In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) of Mumbai held that the set-off of excess duty payments against short-payments is permissible, and remanded the case back to the lower authority for fresh consideration.
The assessee/appellant in the case is M/s Foundation Brake Manufacturing Pvt Ltd.
Initially, the appellant faced a provisional assessment of excise duty for the period from April 2008 to September 2008. During this period, the assessable value of the goods was determined only after the buyers received discounts on their purchases. This resulted in complications regarding the valuation and assessment of duty. Later on, it was found that there was an excess payment of ₹94,07,448 in some clearances, while in others, there was a short-payment of ₹49,24,479.
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The Commissioner of Central Excise, Customs & Service Tax, Nasik-I, disallowed the set-off between these excess payments and short payments, leading to a duty liability on the short-paid amount, along with interest.
Aggrieved, the appellant contested this decision before CESTAT, arguing that similar disputes for other periods had been resolved by the central excise authorities and were left uncontested. These cases involved similar issues and had been remanded by the Tribunal for re-evaluation.
The appellant’s counsel, Mr Sachin Chitnis, pointed out that the Tribunal had previously remanded similar cases, directing the original authority to consider Rule 10A of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. In those instances, the original authority had allowed the set-off of short-payments against excess payments, and these decisions were not challenged by the Revenue.
The Revenue’s case was represented by Mr Rajiv Ranjan, who maintained that the lower authority’s decision was right.
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The bench of Mr C J Mathew and Mr Ajay Sharma, after listening to both sides, observed that for the period from April 2007 to March 2008, the Tribunal had already remanded the matter for consideration under Rule 10A. Similarly, for the period from April 2008 to March 2010, the Tribunal had directed a similar remand. Consequently, the original authority had allowed the set-off in those periods, and these orders had been left uncontested by the Revenue.
The present dispute was therefore considered by the Tribunal in light of these prior decisions. It was observed that the principle of allowing set-offs between excess payments and short-payments had already been established in earlier remand orders. Given that the original authority’s decision to disallow set-off for the period from April 2008 to September 2008 was inconsistent with previous findings, the Tribunal decided that the matter should be remanded once more.
Thus, the appeal was allowed, with the decision deferred for a fresh review by the original authority.
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