₹5.39 Lakh Excise Duty Demand on Handling Charges Set Aside as SCN Held Time-Barred: CESTAT Allows Appeal on Limitation [Read Order]

In a recent ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, set aside a demand of ₹5.39 lakh in excise duty, along with interest and penalty. after finding that the show cause notice was issued beyond the permissible limitation period.

The matter arises from an audit observation that the appellant, BDS Decor and Prefab P Ltd, engaged in supplying prefabricated structures to the Ministry of Defence, had received indirect income on account of handling charges during transportation.

These charges were treated as additional consideration liable to excise duty, and a show cause notice was issued on 4 September 2009. The Additional Commissioner confirmed the demand of ₹5,39,559 along with equal penalty in November 2010, which was later upheld by the Commissioner (Appeals) in September 2012.

The appellant argued that the place of removal was the factory gate, and handling charges incurred during transportation were separate service charges, already subjected to service tax. They also added that imposing excise duty on the same amount amounted to double taxation.

Appellant also submitted that there was no suppression of facts, as the department had prior knowledge of the transactions, and hence the extended period of limitation could not be invoked.

The revenue relied on the supreme court precedents and CBEC circulars, such as CBEC Circular No.1065/4/2018-CX dated 08.06.2018, Roofit Industries Ltd. – 2015, and Ispat Industries Ltd. – 2015

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After hearing both sides, the tribunal observed the issue of limitation; the show-cause notice did not allege suppression, misstatement, or collusion with intent to evade duty. It is also noted that the issue came to light only during a routine audit, and the assessee had been regularly filing returns and paying applicable duty.

Referring to earlier rulings th tribunal held that Revenue has not made any case for the invocation of the extended period.

The bench of S.S Garg (Judicial member), P.Anjani Kumar ( technical member ) ruled that

“Revenue has not made any case for invocation of extended period. Accordingly, we find that the impugned SCN is barred by limitation. Consequentially, the orders passed on the basis of SCN are liable to be set aside.”

Accordingly, the appeal was allowed on limitation grounds, without going into the merits of the case.

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