2006 (5) TMI 250 - AT - Central Excise

Summary

Issues:
1. Whether the value of labels affixed on the bags should be part of the assessable value for cement bags.

Analysis:
The main issue in this appeal was whether the value of labels affixed on the bags should be included in the assessable value for cement bags, especially when these labels were received by the appellant free of cost. The appellant argued that the labels were not essential for the manufacture of the bags and that the bags would still be complete and usable even without the labels. However, the Tribunal held that all processes and materials, whether essential inputs or decorative, used in the production of an excisable item must be considered in the assessable value. Therefore, the demand of the Revenue to include the value of the labels was deemed justified.

The appellant further contended that there was no suppression of facts on their part, as they genuinely believed that the price of the label should not be included in the assessable value. However, it was found that the receipt and use of the labels were not disclosed to the Central Excise authorities, leading to a sustainable charge of suppression of fact against the appellant.

Regarding the imposition of penalties, the appellant argued that no penalty should be imposed since the duty was paid before the issuance of the show cause notice. Citing a precedent, the appellant claimed that penalties should be set aside based on a previous decision of the Tribunal. The Tribunal agreed with this argument and set aside the penalties imposed on the appellant manufacturer and its Director.

In conclusion, the Tribunal confirmed the impugned order, subject to the relief granted in regard to the penalty issue. The judgment highlighted the importance of including all materials and processes in the assessable value of excisable items and upheld the demand of the Revenue in this case.