The issue of a demand being time barred when it is made on the basis of valuation and / or rate of duty, is an issue relating to the assessment of goods and an appeal under this is maintainable before the court: Bombay High Court.

The Bombay High Court passed a judgement on the 23rd of December, in 2021 answering the queries of the division bench in relation to the Central Excise Act, 1944. This was seen in the case of The Commissioner of CGST And Central Excise, Belapur Vs Hindustan Petroleum Corporation Ltd (Central Excise Appeal No. 60 Of 2018) and this judgement was presided over by The Honourable Mr. Justice R.D. Dhanuka, The Honourable Mr. Justice Nitin W. Sambre and The Honourable Mr. Justice Abhay Ahuja.


When looking into the facts of the case, we see the respondent has an Oil Terminal where they inter-alia received non-duty paid Superior Kerosene Oil (SKO) and had cleared SKO to Oil Marketing Companies and in respect of those clearances to the said Oil Marketing Companies, paid Central Excise Duty on value which is allegedly lesser than the transaction value. The revenue accordingly called for the details and the respondent furnished details of the transactions. The revenue then came to the conclusion, the Central Excise Duty on an assessable value was much less than the transaction value actually recovered from the Oil Marketing Companies in contravention of the provisions of Section 4(1)(a) of the Central Excise Act, 1944.

According to the revenue, the differential duty payable by the respondent on account of higher realization of their value was worked out as Rs.3,64,29,967 and the respondent had intentionally with the sole purpose of evading payment of Central Excise Duty wilfully mis-declared the value of the SKO cleared by them to the other Oil Marketing Companies. Revenue accordingly issued show-cause notice upon the respondent as to why the Central Excise Duty amounting to Rs.3,64,29,967 not be demanded and recovered from them under the proviso to Section 11A(1) of the said Act and also as to why penalty should not be imposed on them under Section 11AC of the said Act and / or Rule 173Q read with 209 of the Central Excise Rules, 1944 and under Rule 25 of the Central Excise Rules, 2001/2002. The respondent was also called upon to show-cause as to why interest under Section 11AA/AB of the said Act should not be charged and recovered from them.

The Commissioner observed that it was a clear case of misdeclaration and suppression of facts justifying the invocation of the extension of the time limit by the revenue. It is further held that the respondent was also liable to pay penalty under Section 11AC of the said Act in the sum of Rs.3,64,29,967/- and interest under Section 11AB of the said Act.  The respondent challenges this order in the tribunal and it is held that though on merit issue was held against the respondent assessee, the demand is held to be not sustainable on limitation and the impugned order was quashed. The revenue then filed an appeal for the same to challenge the order passed by the Tribunal.

The Division Bench of Bombay High Court at Mumbai found it difficult to reconcile the conflict of views of this Court in APM Terminals India Pvt. Ltd. v/s. Commissioner of Central Excise, Navi Mumbai and Anr. and the judgment delivered by Division Bench of this Court in case of Facor Steels Ltd. v/s. Commissioner and formulated two questions for consideration by a Larger Bench.

The Division Bench has referred following questions of law to the Full Bench.

  • Whether on the facts and circumstances of the case and in law, the issue of a demand being time barred when it is made on the basis of valuation and / or rate of duty, is an issue relating to the assessment of goods and, therefore, an appeal under Section 35G of the Act, is not maintainable before this Court?
  • Whether an appeal under Section 35G(1) of the Act would be maintainable before this Court when there is no dispute with regard to the rate of duty and / or valuation as arrived at by the Tribunal (both parties accept the decision of the Tribunal on that issue) and challenge the impugned order only to the extent of the demand being barred by limitation ?


The court in its judgement answered the queries of the division bench. For the first Question, the court said answer is in negative and the Appeal is maintainable against the respondent in this Court and for the second Question the court said the Answer is in affirmative. The court also placed the Appeal papers before the Division Bench for further consideration of the appeal.

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