2004 (2) TMI 449 - AT - Central Excise

Summary

Issues:
1. Applicability of transaction value concept to supervision and service charges.
2. Interpretation of Section 4(3)(d) of the Central Excise Act, 1944.
3. Application of amended provisions to goods cleared prior to the amendment date.

Analysis:
1. The appeal challenged the order by the Commissioner (Appeals) regarding the inclusion of supervision and service charges in the assessable value of goods removed. The assessee, engaged in manufacturing transformers and switchgears, provided supervision and service charges to customers. Show cause notices were issued for the period from March 1998 to March 2001. The adjudicating authority confirmed the notices for a specific period, while demands for other periods were dropped. The Commissioner (Appeals) allowed some appeals and dismissed others based on the applicability of Section 4(3)(d) of the Central Excise Act, 1944.

2. The main contention was the applicability of the transaction value concept to the charges collected by the appellants. The Commissioner applied the amended provision of Section 4(3)(d) for assessment, considering payments made by customers after 1-7-2000. However, the Tribunal found this approach erroneous. Excise duty is charged at the time of goods removal, not based on payment dates. As the goods were cleared before the amendment, the unamended provision of Section 4 was applicable. Therefore, the Tribunal allowed the appeal, setting aside the Commissioner's order and emphasizing the irrelevance of payment dates in determining excise duty liability.

3. The Tribunal's decision highlighted the incorrect application of amended provisions to goods cleared prior to the amendment date. Despite customers making payments post-amendment, the duty liability is determined at the time of clearance. As the unamended Section 4 was in force during clearance, the amended provision could not retroactively apply. By allowing the appeal solely on this basis, the Tribunal clarified the importance of assessing excise duty based on the legal provisions in effect at the time of goods clearance, rather than payment dates. The Commissioner's decision was overturned, and the appeal was granted in favor of the assessee.