2004 (3) TMI 679 - AT - Central Excise

Summary

Issues involved:
1. Assessment of Central Excise duty on assembly of "moulded headliners" including free supply items.
2. Allegation of short payment of duty due to non-inclusion of value of bulb in the price declaration.
3. Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Issue 1: Assessment of Central Excise duty on assembly of "moulded headliners" including free supply items.

The appellant undertook job work for a company and assembled moulded headliners using parts supplied free of charge. The value of the free supply items, including "Lamp CTRO," was included in the assessable value for Central Excise duty computation. The dispute arose when it was discovered that the price for "Lamp CTRO" did not include the value of the bulb inside it, leading to a short payment of duty. The appellant argued that they were unaware of this omission as they relied on the prices declared by the supplier. The lower authorities imposed a penalty under Section 11AC, alleging misstatement of facts by the appellant. However, the Tribunal found that there was no intent to evade duty as the appellant acted in good faith based on the supplier's declarations. Therefore, the imposition of penalty was deemed unjustified, and the appeal was allowed.

Issue 2: Allegation of short payment of duty due to non-inclusion of value of bulb in the price declaration.

The appellant faced a show cause notice alleging short payment of duty and imposition of penalty under Section 11AC due to the non-inclusion of the bulb's value in the price declaration for "Lamp CTRO." The appellant contended that they were unaware of this omission as the supplier's declaration did not specify the separate value for the bulb. The Tribunal examined the purchase order details provided by the appellant, which confirmed the lack of clarity regarding the bulb's inclusion in the price. It was concluded that the appellant had no intention to evade duty, as they relied on the information provided by the supplier. Consequently, the penalty imposed was deemed unjustified, and the appellant was not held liable for the alleged short payment of duty.

Issue 3: Imposition of penalty under Section 11AC of the Central Excise Act, 1944.

The lower authorities imposed a penalty under Section 11AC on the appellant for allegedly misstating facts by not including the value of the bulb in the price of the final product. However, the Tribunal found that the appellant acted in good faith and was unaware of the omission in the price declaration. The Tribunal noted that there was no evidence of mala fide conduct or intent to evade duty on the part of the appellant. As a result, the imposition of penalty under Section 11AC was considered unjustified, and the appellant was absolved of the penalty liability. The Tribunal directed the return of the deposited penalty amount to the appellant.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the Tribunal's findings regarding the assessment of Central Excise duty, the non-inclusion of the bulb's value, and the imposition of penalty under Section 11AC of the Central Excise Act, 1944.