2019 (9) TMI 1521 - AT - Central Excise

Court Rules Against Pre-Deposit Requirement, Deems Demand Time-Barred

M/s. H.V. Axles Limited Versus Commissioner of Central Excise, Jamshedpur

The Tribunal disposed of the Stay Application and proceeded with the appeal without the pre-deposit requirement. The High Court set aside the Tribunal's ... Valuation - inclusion of value of discount in the assessable value - transaction value of the inputs were determined by reducing 1.9% from the price of the inputs which was payable by the said assessee to the bank - time limitation - HELD THAT:- In the case of INDIA PISTONS LTD. VERSUS COMMISSIONER OF C. EX., CHENNAI [2007 (9) TMI 89 - CESTAT, CHENNAI] the Tribunal while considering a similar issue in the context of inclusion of 1.9% discount in the value of the raw material supplied to TML held that the interest received from the buyer of the goods by their bankers was not to be included in the assessable value of the goods purchased by them from the assessee. In the present case, the SCN issued to the Appellants proceeds on the basis that the transaction value of the raw materials/inputs should be inclusive of 1.9% discount and therefore, the assessable value of the Axles should be re-determined. When the Commissioner dropped the proceedings initiated against the manufacturer of raw material received by the petitioners, on the very same issue of determination of assessable value of such raw material, the present proceedings initiated against the Appellants on the basis that the value of raw material should be enhanced by the very same discount of 1.9% cannot be confirmed. Time Limitation - HELD THAT:- The entire exercise was revenue neutral inasmuch the differential duty if any, payable, was available as CENVAT Credit to TML. Therefore, there is no question of any suppression with an intent to evade payment of duty. Consequently, the extended period of limitation has been erroneously invoked. Appeal allowed - decided in favor of appellant. Issues:1. Confirmation of demand under Section 11A(2) of the Central Excise Act, 1944 along with penalties.2. Pre-deposit requirement and subsequent appeal process.3. Inclusion of 1.9% discount in the assessable value of goods supplied.4. Bar on limitation for raising demands based on publicly available information.Issue 1:The appeal was filed against the confirmation of a demand of Rs. 8,01,81,838 under Section 11A(2) of the Central Excise Act, 1944, along with penalties and interest for the period from April 2003 to March 2008. The Commissioner of Central Excise, Jamshedpur had imposed an equivalent penalty under Section 11AC of the Act and an additional penalty under Rule 25 of the Central Excise Rules, 2002. The Tribunal, after considering the history of the case and the pending appeal, decided to dispose of the Stay Application and proceed with the appeal without the requirement of pre-deposit.Issue 2:Initially, the Tribunal had directed for a pre-deposit of 50% of the duty, leading to a writ petition before the Calcutta High Court. The High Court set aside the Tribunal's order and remanded the matter for fresh consideration. Subsequently, the department appealed before the Division Bench of the High Court, which affirmed the single bench's order. The Tribunal, in light of these developments, decided to proceed with the appeal without the pre-deposit requirement.Issue 3:The main issue revolved around the inclusion of a 1.9% discount in the assessable value of goods supplied. The department issued a Show Cause Notice proposing a demand based on the premise that the 1.9% discount paid by the buyer to their bank was not added to the cost of the material in the cost of production. The appellant argued that such charges should not be included in the assessable value of the goods supplied, citing various legal precedents and interpretations. The Tribunal, after detailed analysis of similar cases and circulars, concluded that the demand to include the 1.9% discount in the assessable value was erroneous and not substantiated by the department.Issue 4:The Tribunal also addressed the issue of limitation for raising demands based on publicly available information extracted from the balance sheet of the appellant. It was noted that the demand was time-barred as the figures were publicly available, and the entire exercise was revenue neutral since any differential duty payable was available as CENVAT Credit to the buyer. The Tribunal held that the extended period of limitation was erroneously invoked, and there was no intent to evade payment of duty. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.