Excise duty on depot clearance should match depot sale value. Time-barred notice deemed invalid. Compliance saves the day.

The Tribunal held that in cases of depot clearance, excise duty should be charged based on the transaction value prevailing at the depot at the time of sale. While the demand for duty was found to be valid, it was deemed not sustainable for the extended period as there was no intention to evade payment, and the duty demanded was refundable. The Show Cause Notice issued covering a specific period was considered time-barred due to the appellant's compliance with regulations and lack of revenue loss to the Government. Consequently, the appeal was allowed, and the impugned order was set aside.

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Issues involved:
The issues involved in the judgment are the valuation of excisable goods in case of depot clearance and the applicability of the extended period for demanding duty.

Valuation of Excisable Goods:
The appellants were engaged in the manufacture of various excisable goods and availed area-based exemption under Notification No. 39/2001-CE. The Department contended that duty should be paid on the price at which the goods were actually sold from the depot, not the factory gate price. A Show Cause Notice was issued for demanding duty, interest, and penalty. The appellant argued that there was no intention to evade payment of duty as they regularly filed refund claims under the notification and the duty demanded was refundable. The Tribunal found that in case of sale through depot, the transaction value prevailing at the depot at the time of sale shall be the transaction value for charging excise duty. While the demand was found to be sustainable on merit, the Tribunal held that there was no mala fide intention to evade payment of duty, as the appellant was entitled to a refund, making the situation revenue neutral. Therefore, the demand for the extended period was deemed not sustainable.

Applicability of Extended Period:
The Tribunal noted that the Show Cause Notice was issued on 09.03.2011, covering the period from 2005-06 to April 2009. The appellant argued that the demand was time-barred as they were working under Notification No. 39/2001-CE and regularly filed refund claims. The Tribunal agreed with the appellant, stating that there was no suppression of fact and no intention to evade payment of duty. As the duty demanded was also refundable, and there was no revenue loss to the Government, the Tribunal found that the demand for the extended period was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed on the ground of being time-barred.

Separate Judgment by Judges:
The judgment was pronounced by Mr. Ramesh Nair, Member (Judicial) and Mr. Raju, Member (Technical) on 03.04.2023.

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