Revenue Cannot Treat Turnover Mismatch As Duty Evasion Without Examining On Merits: CESTAT Mumbai

The CESTAT Mumbai has held that when an assessee shows sufficient cause for delay in filing an appeal within the statutorily permissible condonable period of 30 days, the Commissioner (Appeals) cannot reject the appeal on limitation without examining the merits. A Bench of the CESTAT comprising of Member (Technical) M.M. Parthiban was hearing the appeal, challenging the order of the Commissioner(Appeal) whereby appeal of the assessee was dismissed as time-barred by 26 days and thereby the automatic confirmation of differential duty demand of ₹2,64,039 along with interest and penalty. The assessee, Gold Seal Engineering Products Pvt. Ltd. is engaged in the manufacture of rubber auto parts supplied both to Original Equipment manufacturer(OEM) market and to retail market. For OEM supplies, the assessee discharged duty on transaction value under Section 4 of Central Excise Act, 1944 while for retail supplies, the assessee discharged duty on MRP valuation under Section 4A. The Department, during the audit compared the sales turnover in the Trial Balance with the sales turnover reflected and noticed a difference between the two figures. The Department declared that the assessee had not declared the correct assessable value under Section 4 (Valuation of excisable goods for purposes of charging of duty of excise) and that differential central excise duty of Rs. 2,64,039 was recoverable, which was confirmed by the Adjudicating Authority. The assessee preferred an appeal before CESTAT challenging the rejection of the statutory appeal as time-barred and the duty demand without going in the merits of the case. The assessee argued before the bench that the difference in turnover arose because ER-1 reported assessable value based on MRP minus abatement, whereas the Trial Balance recorded actual commercial sales value with full trade discounts, which was naturally higher than the assessable value used for excise. Also, the assessee argued that the three export consignments were recorded in the Trial Balance but were not required to be reflected in ER-1(Monthly Central Excise Return), contributing to the turnover mismatch and duty had been fully paid for all clearances no transaction involved under-payment. The Tribunal categorically held that the Commissioner (Appeals) was required to condone the delay of 26 days, since it was within the condonable period and the assessee had shown the sufficient cause, namely non-availability of its earlier Central Excise consultant post-GST and the time taken to appoint a new consultant, beyond the assessee's control. The Tribunal also held delay within condonable period must be condoned when adequate cause is shown, and a demand raised purely on audit of already disclosed records cannot justify invoking the extended period on allegations of wilful suppression. Accordingly, the Bench allowed the appeal in the favour of the assessee, setting aside the order of Commissioner(Appeals). Case Title: Gold Seal Engineering Products Private Limited Vs. Commissioner of CGST & Central Excise Navi Mumbai Commissionerate Case No: Excise Appeal No. 87141 of 2023 Appearance for the Appellant: Shri Mahesh Bhattar, Chartered Accountant Apearance for the Respondent: Shri Ranjan Kumar, Authorised Representative Click Here To Read/Download Order

Revenue Cannot Treat Turnover Mismatch As Duty Evasion Without Examining On Merits: CESTAT Mumbai

Rajnandini Dutta

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