Public Sector Undertakings indicate that there cannot be an intention to evade duty. The penalty is required to be set aside in its totality.

9. Appeal Decision:
The appeal is allowed, and the impugned order is set aside with consequential relief. The majority opinion supports the view that the excess recovery of Sales Tax does not form part of the assessable value, and the demand is barred by limitation.

Conclusion:
In view of the majority opinion on points of difference, the appeal is allowed, and the impugned order is set aside. The excess recovery of Sales Tax is not includible in the assessable value, and the demand is barred by limitation. The penalty is also set aside.

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