2020 (3) TMI 198 - AT - Central Excise

Tribunal upholds demand for normal limitation period, sets aside extended period demand and penalties. Case remanded for re-computation.

The Tribunal upheld the demand for the normal period of limitation but set aside the demand for the extended period and the penalties imposed. The case ... Valuation - inclusion of additional amount which has been collected by the appellant from their customers as representing VAT but which has not been deposited as VAT forms an additional consideration for sale, in the assessable value - HELD THAT:- There are several schemes of State Governments in which, as an incentive, businesses are allowed to collect amounts as representing VAT/Sales Tax but not remit the amount to the State Government. The question is whether in such cases the amounts so retained form part of the assessable value for the purposes of Excise Duty. Since such matters were pending in various States all these appeals or at least many of them were disposed of by the Hon’ble Apex court who held that Excise Duty has to be paid on such amounts which are retained by the assessee. This judgment was not confined to any particular law of a particular state or a particular scheme but has laid down the law. Review Petitions filed against this judgment were also dismissed by the Hon’ble Apex Court. There is nothing on record to show that a larger Bench of Supreme Court has taken any contrary view - reliance can be placed in the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR-II VERSUS M/S. SUPER SYNOTEX (INDIA) LTD. AND OTHERS [2014 (3) TMI 42 - SUPREME COURT]. We therefore, find this judgment is binding on us and leaves us with no option but to hold that the assessee in the present case is bound to pay Excise Duty on the amounts collected as representing VAT but which were not paid to the government under the scheme. Extended period of limitation - penalty - HELD THAT:- Such a suggestion preposterous considering that it is clearly on record that the Revenue is aware of modus operandi of the assessee. To allege fraud, collusion, willful misstatement or suppression of fact or violation of Act or rules with an intent to evade payment of duty and invoke extended period has no basis - the demand for extended period of limitation needs to be set aside - penalty also set aside. The demand for the normal period of limitation is upheld and the demand for extended period of limitation is set aside - amounts which have been collected by the appellant as VAT and retained must be taken as cum duty price and Excise Duty are calculated accordingly - appeal is remanded to the Adjudicating Authority for the limited purpose of re-computation of duty. Issues Involved:1. Liability to pay Excise Duty on amounts collected as VAT but not paid to the State Government.2. Validity of demands raised under extended period of limitation.3. Applicability of penalties imposed.4. Principle of res judicata in the context of Central Excise Duty.5. Computation of duty as cum-duty price.Detailed Analysis:1. Liability to Pay Excise Duty on Amounts Collected as VAT but Not Paid to the State Government:The primary issue is whether the amounts collected by the appellant as VAT, which were not paid to the State Government under the West Bengal Incentive Scheme, 1999, form part of the assessable value for Excise Duty. The Revenue's position is supported by the Supreme Court's judgment in the case of Super Synotex (India) Ltd., which held that amounts collected as VAT but not paid to the State Government are includable in the assessable value for Central Excise Duty. The appellant contended that this judgment did not consider the computational difficulties arising from VAT being payable on the price plus Excise Duty. However, the Tribunal found that the Supreme Court's ruling is binding and leaves no option but to hold that Excise Duty must be paid on such amounts.2. Validity of Demands Raised Under Extended Period of Limitation:The appellant argued that the demands for the period up to 2009-10 were time-barred as there was no evidence of fraud, collusion, willful misstatement, or suppression of facts. The Tribunal agreed, noting that the Revenue was aware of the appellant's modus operandi, and thus, the extended period of limitation could not be invoked. Consequently, the demands for the extended period were set aside.3. Applicability of Penalties Imposed:The appellant argued that no penalties should be imposed as there was no fraud or suppression of facts. The Tribunal concurred, setting aside the penalties imposed on the appellant, citing the lack of basis for alleging fraud or collusion.4. Principle of Res Judicata in the Context of Central Excise Duty:The appellant claimed that the issue was res judicata since a similar demand for an earlier period was decided in their favor, and no appeal was filed by the Revenue. The Tribunal rejected this argument, stating that each consignment in Central Excise Duty is an individual assessment, and a mistake in one assessment does not bind the other party for all subsequent periods. The Tribunal emphasized that the clear ruling by the Supreme Court overrides any previous unchallenged decisions.5. Computation of Duty as Cum-Duty Price:The appellant argued that if the matter is decided against them on merits, the amounts received should be taken as cum-duty price. The Tribunal agreed, directing that the amounts collected as VAT and retained by the appellant must be taken as cum-duty price, and Excise Duty should be recalculated accordingly.Conclusion:The Tribunal upheld the demand for the normal period of limitation but set aside the demand for the extended period and the penalties imposed. The case was remanded to the Adjudicating Authority for the limited purpose of re-computation of duty, considering the amounts collected as VAT as cum-duty price. The Tribunal's decision was pronounced in open court on 02/03/2020.