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2023 (9) TMI 717 - CESTAT NEW DELHI
Invocation of extended period of limitation - Valuation of manufactured goods - Waste Rubber Granules (Patta) and Waste Rubber Granule (RD) - rejection of declared value - Rule 8 of Customs Valuation Rules, 2000 - demand of interest and penalty - revenue neutrality - HELD THAT:- It is not in dispute that Section 11A provides for a limitation of one year for issuing the SCN. This period can be extended to five years in case the duty is not paid, short paid, not levied, short levied or erroneously refunded on account of fraud or collusion or willful statement or suppression of facts or violation of the provisions of Act or Rules with an intent to evade the payment of duty - while the assessee was required to self–assess duty and file ER-1 return, a check against such self-assessment was the scrutiny which the officers were mandated to do by Rules. Audit is the next level of check against the scrutiny by the officers. If the audit points out some wrong assessment which was not pointed out by the officer scrutinising the ER-1 return, the fault lies at the doorstep of the officer. It does not, by itself, establish that the assessee had suppressed any facts.
Revenue Neutrality - HELD THAT:- Revenue neutrality is a concept which has evolved through a series of decisions only for the limited purpose of determining if the assessee could have had an intention to evade payment of duty. This intention is an essential ingredient to invoke extended period of limitation. If it is Revenue neutral situation where, the excess duty, if paid, would have been available to the appellant itself or its another unit or a related unit as CENVAT credit, there cannot be an intention to evade because the assessee would gain nothing by evading - Beyond the limitation, Revenue has no remedy although the charge remains. It is like a time-barred debt which, though owed, cannot be recovered by the creditor. If differential duty was chargeable but was not paid and it is later discovered by audit and it gets time barred under Section 11A, the responsibility for it rests squarely on the officers mandated to scrutinize the returns in time and raise a demand in time.
Since the entire demand is beyond the normal period of limitation, the demand in the impugned order or the consequential interest and penalties cannot be sustained. The impugned order is set aside - Appeal allowed.