2001 (3) TMI 938 - AT - Central Excise

Summary

Issues: Valuation of aerated waters for excise duty, Permissibility of deductions in assessable value, Inclusion of costs in assessable value, Time bar for demand

Valuation of Aerated Waters for Excise Duty:
The case involved a dispute regarding the valuation of aerated waters manufactured and cleared by the appellants during a specific period. The impugned order confirmed duty demand upon the appellants, along with penalties, based on the valuation issue. The show cause notice alleged that certain deductions claimed by the appellants were not permissible as they related to items of expenditure that should be included in the assessable value of goods. The impugned order held that costs like advertisement, publicity, and maintenance of depot, including employee salaries, should not be excluded from the assessable value.

Permissibility of Deductions in Assessable Value:
The appellants contended that the demand raised in the show cause notice was unjustified as it related to transport and distribution activities, not manufacturing. They argued that certain costs, such as depreciation for bottles and employee costs at the depot, should not be included in the assessable value. The appellants also challenged the order's inclusion of rent for the godown, claiming it was part of the factory rent. They emphasized that the costs in question were post-manufacture distribution activities and should not be included in the assessable value.

Inclusion of Costs in Assessable Value:
The learned DR argued that all costs incurred by the manufacturer, including depot maintenance costs, form part of the manufacturing cost and should be included in the assessable value. Referring to legal precedents, it was contended that costs like rent, electricity, water, and employee costs at the depot are rightly includible in the assessable value. The DR disputed the appellants' assertion that the costs should be excluded and supported the impugned order's findings.

Time Bar for Demand:
The appellants raised a time bar defense, claiming that the extended period for demand was not applicable as they had not suppressed any facts with intent to evade duty payment. However, it was held that the appellants did not inform the authorities about the deductions claimed, including depot maintenance costs and employee expenses. The judgment found that the proviso to Section 11A was attracted in the case due to lack of disclosure in the price list filed by the appellants.

Judgment:
The appeal was partially allowed and remanded for reconsideration of the issues related to the inclusion of depreciation for bottles and rent in the assessable value. The rest of the demand was confirmed. The Commissioner was directed to recompute the demand and reconsider the quantum of penalty in the remand proceedings. The judgment emphasized the need for a factual verification and reconsideration of certain aspects related to the valuation of aerated waters for excise duty.