AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1437
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....apter 87 of the Central Excise Tariff Act, 1985. For the purpose of payment of excise duty on final products manufactured by them and in respect of service tax on taxable output services, if any, and for compliance with the indirect tax statute, they are registered with the jurisdictional Commissionerate under Central Excise registration AAACG1492RXM001 and service tax registration No. AAACG1492RST003. 2.2 During the course of EA-2000 audit conducted on the records maintained by the appellant, the department had observed that on comparison of the sale value shown in trial balance and ER-1 returns on monthly basis during the audit period October, 2016 to June, 2017, there is a difference between the figures declared in both the documents; the figures of sale shown in trial balance is on higher side, whereas the figures on the basis of which Central Excise duty was paid was not matching to such figures. Therefore, the audit observed that the appellant had not declared the correct assessable value under Section 4 of Central Excise Act, 1944; and quantified the differential duty payable as Rs.2,64,039/-. In respect of the said audit objection raised by the De....
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....f transaction value/sale value itself as per Section 4 ibid. Accordingly, in respect of OEM supplies, they have captured their entire sales value and trade discounts offered to the trade in Trial Balance and ER-1 returns, and there is no difference in these figures. However, in respect of sales to retail trade/open market, excise duty paid on MRP basis less abatement of 30% was reported in the ER-1 returns as sales value, whereas in the Trial Balance the sales value less the actual trade discount, which is higher than 30%, was reported. Further, certain export transactions were not taken into account for the purpose of arriving at the differential value of sales/assessable value for determining the differential excise duty by the audit. All these details were submitted by the appellant during the adjudication proceedings, but these have not been examined in a proper manner. There has been no short payment of duty in any transaction and the audit have also not pointed out any specific cases, except for the difference in the sales value reported in ER-1 and Trial Balance. Therefore, they submitted that the basis for demand of differential duty is without any basis and the same is not....
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....ul suppression', by invoking extended period of limitation are sustainable or otherwise, in the facts and circumstances of the case. 7. In order to address the above issues, I would like to refer the relevant legal provisions contained in Sections 4, 4A and 11A of the Central Excise Act, 1944 for consideration of proper and appropriate legal course of action available to the department, in respect of payment of central excise duty on the subject goods under dispute and the differential duty that is liable to be demanded under the Central Excise statute. Central Excise Act, 1944 "Valuation of excisable goods for purposes of charging of duty of excise. Section 4. (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall- (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods ar....
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....hing contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer- (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall b....
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.... of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant date, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under section 11AA and a penalty equivalent to the duty specified in the notice." 8.1 On plain reading of legal provisions of Section 4 and 4A ibid it transpires that duty of excise is chargeable on the assessable value determined for each removal of excisable goods, and excise duty payable is calculated in terms of prescribed rate applied on the value for delivery at the time and place of removal, when the buyer and seller are not related, on the condition that such value represents the entire consideration for sale, which is otherwise known as 'transaction value'. Further, where the Central Government had notified excisable goods on which payment of central excise duty has been prescribed on the basis of Retail Sale Price (RSP/MRP) in terms of Notification No. 2/2006-C.E. (N.T.) dated 1-3-2006, as amended, th....
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....ts, essences or concentrates or with a basis of coffee 35% 18. 2102 All goods 35% 19. 2105 00 00 Ice cream and other edible ice, whether or not containing cocoa - 20. 2106 90 20, 2403 Pan masala and Pan Masala containing tobacco 50% 21. 2106 90 30 All goods 35% 22. 2106 Ready to eat packaged food, texturised vegetable proteins (Soya bari), and instant food mixes such as Pongal mix, Vadai mix, Pacoda mix, Payasam mix, Gulab jamun mix, Rava Dosa mix, Idli mix, dosai mix, Murruku mix, and Kesari mix. 37% 23. 2106 90 11 Sharbat 35% 24. 2106 10 00, 2106 90 50, 2106 90 70, 2106 90 80, 2106 90 91 or 2106 90 99 All goods (other than S. No. 22 above) 40% 25. 2201 10 10, 2201 90 90, 2202 10 90, 2202 90 90 Mineral waters 50% 26. 2201 10 20 or 2202 10 10 Aerated waters 42.5% 27. 2209 Vinegar and substitutes for vinegar obtained from acetic acid 40% 28. 2403 99 10 or 2403 99 20 All goods 50% 29. 2523 21 00 or 2523 29 White cement, whether or not artificially coloured and whether or not with rapid harden....
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.... ink removers put up in packings for retail sale 40% 51. 3919 Self adhesive tapes of plastics 40% 52. 3923, 3924 Insulated ware 45% 53. 4816 Carbon paper, self-copy paper, duplicator stencils, of paper 40% 54. 4818 except 481840, 4818 50 00 Cleansing or facial tissues, handkerchiefs and towels, of paper pulp, paper, cellulose wadding or webs of cellulose fibres. 40% 55. 6401 to 6405 The following goods, namely:-(i) Footwear of retail sale price exceeding Rs 250/- and not exceeding Rs 750/- per pair 37% (ii) All other footwear 40% 56. 6506 10 Safety headgear 40% 57. 6907 10 10, 6907 90 10 Vitrified tiles, whether polished or not 45% 58. 6908 Glazed tiles 45% 59. 7321 Cooking appliances and plate warmers, other than LPG gas stoves (with burners only, without other functions such as, grills or oven 40% 60. 7321 LPG gas stoves (with burners only, without other functions such as, grills or oven) 35% 61. 7323, 7615 19 10 Pressure Cookers 30% 62. 7324 Sanitary ware of iro....
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....ansistors sets, having the facility of receiving radio signals and converting the same into audio output with no other additional facility like sound recording or reproducing or clock in the same housing or attached to it 35% 88. 8527 Reception apparatus for radio-broadcasting, whether or not combined, in the same housing, with sound recording or reproducing apparatus or a clock (other than goods covered at S.No. 86) 40% 89. 8528 Television receivers (including video monitors and video projectors) whether or not incorporating radio broadcast receivers or sound or video recording or reproducing apparatus 35% 90. 8536 All goods 40% 91. 8539 The following goods, namely :- (i) Compact Fluorescent Lamp (CFL) falling under tariff item 8539 31 10 37% (ii) All other goods 40% 92. 9006 Photographic (other than cinematographic) cameras 35% 93. 9101, 9102 All goods, other than braille watches 35% 94. 9103, 9105 Clocks 45% 95. 9612 All goods 35% 96. 9617 00 11, 9607 00 12 Vacuum flasks 40% 8.3 The genesis for having two different 'sale value' ....
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....Finance (Department of Revenue) No. 2/2006-Central Excise (N.T.), dated the 1 st March, 2006, G.S.R. 113(E), dated the 1 st March, 2006, namely:- In the said notification, in the TABLE, after S.No.96 and the entries relating thereto, the following shall be added, namely:- (1) (2) (3) (4) "97. Any heading Parts, components and assemblies of automobiles 33.5% 98. 3808 30 40 Plant-growth regulator 30% 99. 9603 21 00 Toothbrush 28.5%". 2. This notification shall come into force on the 1st day of June, 2006 [F. No. B1/1/2006-TRU] Note.-The principal notification No. 2/2006-Central Excise (N.T.), dated the 1st March, 2006, was published vide number G.S.R.113(E), dated the 1st March, 2006." The scope of entry given at Sl. No.97 of the above notification dated 29.05.2006, literally covered the entire goods covered under the Central Excise tariff by prescribing 'any heading' under column (2) where a specific 'Chapter or heading or sub-heading' is required to be mentioned. Adding more vulnerability to this categ....
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....components imported as OE parts and as spare parts had to be accepted unless there was evidence to the contrary. To reject the transaction value, the onus is on the department to establish that price is not sole consideration for the sale/transaction. This would be consistent with the practice on the Central Excise side." 5. Therefore, Board would like to reiterate the acceptance of dual pricing as long as they represent the transaction value." From the above discussion, it is evidential that by including the scope of the wide gamut of parts, components and assemblies of automobile, under the MRP/RSP based Central Excise levy there was certain amount of lack of clarity on the scheme of 'sales value' to be adopted when there were two different methods of valuation for two different situations envisaged under the Central Excise statute. Thus, by genesis, there was variation in the sales value to be adopted for sale of automobile parts, depending on the method whether Transaction value under Section 4 ibid or MRP/RSP less abatement under Section 4A ibid. As a matter of abundant caution, it is recorded that the issue was analysed only for understanding the genesis of the pr....
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.... in case of open market sales excise duty is paid on MRP based on valuation notified under Section 4A of CEA 1944, excise duty is paid on MRP less 30% abatement notified by Central Govt., ER-1 reports assessable value as 'MRP less 30%' but Trail Balance records sales at transaction value, i.e., actual selling price, hence there can be no reconciliation at all, differences are bound to occur as regular books of accounts are maintained at actual sales value and not special assessable values notified for Central Excise Act. (ix) Appellant however has maintained books of account in a manner that reconciliation with MRP is possible, sales in open market are booked in Trial Balance at MRP value though goods are sold at sales price which is much lesser than MRP, trade discount is booked @ 30% of such MRP value equivalent to abatement, as actual sales price is even lesser, the difference between 'MRP less 30%' and that of actual sales price is further booked in Trade Discount Ledger. As an e.g., stated, in Bill No. EM1701015, goods are sold at Rs. 21,382/ though MRP of the said goods was Rs. 43,860/-. 30% abatement on the said MRP Rs. 13,158/- was accounted for as ....
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....,65,69,256/- giving out a difference of Rs.4,68,125/- is on account of exports made through three Shipping Bills No. 4159303 dated 16.02.2017; No. 5124917 dated 31.03.2017 and No.7082803 dated 30.06.2017 involving export value of Rs.2,93,528/- Rs.1,71,026/- and Rs.36,282/-, respectively. Similarly, the difference in figures of sales value between Trial Balance and ER-1 returns data of Rs.16,44,186/- [Rs.1,86,81,567/- (-) Rs. 1,70,37,381/-] is also explained by the prescribed rate of abatement 30% on MRP value. Thus, I find that the difference in figures of sales value occurring in the documents have been elaborately explained by the appellant in their records and before the authorities below as well as in the proceedings before the Tribunal, justifying that there is no short payment of excise duty in respect of sales made during this period. 9.4 I further find that the learned Commissioner in the impugned order has recorded the reasons for rejection of the appeal as follows: "DISCUSSION AND FINDINGS 8. Before going into the merits of the case, I find that appeal is hit by limitation of time. The impugned order was received by the appellant on 06.09.....
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.... From plain reading of the above provision, it transpires that the ground on which the extension beyond 60 days is to be given is that the appellant was prevented from presenting the appeal before the Commissioner (Appeals) and the cause or reason(s) is/are sufficient to explain this. Since, it has been specifically recorded in the impugned order that the appellant could not avail the facility of representing his appeal through legal/Central Excise consultant, it is evident that such an action was beyond the control of the appellant, as he had to appoint a new counsel/consultant to hear the case before the learned Commissioner (Appeals). Thus, I find that the legal requirement for condonation of delay within the permitted 30 days period beyond 60 days has been fulfilled by the appellant in the present case. 9.6 In the case of New Spice Sales and Solutions Ltd. (supra), the Coordinate Bench of the Tribunal have considered similar factual situation arising in the present case and have held that the delay in filing the appeal within the permissible period of 30 days is to be considered and refusal to condone the delay is set aside. The relevant paragraph of the said decision ....
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....n vide e-mail dated 24.11.2021 and stated that while arriving at the value, sales return and target discount are not being considered. The assessee has forwarded few details in excel sheet namely "GL311100 Oct, 16 to Mar,17". The sheet containing figures of various ledgers. On perusal of that it is noticed that the re conciliation submitted is not proper and satisfying and not meeting the requirements of audit objection. The differential value between Trial balance and ER returns are not reconciled. Recommendation of the Auditors: SCN is proposed to be issued to recover the dues under section 11 of Central Excise Act, 1944. Department's conclusion with reason: Para is accepted. Group to issue SCN immediately. Remarks: SCN No. 92/GST Audit RGD/AC/Gr-1/Cir-1 2021-22 issued under F. No. GADT/CnG/ADT/CE/895/2021-GR 1-CGST-ADT-RAIGAD ON 24.12.2021." Since the audit was conducted by the department on 23.09.2021 and the objection was raised based on the documents and financial records maintained by the appellant and the Trial Balance, it cannot be said that the appellant had suppressed the material facts. Thus, in my opinion there is no grounds fo....
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....ked and the impugned demand is not sustainable and is time barred on this ground also." 11. In view of the above, we are of the considered opinion that the Show cause Notice is not maintainable on limitation. Taking in to account other factors that the Show Cause Notice is vague and Non-specific, the same does not have any chance of survival. As such, remitting the matter back to the Commissioner (Appeals) is not going to serve any fruitful purpose. On the contrary, it would continue the litigation endlessly, without a reason. Therefore, we are of the considered opinion that the impugned Show Cause Notice is liable to be set aside. Therefore, the impugned OIO and OIA are not maintainable. The only way left for us, in the interest of Justice, is to allow the appeal. We do so. 9.8 I further find that in the case of Uniworth Textiles Limited (supra), the Hon'ble Supreme Court have held that there is no ground for invocation of extended period of limitation, since there is no case of 'wilful suppression' etc. The relevant paragraphs of the said case is given below: "18. We are in complete agreement with the principle enunciated in the above decisions, in light of t....
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....aid observations show that the words "with intent to evade payment of duty" were of utmost relevance while construing the earlier expression regarding the misstatement or suppression of facts contained in the proviso. Reading the proviso as a whole the Court held that intent to evade duty was essentially before the proviso could be invoked. 55. Though it was sought to be contended that Section 28 of the Customs Act is in pari materia with Section 11-A of the Excise Act, we find there is one material difference in the language of the two provisions and that is the words "with intent to evade payment of duty" occurring in proviso to Section 11-A of the Excise Act which are missing in Section 28(1) of the Customs Act and the proviso in particular... 56. The proviso to Section 28 can inter alia be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful misstatement or suppression of facts by the importer or the exporter, his agent or employee. Even if both the expressions "misstatement" and "suppression of facts" are to be qualified by the word "wilful", as was done in the Cosmic Dye Chemical case while construing the pr....
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....e appellant made efforts in pursuit of adherence to the law rather than its breach. 24. Further, we are not convinced with the finding of the Tribunal which placed the onus of providing evidence in support of bona fide conduct, by observing that "the appellants had not brought anything on record" to prove their claim of bona fide conduct, on the appellant. It is a cardinal postulate of law that the burden of proving any form of mala fide lies on the shoulders of the one alleging it. This Court observed in Union of India v. Ashok Kumar & Ors. - (2005) 8 SCC 760 that "it cannot be overlooked that burden of establishing mala fides is very heavy on the person who alleges it. The allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demand proof of a high order of credibility." 25. Moreover, this Court, through a catena of decisions, has held that the proviso to Section 28 of the Act finds application only when specific and explicit averments challenging the fides of the conduct of the assessee are made in the show cause notice, a requirement that the show cause notice in the present case fails to meet. In Aban L....