2011 (11) TMI 559 - AT - Central Excise

Tribunal overturns demand on goods with discounts due to time-barred claim, citing limitation defense.

The Tribunal set aside the confirmation of demand on goods cleared with quantitative discounts, citing the limitation defense. The appellants consistently ... Duty demand - Valuation - Quantitative discount from the clearances affected by them as claiming reduction for discounts as enshrined in provisions of Section 4 of the Central Excise Act, 1944 - Bar of limitation - Held that:- adjudicating authority while holding against the assessee-appellant on limitation has recorded the findings in his Order-in-Original at paragraph 4.9.3.2, 4.9.3.3 and 4.9.3.3.1. In our considered view) the findings recorded by the adjudicating authority are devoid of merits, inasmuch as, it is an acknowledgement of the adjudicating authority that ER-1 returns were filed but did not mention in the particular columns regarding the clearances of P or P medicaments without payment of duty under quantitative discounts. The adjudicating authority has erred on the point of limitation as the lower authorities had never questioned or sought clarification from the assessee as regards the quantitative discounts claimed by them on the products covered under Section 4A of the Central Excise Act, 1944 - Decided in favour of assessee. Issues involved:Confirmation of demand on liability for goods cleared by claiming quantitative discount; Challenge on limitation regarding the demand.Analysis:1. The appeals were filed by the assessee against Orders-in-Original related to the manufacturing of pharmaceutical goods falling under Chapter 30 of the Central Excise Tariff Act, 1985. The issue revolved around the assessee claiming quantitative discounts and not paying duty on free goods. The lower authorities issued show cause notices as they believed the assessee was liable to discharge duty on the free goods due to the absence of provisions for granting quantitative discounts under Section 4A of the Central Excise Act, 1944. The adjudicating authority confirmed the demands, imposed penalties, and directed the payment of interest, leading to the appeals.2. The counsel for the appellants argued that the demand confirmation should be contested on the grounds of limitation. They maintained that the appellants consistently provided information on clearances, including quantitative discounts, in their monthly returns during the relevant period. The appellants contended that the lower authorities never raised any questions regarding these clearances, asserting that the demand was time-barred due to this lack of inquiry.3. On the other hand, the departmental representative argued that the limitation defense of the assessee relied on entries in the RG-1 register, which were not scrutinized by the range officer. They highlighted discrepancies in the submitted returns, emphasizing the need for separate mention of all duty rates if a product attracted multiple rates. The representative supported the findings of the adjudicating authority.4. The Tribunal considered the submissions and records in detail. The primary issue was the confirmation of demand on goods cleared with quantitative discounts under Section 4A of the Central Excise Act, 1944. While the appellants had no case against discharging duty liability on the claimed discounts, the critical point was the limitation aspect for the period in question.5. The Tribunal observed that during the relevant period, the appellants consistently filed monthly ER-1 returns indicating clearances without payment of duty under quantitative discounts. These returns were accepted without any queries or clarifications sought by the lower authorities. The adjudicating authority's findings on limitation were deemed erroneous as there was no communication or clarification sought from the assessee regarding the quantitative discounts claimed under Section 4A. Consequently, the demands were held to be time-barred, and the orders were set aside on the grounds of limitation, allowing the appeals.