2004 (5) TMI 377 - AT - Central Excise

Summary

Issues:
1. Whether the cost of tooling should be included in the assessable value of sheet metal components for Central Excise duty calculation.
2. Whether the extended period for issuing a show cause notice was rightly invoked due to suppression of facts regarding tooling charges.
3. Whether there was an intention to evade duty by not including tooling costs in the assessable value.

Issue 1: Assessable Value of Components
The appellant, a manufacturer of Sheet Metal Components, did not include the value attributable to the cost of tooling while determining the assessable value of the components for Central Excise duty calculation. The duty demand was raised for the price attributable to the tools in the value of the components. The appellant contended that since the price charged for the metal components was the only consideration, the tooling cost should not be included. They argued that they would have been entitled to credit for duty paid on the tooling, indicating no intention to evade duty. The appellant cited various decisions in support of their position. However, the Tribunal found that the tooling charges were necessary for producing the components, and the duty paying documents did not disclose separate recoveries for tooling charges, leading to the conclusion that there was a short recovery due to suppression of facts.

Issue 2: Extended Period for Show Cause Notice
The lower authorities invoked the extended period for issuing a show cause notice, considering the non-disclosure of the fact of free supply or separate recovery of charges for tooling to the Central Excise authorities. The appellant argued that there was no suppression as the tooling charges were reflected in their books of account and balance sheet. The Tribunal held that the extended period was rightly attracted due to the non-disclosure of tooling charges separately in the duty paying documents and the lack of communication to the authorities during the relevant period.

Issue 3: Intention to Evade Duty
The appellant claimed a bona fide belief that the cost of tooling was not required to be included in the assessable value. They highlighted a 1996 clarification letter on the allocation of tooling costs as evidence of their belief. However, the Tribunal rejected this argument, stating that the legal position on including tooling costs was not dependent on the 1996 clarification. The Tribunal concluded that the separate recovery for tooling charges indicated an intention to evade duty, as the tooling was essential for producing the metal components. Therefore, the Tribunal dismissed the appeal, finding no merit in the appellant's contentions.

This summary provides a detailed analysis of the judgment, covering all the issues involved comprehensively while preserving the legal terminology and significant phrases from the original text.