2003 (12) TMI 426 - AT - Central Excise

Summary

Issues:
Challenge against penalty and interest imposition under Section 11AC and 11AB for delayed payment of duty on amortized cost of moulds supplied free of cost by buyers.

Analysis:
The appeal was filed against an order imposing a penalty and interest for delayed payment of duty on the amortized cost of moulds provided free of cost by buyers of the appellant's products. The appellant, engaged in manufacturing plastic moulded parts, included the cost of moulds in the assessable value of final products, except for cases where information on cost was not provided by buyers. The appellant paid the differential duty upon receiving the required information, even before the issuance of the show cause notice. The adjudicating authority confirmed the duty demand, imposed a penalty under Section 11AC, and ordered interest under Section 11AB. Additionally, a penalty was levied on the Manager of the appellant-company. The Commissioner (Appeals) upheld the invocation of Section 11AC but reduced the penalty amount. The personal penalty on the Manager was set aside, and the liability under Section 11AB was confirmed for a specific period.

The appellant argued that the delay in duty payment was due to the delay in obtaining necessary information from buyers, without any intent to evade payment. It was contended that the invocation of Section 11AC was unjustified, and the demand was time-barred as the show cause notice was issued after a significant delay. Moreover, conflicting Tribunal rulings existed on the inclusion of the cost of moulds in the assessable value. While some cases held that such costs were not includible, others required amortization. The appellant highlighted that it had paid the duty amount before the show cause notice was issued, relieving it from penalty burden.

The Tribunal found merit in the appellant's contentions, noting that the issue of including the amortized cost of moulds in the assessable value was not conclusively settled during the relevant period. Given the conflicting Tribunal decisions on this matter, the Tribunal concluded that there was no willful suppression of facts by the appellant to avoid duty payment. Consequently, the imposition of penalty under Section 11AC was deemed unjustified. Therefore, the Tribunal set aside the penalty demand against the appellant and allowed the appeal, ruling in favor of the appellant.