2017 (1) TMI 598 - AT - Central Excise

Tribunal upholds Commissioner's decision on time-barred demand, dismisses Revenue's appeal

The Tribunal upheld the Commissioner (Appeals) decision based on the limitation aspect, dismissing the Revenue's appeal and disposing of the respondent's ... Intermediate product, consumed captively - duty based on cost construction method - time limitation - Held that: - It is obvious that when the goods are cleared captively, the valuation of goods is governed by Rule 8 of Central Excise Valuation Rules, 2000 which is based on the cost construction method, if at all there is any variation in the cost, the department was free to issue show cause notice within the normal period of 1 year - In the present case, the demand pertains to the period September 2002 to March 2003 and the show cause notice was issued on 4.10.2004 i.e. much after 1 year. In these facts, no suppression of fact can be alleged against the respondent - demand not maintainable on the ground of time bar - appeal allowed - decide in favor of assessee. Issues:1. Dispute over quantification of costing in CAS4 certificate.2. Appeal against the order-in-original by the respondent.3. Revenue's challenge to the Commissioner (Appeals) order.4. Respondent's cross-objection on the limitation of the demand.Analysis:1. The case involved a dispute regarding the quantification of costing in the CAS4 certificate for the intermediate product generated during the manufacture of final products cleared under exemption. The issue was whether the amount of drawback should be deducted from the total cost in the CAS4 certificate. The Revenue contended that since the final products were cleared for home consumption, there should be no exclusion of drawback element, contrary to the Commissioner (Appeals)' decision based on CAS4 guidelines.2. The Revenue, represented by Shri Sanjay Hasija, argued that the costing of the product should not involve the drawback element as there was no export involved in the clearance for home consumption. The Revenue challenged the Commissioner (Appeals) decision, emphasizing the general guideline under CAS4 for product costing. The appeal primarily focused on the exclusion of drawback from the cost calculation in the CAS4 certificate.3. On the other hand, Shri Prithwiraj Choudhuri, representing the respondent, maintained that the cost determination as per CAS4 guidelines should include the proportional reduction of the drawback element. The respondent argued that the cost arrived at based on the CAS4 certificate was uniform for both export and domestic clearances. Additionally, the respondent raised a cross-objection on the limitation of the demand, asserting that the demand was time-barred as it was raised beyond the stipulated one-year period.4. The Tribunal, comprising Shri Ramesh Nair and Shri Raju, considered the submissions and focused on the limitation aspect to dispose of the appeal. The Tribunal found that the respondent had cleared the intermediate goods and paid duty in accordance with the CAS4 certificate, which was also submitted to the department in a timely manner. Since the department was aware of the respondent's activities and the duty payments, the demand raised beyond the one-year period was deemed time-barred. As a result, the Tribunal dismissed the Revenue's appeal due to the demand being hit by limitation and disposed of the respondent's cross-objection accordingly.In conclusion, the Tribunal upheld the Commissioner (Appeals) decision based on the limitation aspect, without delving into the merit of the case, thereby dismissing the Revenue's appeal and disposing of the cross-objection raised by the respondent.