2002 (4) TMI 527 - AT - Central Excise

Summary

Issues:
Determining assessable value of waste of man-made fiber, inclusion of packaging charges in assessable value, invocation of extended period of limitation for demanding duty, imposition of penalty under Rule 173Q of Central Excise Rules and Section 11AC of Central Excise Act.

Assessable Value of Waste of Man-made Fiber:
The appeals filed by M/s. Chenab Textile Mills revolve around the issue of determining the assessable value of waste of man-made fiber. The Appellants contested the inclusion of packaging charges in the assessable value, arguing that bardana charges were collected only when bardana was supplied by them. They relied on previous cases to support their contention that optional packing costs should not be included in the assessable value. However, the Respondent argued that the waste material was removed only in the supplied or buyer-brought packing, citing the Apex Court's decision in MRF case to support the inclusion of packing charges in the assessable value.

Invocation of Extended Period of Limitation:
The Appellants argued against the invocation of the extended period of limitation for demanding duty, stating that there was no suppression of facts by them to evade duty payment. They highlighted that bardana charges were separately shown in the invoices, and the show cause notice did not mention any allegations of suppression. The Tribunal found merit in these arguments and held that the extended period of limitation was not invokable in this case.

Imposition of Penalty:
Regarding the imposition of penalties under Rule 173Q of the Central Excise Rules and Section 11AC of the Central Excise Act, the Appellants contested that penalties exceeding 100% were unjustified as there was no suppression of facts. They cited cases where it was held that in cases of consolidated penalties, apportionment cannot be done in appeal. The Tribunal agreed with the Appellants, setting aside the penalties imposed and directing the Adjudicating Authority to recompute the duty payable by the Appellants.

Conclusion:
The Tribunal upheld the duty demanded on Dharamada and handling & forwarding charges, while ruling that the cost of packaging charges was includible in the assessable value based on the Apex Court's test. However, penalties under Section 11AC and Rule 173Q were set aside, and interest under Section 11AB was deemed not chargeable. The Adjudicating Authority was instructed to recalculate the duty payable by the Appellants in line with the Tribunal's order, ultimately disposing of both appeals accordingly.