Extended Period of Limitation not Invocable on Non-Inclusion of VAT in Assessable Value: CESTAT sets aside Duty Demand Order [Read Order]

Recently in a ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Kolkata, set aside a duty demand order against an assessee concerning the non-inclusion of Value Added Tax ( VAT ) in the assessable value for excise duty calculation. The Tribunal held that the extended period of limitation was not invocable due to interpretational difficulties prevailing during the disputed period.

The case arose from an order issued by the Commissioner of Central Excise, Kolkata-IV, in December 2014. The Commissioner had confirmed a demand against the appellant/ assessee, M/s. B.D. Castings Pvt. Ltd., asserting that the VAT collected from customers should have been included in the assessable value for calculating excise duty for the period between October 2004 and September 2007.

Become a PF & ESIC expert with our comprehensive course - Enroll Now

Representing the appellant, Advocate N.K. Chowdhury argued that the non-inclusion of VAT in the assessable value was due to a long-standing interpretational ambiguity, which had only been resolved by the Supreme Court's ruling in iCCE, Jaipur v. Super Synotex (India) Ltd. in 2014. Therefore, the counsel for appellant contended that the extended period of limitation could not be invoked in this case.The counsel cited similar rulings from other tribunals, particularly in Jayaswal Neco Industries Ltd. v. CCE, Raipur and CCE, Delhi-III v. Microtek Forgings, where demands were set aside on account of time-barred proceedings.

After considering the arguments of both the sides, the Tribunal, comprising Judicial Member R. Muralidhar and Technical Member Rajeev Tandon, agreed with the appellant’s argument. They noted that the show-cause notice for the period in dispute was issued in 2009, beyond the normal period of limitation. During this time, there was considerable confusion about whether VAT collected but not paid to the government should be included in the assessable value for excise duty purposes.

Referring to earlier judgments, including the Super Synotex case, the Tribunal observed that due to the ambiguity in law and the circulars issued by the Central Board of Excise and Customs ( CBEC ), which favored the appellant’s stance, it was reasonable for the appellant to act under a bona fide belief. Therefore, invoking the extended period of limitation was not justified.

Become a PF & ESIC expert with our comprehensive course - Enroll Now

In result, the Tribunal set aside the duty demand order, allowing the appeal on the grounds of time-bar. The appellant will be eligible for consequential relief as per law.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates