2008 (7) TMI 171 - AT - Central Excise

Tribunal overturns order, rules for Appellant on Central Excise Act interpretation.

The Tribunal set aside the impugned order in its entirety, ruling in favor of the Appellant, and allowed the appeal. The demands for duty, interest, and ... Wrong computation of duty demand taking highest value prevailing at depot on day of removal from factory – duty paid by appellant more than actual liability as indicated from Annexures to SCN - allegation of collecting excess amount from the customers as duty is not proved. In this regard, the burden entirely lies on the Department which cannot be shifted to the Appellants – duty paid as per directions of filed officer so suppression not proved– demand not sustainable on merits & on limitation Issues:1. Interpretation of Section 4 of the Central Excise Act, 1944 regarding Assessable Value.2. Validity of belated show cause notice for duty payment.3. Calculation of duty based on depot prices and subsequent differential duty payment.4. Confirmation of demand under Section 11D of the 1944 Act.5. Allegation of collecting excess duty amount from customers.6. Burden of proof on the Department in confirming demands.Analysis:1. The case involved the interpretation of Section 4 of the Central Excise Act, 1944, post an amendment in 1996, which included depots and consignment agents' premises in the definition of 'place of removal.' The Assessable Value of goods sold from these locations was to be based on prices prevailing at the time of removal from the factory.2. The Appellant had paid duty based on prevailing prices at the time of clearance from the factory and subsequently paid differential duty when goods were sold at higher prices from depots/consignment agents. The belated show cause notice alleging short payment was challenged as time-barred and legally baseless.3. The Department's method of calculating duty based on the highest value prevailing at the depot on the day of removal was deemed incorrect. The Appellants had paid more duty than legally required, as confirmed by assessments accepting the higher duty paid. The Directorate's attempt to demand more duty was considered unjustified.4. Another demand under Section 11D of the 1944 Act was challenged as time-barred and unsupported by evidence. The Appellants had not collected excess duty from customers, and the Department failed to prove otherwise, leading to the demand being set aside.5. The burden of proof regarding the allegation of collecting excess duty amount from customers rested entirely on the Department. The Appellants had provided all relevant details, and without proper examination of these, confirming the demand was deemed inappropriate.6. Ultimately, the Tribunal set aside the impugned order in its entirety, including the demand for duty, interest, and penalty, ruling in favor of the Appellant and allowing the appeal.This detailed analysis of the judgment covers the various legal issues involved and the Tribunal's reasoning behind setting aside the demands and confirming the Appellant's position.