2026-VIL-1722-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Invocation of extended period of limitation for demand of duty on cement allegedly sold below cost of production - Appellant, working under the Area Based Exemption scheme, was demanded duty by invoking the extended period on the basis of Board Circular issued after the Supreme Court judgment in Fiat India, on the allegation that cement was sold below the cost of production shown in CAS-4 - Whether the extended period of limitation could be invoked to demand central excise duty - HELD - Duty paid under the Area Based Exemption scheme is refundable, and the Department grants the refund after being satisfied with the duty payment upon proper assessment. Suppression of valuation therefore never arose - The Department failed to adduce any evidence that the Appellant received any money as flow back. The Board Circular does not mean that the extended period is invocable in all cases. It applies to situations involving valuation of goods where the sale has taken place below the approved price, as in Fiat India, and the cost of production arrived at by CAS-4 cannot be considered as approved price. The circumstances mentioned in the Circular are non-existent in this case. The Circular also stipulates that the extended period should not be invoked where an alternate interpretation was taken by the assessee before the Supreme Court judgment - All records maintained by the Appellant were verified by the officers before sanctioning the refund claims, and the allegation of suppression with intention to evade tax is devoid of merit. Since the demand is not sustained, interest and penalty also do not arise - The demand of duty confirmed by invoking the extended period is set aside along with interest and penalty – The appeal is disposed of - Liability on freight collected in excess of actual freight incurred - Appellant, a manufacturer registered for payment of service tax under GTA service, charged freight from buyers for delivery of goods at the buyer's end, and in some cases the freight charged was more than the actual freight incurred - Whether service tax is payable on the excess amount realised for the period up to 30.06.2012 - HELD - The excess amount charged is the profit on the transportation activity rendered by the Appellant. Under Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994, the Appellant was required to pay service tax on the freight charges paid by it and not on the amount realised in excess of the freight incurred. The question of payment of service tax on such excess amount is not supported by any provision of law. The first appellate authority itself admitted that no service tax is payable from 01.07.2012, when the Rule came into effect, and there is no change in the Rule for the period prior to 01.07.2012. Upholding the service tax up to 30.06.2012 is not supported by any provision of the Act or Rules. As the demand cannot be sustained, interest and penalty under Section 78 do not arise - The demand of service tax for the period prior to 01.07.2012 is set aside along with interest and penalty - Demand of erroneously sanctioned refund by invoking extended period of limitation - Show cause notice was served by invoking the extended period for recovery of refund pertaining to an earlier year, and the Appellant operated under area based exemption - Whether the demand of erroneous refund with interest and penalty could be confirmed by invoking the extended period - HELD - The Appellant operates under area based exemption and all the records maintained by it are verified by the officers before sanctioning the refund claim. Considering these facts, the allegation of suppression of facts with intention to evade tax does not exist in this case - The demand confirmed along with interest and penalty by invoking the extended period is not sustainable and is set aside - The penalty imposed under Section 77 is upheld - All penalties imposed under Section 78 are set aside, the penalty under Section 77 is upheld, and the appeal is disposed of.
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