1997 (12) TMI 594 - AT - Central Excise

Summary

Issues: Valuation of goods sold through consignment agents, inclusion of excess freight and insurance charges in assessable value, applicability of larger period under Section 11A, inclusion of interest on delayed payments in assessable value, suppression of facts, time-barred demand, imposition of penalty.

In this case, the appellant used two types of Price Lists during the period 1985-86 to July 1988: Part [I] for goods sold at the factory gate and Part [VII] for goods transferred to consignment agents. The prices in Part [VII] were lower due to larger quantities sold by agents. The appellant paid duty on the price difference when the actual sale price exceeded the declared price. However, a show cause notice alleged that the ex-factory price should be the assessable value for goods sold through agents, demanding duty on various aspects and imposing a penalty. The appellant argued that the clearance to agents did not involve a sale, and they believed the assessable value should be declared through Part [VII]. They cited cases to support their position, claiming no deliberate suppression of facts.

Regarding the valuation of goods, the appellant argued that the larger period under Section 11A should not apply. They contended that excess freight and insurance charges should not be included in the assessable value, citing relevant case law. They also argued that interest on delayed payments should not be part of the assessable value, referencing a specific case. The Revenue argued that the ex-factory price should be the basis of valuation, relying on a Supreme Court judgment. They claimed that the appellant made a misleading statement in the Part [VII] price list, justifying the invocation of a larger period.

The Tribunal, considering the arguments, held that the ex-factory price alone should be the basis of valuation, following the Supreme Court precedent. They also ruled that excess freight and insurance charges should not be included in the assessable value, in line with another Supreme Court judgment. Regarding the limitation period, the Tribunal found that full disclosure was made through the price lists, indicating no suppression of facts. Consequently, they held that the demand beyond the normal duration was time-barred, leading to the dismissal of the penalty imposition.

In conclusion, the Tribunal disposed of the appeal by ruling in favor of the appellant on the valuation issue, exclusion of excess charges from assessable value, and the limitation period, ultimately leading to the rejection of the penalty imposition due to the time-barred demand.