2004 (8) TMI 615 - AT - Central Excise

Summary

Issues:
1. Inclusion of cost of moulds in assessable value of finished goods.
2. Time limitation for demanding duty.
3. Imposition of penalty under Sec. 11AC of the Central Excise Act.

Analysis:

Issue 1: Inclusion of cost of moulds in assessable value of finished goods
The case involved appeals by M/s. Paradise Plastics Enterprises Ltd. and the Revenue against an Order-in-Appeal. The main contention was regarding the inclusion of the cost of moulds supplied free of cost by buyers in the assessable value of the finished goods manufactured by the appellant. The appellant argued that the disputed duty was time-barred under Sec. 11A(1) of the Central Excise Act, as the Department was aware of the non-inclusion of the cost of moulds since 17-3-98. The Tribunal noted that the Department indeed became aware of the free supply of moulds from 17-3-98, and the extended period of limitation would not be applicable from that date. However, for the period before 17-3-98, the extended period of limitation was upheld as per the decision in the case of Nizam Sugar Factory v C.C.E., Hyderabad. The duty demand for the period prior to 17-3-98 was considered valid, while any demand for the extended period from that date was deemed time-barred.

Issue 2: Time limitation for demanding duty
The Tribunal analyzed the timeline of events and the knowledge of the Department regarding the non-inclusion of the cost of moulds in the assessable value. It was established that the Department acquired knowledge of the factual position at least from 17-3-98, and the extended period of limitation was not applicable beyond that date. The duty demand for the period prior to 17-3-98 was considered valid under Sec. 11A of the Central Excise Act. Any demand for the extended period from 17-3-98 was deemed time-barred due to the Department's awareness of the non-inclusion of the cost of moulds in the assessable value.

Issue 3: Imposition of penalty under Sec. 11AC of the Central Excise Act
Regarding the imposition of penalty, the Tribunal noted that while a penalty was warranted for M/s. Paradise Plastics Enterprises Ltd., a penalty equivalent to the amount of duty involved was not deemed necessary in the circumstances. Instead, a penalty of Rs. 50,000 was considered appropriate and imposed on the appellant. The Tribunal enhanced the penalty to Rs. 50,000 to meet the ends of justice. Both appeals were disposed of based on the above considerations.

In conclusion, the Tribunal upheld the duty demand for the period prior to 17-3-98, deemed the demand for the extended period from that date time-barred, and imposed a penalty of Rs. 50,000 on M/s. Paradise Plastics Enterprises Ltd. to ensure compliance with the Central Excise Act.