2006 (3) TMI 609 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of 10% subsidy in the price.
2. Applicability of the extended period of limitation under Section 11A of the Central Excise Act.

Detailed Analysis:

1. Inclusion of 10% Subsidy in the Price:

The appellant challenged the order confirming the demand of Central Excise duty of Rs. 1,44,53,945/- and imposing a penalty of Rs. 25,00,000/-. The dispute arose from the appellant's declaration of the jack-up rig price as Rs. 45,88,55,418/- without including a 30% subsidy (20% from the Government of India and 10% from ONGC). The Superintendent (Preventive) found that the assessable value should include this subsidy, making it Rs. 59,65,12,043/-. The appellant contended that the 10% subsidy from ONGC was included in the contract price, while the 20% from the Government was not part of the assessable value. The Tribunal earlier set aside the impugned order, stating no additional consideration flowed from ONGC to the appellant. The Supreme Court, however, remitted the matter, stating that the 10% subsidy from ONGC was additional consideration and includible in the assessable value. The appellant argued that no additional payment beyond the contracted price was received from ONGC, as confirmed by the Committee of Secretaries.

2. Applicability of the Extended Period of Limitation:

The Supreme Court directed the Tribunal to examine if the extended period of limitation under Section 11A was attracted. The appellant argued that since no duty was payable on the subsidy not received from ONGC, the extended period of limitation did not apply. The Department contended that the appellant admitted before the Supreme Court that the 10% subsidy was received, making it part of the assessable value. However, the record showed that the contract price was fixed at Rs. 41.80 crores, and no additional payment was made by ONGC as per the decision of the Committee of Secretaries. The Tribunal concluded that no 10% subsidy was received from ONGC, thus not includible in the assessable value, and no duty was payable. Consequently, the issue of limitation did not arise.

Conclusion:

The Tribunal set aside the impugned order to the extent it was against the appellant, holding that the 10% subsidy was not additional consideration as it was not received from the buyer, ONGC. The appeal was allowed, and no duty was payable on the subsidy, rendering the issue of limitation moot.