The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal,( CESTAT ) has held that central excise authorities cannot deem the clearance to have been a provisional assessment in the absence of exercise of such an option.
Finolex Cables Ltd, the appellant challenged the order of Commissioner of Central Excise (Appeals), Pune – I which upheld the confirmation of demand of ₹43,48,897/-, under section 11A of Central Excise Act, 1944, and imposition of penalty of like amount under section 11AC of Central Excise Act, 1944 by the original authority about clearance of goods from their unit at Pimpri between April 2007 and March 2009 and April 2010 and March 2010 to their factories at Urse and Goa.
The goods that attained ‘semi-finished’ form at their Pimpri factory were cleared to the other two units for utilization in manufacture of ‘cables and wires’ and, by recourse to rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 the appellant had been discharging duty liability under Central Excise Act, 1944 by adopting computation in certificate of cost accountant, based on CAS-4, on which 10%, as required by the relevant rule under which they had claimed coverage, was added.
The Apex Court in case of Mafatlal Industrie observed that “Appellants have while filing the ER-1 return disclosed all the facts and have also submitted the CAS-4 certificate. The department was aware of the valuation practices adopted by the Appellants. All the material facts relating to the manufacture, clearance and valuation of the cables used in the captive consumption were always within the knowledge of the department. The ER-1 returns also show that there was an interplant transfer. Undisputedly appellant had during a few months excess paid the duty. This clearly shows that the alleged short payment of duty was not accompanied by the intention to evade payment of duty. Therefore, when the Appellants have paid duty over what was payable as per the department, the finding of suppression cannot survive against the Appellants. In our view appellants have not violated any provisions of the Central Excise Act or the rules made thereunder. Thus even if there was any short payment of duty the same was based on the CAS-4 certificate issued by the independent Cost Accountant, was due to the bonafide belief of the Appellants regarding the determination of assessable value, cannot be on account of suppression, fraud misstatement or contravention of the rule to evade payment of duty leading to invocation of extended period of limitation as per the proviso to Section 11A (1) of the Central Excise Act,1944.’
A two-member bench of Mr C J Mathew, Member (Technical) and Mr Ajay Sharma, Member (Judicial) observed that in the absence of exercise of option by the assessee for ‘provisional assessment’, it is not open to central excise authorities to deem the clearances to have been provisional and to proceed with final assessment for each year. Respectfully following the above decision, the CESTAT set aside the impugned order and allowed the appeal.
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