2004 (10) TMI 440 - AT - Central Excise

Issues Involved:
1. Inclusion of job charges in the assessable value.
2. Validity of the Cost Accountant's certificate.
3. Suppression of facts and invocation of extended period of limitation.
4. Imposition of penalties under Section 11AC and Rule 173Q.

Detailed Analysis:

1. Inclusion of Job Charges in the Assessable Value:
The primary issue was whether the job charges incurred by the appellants for repacking pesticides should be included in the assessable value of the goods cleared by them. The appellants argued that the job charges were already included in the sale price of the bulk goods supplied by M/s. BASF Ltd. However, the tribunal observed that M/s. BASF Ltd. and the appellants are independent entities. M/s. BASF sold the goods to the appellants on payment of duty, and the appellants repacked the goods and sold them back to M/s. BASF on payment of duty, utilizing the Modvat credit. The tribunal concluded that the value adopted by the supplier did not include the repacking cost incurred by the appellants. Therefore, the cost of repacking should be added to the assessable value, confirming the differential duty demand.

2. Validity of the Cost Accountant's Certificate:
The appellants presented a certificate from Cost Accountants to support their claim that the job charges were included in the sale price. However, the tribunal found the certificate lacking in credibility as it was not supported by verifiable details or relevant documents. The tribunal noted that the certificate was based on information provided by the supplier and not on an independent verification. The tribunal rejected the certificate, citing similar rejections in previous cases such as Apollo Exports v. CC, Calcutta and CC, Mumbai v. Eltech Enterprises.

3. Suppression of Facts and Invocation of Extended Period of Limitation:
The tribunal addressed the appellants' plea regarding the non-invocation of the extended period of limitation under Section 11A(1) of the CE Act. It was found that the appellants had withheld information about the non-inclusion of repacking costs and had not furnished accurate declarations about the receipt of raw materials for repacking. This constituted suppression of facts with an intent to evade duty, justifying the invocation of the extended period for demand.

4. Imposition of Penalties under Section 11AC and Rule 173Q:
Given the suppression of facts, the tribunal upheld the imposition of mandatory penalties under Section 11AC. However, considering the circumstances, the tribunal reduced the penalty under Section 11AC from Rs. 2,55,654.92 to Rs. 1,50,000 and the penalty under Rule 173Q from Rs. 20,000 to Rs. 10,000.

Conclusion:
The appeal was dismissed with modifications to the penalties. The tribunal confirmed the inclusion of job charges in the assessable value and upheld the demand for differential duty. The Cost Accountant's certificate was rejected due to lack of supporting details, and the extended period of limitation was rightly invoked due to suppression of facts.

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