2013 (8) TMI 425 - AT - Central Excise

Tribunal rules in favor of appellants in duty liability case, citing exclusion of free items from assessable value.

The Tribunal ruled in favor of the appellants, M/s SDL Auto and Sh. Deepak Adlakha, in a case concerning duty liability for suppression of assessable ... Extension of period of limitation - RT-12 returns/ ER-1 returns were regularly being filed by the appellants to the department - Appellants were regularly being audited by the Central Excise officers and no objection on the issue of free supply of goods by the principal manufacturer as well as on amortisation cost was raised by the audit during their visits – Held that:- It is not the case of the department that the documents/ RT-12 returns and other records were not submitted to the officers of the audit team by the appellants. Once the officers have audited the records they were supposed to examine each and every issue in respect of appellants for the audit period – Therefore, finding of the Commissioner that it is not clear whether audit had in fact examined this issue or not is not sustainable - Extended period as provided under Section 11A of the Central Excise Act will not be applicable in the present case. Show cause notice was issued on 05.01.2005 - Demand issued in the show cause notice beyond the period of one year is completely time barred - Since there is no finding from the RUDs 18 and 19 that there is any clearances after 04.01.2004, entire show cause notice is hit by time limitation – Decided in favor of Assessee. Issues:1. Duty liability on the appellants for suppression of assessable value.2. Applicability of extended period under Section 11A of the Central Excise Act.3. Time bar for issuing the show cause notice.Analysis:Issue 1: Duty liability on the appellants for suppression of assessable valueThe case involved M/s SDL Auto and Sh. Deepak Adlakha against a show cause notice for not adding the value of inputs received free of cost and amortization cost on tooling in the assessable value of the final product. The Commissioner confirmed the demand against the main appellant, holding that the value of items supplied free of cost and amortization cost should be added to the assessable value. The appellant contended that they followed job work procedures under relevant rules and cited a Supreme Court decision to support their case. However, the Department argued that the material supplied free of cost was not accounted for in the assessable value. The Tribunal analyzed the arguments and decided in favor of the appellants, setting aside the duty demand and penalties imposed.Issue 2: Applicability of extended period under Section 11A of the Central Excise ActThe appellants raised the ground of time bar against the show cause notice, claiming regular filing of returns and audits by the department. They argued that no suppression of facts occurred as all information was available to the department during audits. The Commissioner had invoked the extended period under Section 11A, but the Tribunal disagreed. It noted that the audit did not raise any objections during visits, indicating no suppression by the appellants. Therefore, the extended period was deemed inapplicable in this case.Issue 3: Time bar for issuing the show cause noticeThe show cause notice was issued on 04.01.2005, demanding duty for the period 01.12.1999 to 30.11.2004. However, the details provided in the notice only covered up to 2003-2004, with no clearances mentioned after 04.01.2004. The Tribunal found the demand beyond one year to be time-barred, as the notice did not specify clearances after a certain date. Consequently, the entire show cause notice was considered hit by time limitation, leading to the setting aside of the order-in-original and penalties imposed on the appellants.In conclusion, the Tribunal allowed the appeals, ruling in favor of the appellants based on the issues of duty liability, applicability of the extended period, and time bar for issuing the show cause notice.