1998 (7) TMI 604 - AT - Central Excise

Summary

Issues:
- Appeal filed by assessee and Department against Order-in-Original confirming demand of duty on Air-conditioners and penalty.
- Determination of assessable value based on retail price charged by related person Lloyds.
- Allegations of suppression of material facts and invocation of larger period of limitation.
- Calculation of assessable value without considering wholesaler's margin of profit.
- Department's appeal for inclusion of extra amounts collected by Lloyds in assessable value.

Issue 1:
The Appellate Tribunal considered appeals filed by the assessee and the Department against the Order-in-Original confirming the demand of differential duty on Air-conditioners manufactured and cleared by the assessee during a specific period and imposing a penalty on the manufacturer.

Issue 2:
The Tribunal analyzed the method of determining the assessable value based on the retail price charged by the related person, Lloyds, to consumers. It was noted that the assessable value should include the wholesaler's margin of profit, which was not accounted for in the calculation based on Lloyds' retail price.

Issue 3:
Regarding the allegations of suppression of material facts and the invocation of a larger period of limitation, it was observed that the department was aware of crucial aspects such as the low percentage of sales at the factory gate to dealers and the relationship between the assessee and Lloyds. The Tribunal held that the grounds for invoking the larger period of limitation were not tenable, and the entire claim was barred by limitation.

Issue 4:
The Tribunal addressed the Department's appeal for the inclusion of extra amounts collected by Lloyds from ultimate buyers in the assessable value. It was clarified that such inclusion would only be relevant for sales made to hospitals and factories covered by a specific notification, amounting to less than 2% of total sales.

Conclusion:
In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the assessee and dismissing the appeal filed by the Department. The decision highlighted the importance of considering wholesaler's margin of profit in determining the assessable value and clarified the limitations on including extra amounts collected by a related person in the duty calculation.