No Extended Limitation or Penalty Where Clearance Details Were Disclosed in ER-1 Returns: CESTAT [Read Order]
CESTAT ruled that excise duty must be recomputed after allowing duty adjustment, and the extended limitation cannot apply when disclosures are made in returns.
![No Extended Limitation or Penalty Where Clearance Details Were Disclosed in ER-1 Returns: CESTAT [Read Order]](https://images.taxscan.in/h-upload/2025/06/19/2050407-er-1-returns-cestat-taxscan.webp "No Extended Limitation or Penalty Where Clearance Details Were Disclosed in ER-1 Returns: CESTAT [Read Order]")
The Hyderabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that the excise duty demand against Safe Parentals Ltd and Safe Formulations Ltd must be recalculated after allowing credit for duty already paid, and the extended period for raising the demand cannot be invoked since all relevant details had been disclosed in statutory returns.
The case arose from two orders passed by the Commissioner of Central Excise, Guntur, partially confirming duty demands against Safe Parentals Ltd and Safe Formulations Ltd. The department filed appeals before the Tribunal seeking to reinstate the full demand on the ground that the companies had not included certain clearances made under third-party brand names while calculating their total value of clearances under Notification No. 08/2003-CE.
The respondents’ counsel argued that they had disclosed the relevant clearance values in their ER-1 returns and were entitled to the exemption under the notification. They relied on an earlier Tribunal order dated 04.07.2013, in which the Tribunal had already remanded the matter for limited purposes of verifying the quantum of duty payable and adjusting the duty already paid. They also argued that the department could not invoke the extended limitation period since there was no suppression or misstatement.
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The department’s counsel argued that clearances made under other brand names should have been included in the value calculation and that the adjudicating authority had erred by confirming only a part of the demand. It claimed that the omission justified invoking the extended period of limitation and imposing penalties.
The two-member bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that the legal position had already been settled in the earlier Tribunal order, which was not appealed by either party. It further observed that the companies had disclosed the disputed clearances in their ER-1 returns, and hence, the extended limitation period could not apply. The tribunal also clarified that penalties were not warranted in such a situation where all facts had been disclosed.
The tribunal remanded the matter back to the adjudicating authority for the limited purpose of recomputing the demand after allowing adjustment of the duty already paid. It held that no penalties could be imposed, and the department’s appeal was disposed of with these directions.
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