At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, HONBLE MS.JYOTI BALASUNDARAM
By, VICE-PRESIDENT &
HONBLE MR. P.KARTHIKEYAN
By, MEMBER (TECHNICAL)
For the Appearing Parties: R.P. Meena, SDR, S. Venkatachalam, Advocate.
The respondents herein, who are engaged in the manufacture of cotton yarn, cleared their entire production during the period October 1996 to June 2000 on stock transfer basis to depot at Tiruppur and to their consignment agents for sales and for other disposal. The final sale of yarn was effected from the depot at Tiruppur. Cotton yarn was consumed for the manufacture of hosiery fabrics on their own account besides effecting sales to other customers. While effecting clearances to job workers, the respondents had not adopted the same value for the same kind of yarn and adopted much lesser value when compared to the value adopted for the sales made from depot to other customers. Hence a show-cause notice dated. 15.3.01 was issued proposing recovery of differential duty of Rs.13,88,269/- together with interest, under the proviso to Section 11A (1) of the Central Excise Act, and proposing imposition of penalty under Section 11AC read with relevant Rules. The notice was adjudicated by the Additional Commissioner who upheld the demand together with interest and also imposed penalty of equal amount. The Commissioner (Appeals) accepted the contention of the assesses that the demand for the period October 1996 to 16.3.2000 was barred by limitation and restricted the demand for the period from 17.3.2000 to 30.6.2000 which worked out to Rs.2,45,563/- and he also reduced the penalty to Rs.50,000/-. Hence this appeal by the Revenue.
2. We have heard both sides. It is the case of the department that assesses were guilty of suppression as they had not filed any declaration as required under the second proviso to Rule 173C of Central Excise Rules, 1944. However, we find that the assesses had filed declaration in terms of sub-rule (3A) of Rule 173C regarding their market pattern. They had also filed worksheets showing item wise details of dispatch, value, forwarding charges and differential duty along with RT-12 Returns filed every month. In the worksheet, they had indicated quantity sent for conversion and the rate adopted. Thus it is clear that the department was aware that assesses were sending cotton yarn to job worker for conversion and selling hosiery fabrics at a particular value. Hence all the relevant information was available with the department. If the department was of the view that the value adopted by the assesses for clearances to job worker was much lesser than the value adopted for sales made from depot to other customers, show-cause notice alleging undervaluation and proposing to recover differential duty should have been issued within the norm
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al period of limitation. We, therefore, agree with the finding in the impugned order that the extended period of limitation is not available to the department and that the demand for the period prior to 17.3.2000 is time barred. We, accordingly, uphold the impugned order and reject the appeal.