Gold Seal Engineering Triumphs in CESTAT: Delay in Excise Appeal Condoned and Demand Set Aside

Mumbai Tribunal Upholds Gold Seal's Appeal, Rejects Extended Limitation on Alleged Excise Duty Evasion  

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Regional Bench in Mumbai has delivered a favorable verdict for Gold Seal Engineering Products Private Limited, Navi Mumbai, in a case concerning the condonation of delay and excise duty demands. The Tribunal, led by Member (Technical) Mr. M.M. Parthiban, adjudicated on the contentious issues surrounding the appeal filed by Gold Seal Engineering against the order of the Commissioner of Central Tax (Appeals), Raigarh.

The appeal stemmed from an earlier decision by the Commissioner (Appeals) that rejected Gold Seal's appeal as time-barred, due to a 26-day delay beyond the stipulated 60-day period. This delay was attributed to a change in the legal consultant following the abolition of Central Excise. However, the Tribunal found sufficient cause for condoning the delay within the additional permissible period of 30 days, emphasizing that the change in legal representation was beyond the control of the appellant.

The case also involved a demand for differential central excise duty amounting to Rs. 2,64,039, which was raised following an audit objection. The department had alleged wilful suppression of facts, invoking an extended period of limitation. However, the Tribunal held that the demand was unsustainable, as there was no evidence of wilful suppression or intent to evade duty. The Tribunal noted that all relevant records, including Trial Balance and ER-1 returns, were duly maintained and available to the department.

Gold Seal Engineering, represented by Chartered Accountant Shri Mahesh Bhattar, successfully demonstrated that the variations in sales figures were due to permissible trade practices, including dual pricing strategies for Original Equipment Manufacturer (OEM) supplies and retail sales under MRP-based valuation. The Tribunal accepted the reconciliation of sales figures provided by Gold Seal, finding no short payment of duty.

The decision draws on precedents such as New Spice Sales and Solutions Ltd. v. Commissioner, CGST & Central Excise, Noida, and Uniworth Textiles Limited v. Commissioner of Central Excise, Raipur, which emphasize that delays due to procedural complexities and reliance on audit objections do not warrant an extension of the limitation period.

This ruling underscores the importance of due diligence in excise matters and sets a precedent for handling similar cases where procedural delays and audit objections are involved. It also highlights the Tribunal's role in ensuring that justice is served by examining the merits of each case, beyond procedural technicalities.

Bottom Line:

Appeal in excise matters - Condonation of delay in filing appeal - Delay of 26 days beyond the stipulated 60 days explained as due to change of legal consultant - Held, sufficient cause shown for condonation of delay within the additional 30-day permissible period. Demand raised invoking the extended period of limitation based on audit objections held unsustainable as there was no evidence of wilful suppression or intent to evade duty.

Statutory provision(s): Central Excise Act, 1944 Sections 4, 4A, 11A

Gold Seal Engineering Products Private Limited v. Commissioner of CGST and Central Excise, (CESTAT)(Regional Bench, Mumbai) : Law Finder Doc Id # 2811585