2005 (4) TMI 428 - AT - Central Excise

Summary

Issues involved: Confirmation of demand for less freight charges and imposition of penalties under Rule 173Q of the Central Excise Rules.

The Appellate Tribunal CESTAT, Mumbai, in the case, confirmed a demand of Rs. 83,02,115 against the appellants for incurring less amount towards freight charges than claimed. Additionally, penalties of Rs. 81,97,642 and Rs. 1,05,000 were imposed under Rule 173Q of the Central Excise Rules and Section 11AC of the Central Excise Act.

Confirmation of Demand for Less Freight Charges:
The adjudicating authority distinguished a Supreme Court decision related to equalized freight charges, stating that the documents in the present case did not show equalization basis for freight charges. However, as per the show cause notice alleging lump sum deduction, the deduction was accepted as a claim for equalization freight. Citing precedents like Commissioner of Central Excise, Jaipur v. A. Infrastructure Limited and Farm Fresh Foods (P) Ltd. v. Collector of Central Excise, Chandigarh, where excess freight claimed was not included in assessable value without evidence showing it as part of the goods' value, the Tribunal found no such evidence presented in the current appeal.

Imposition of Penalties under Rule 173Q:
Penalties were imposed under Rule 173Q of the Central Excise Rules. However, based on the precedents and the lack of evidence linking the excess freight to the value of the goods, the Tribunal set aside the impugned order and allowed the appeal.

This judgment highlights the importance of providing evidence and following established legal principles in determining the assessable value and penalties in excise cases.