2007 (12) TMI 394 - AT - Central Excise

Valuation - Demand - Differential duty - Demand - Limitation - Extended period - Suppression - The Revenue entertained a plea that the value as shown in the central excise invoices, on which duty was being paid by the appellants was on the lower side than the value as reflected in the commercial invoices/bills raised by them to their customers

Issues:
1. Discrepancy in assessable value between central excise invoices and commercial invoices.
2. Inclusion of excess freight charges in assessable value.
3. Treatment of brokerage to agents in the assessable value.
4. Discrepancy in price between computer booking order sheets and commercial invoices.
5. Rectification of typographical error in duty demand.
6. Extension of cum-duty price benefit.
7. Limitation period for filing objections.
8. Imposition of penalty.

Analysis:

1. The appeals revolve around a common issue of a perceived difference in the assessable value between central excise invoices and commercial invoices raised by a group of companies manufacturing Texturised yarn. The Commissioner initiated proceedings against them for the confirmation of differential duty and penalty due to this alleged discrepancy.

2. The first issue addressed pertains to the inclusion of excess freight charges in the assessable value. The appellants argued that the deductions made in central excise invoices were legitimate, including those for transportation, octroi, brokerage, and cottage charges. The Tribunal concurred with the appellants, citing a Supreme Court decision that excess freight recovered from customers, without being part of the goods' value, should not be included in the assessable value.

3. The second disputed issue concerned the treatment of brokerage to agents in the assessable value. While the appellants contended that brokerage to agents should be a permissible deduction, the Tribunal referred to legal precedents, including a Supreme Court decision, which held that such commissions cannot be considered trade discounts and must be included in the assessable value.

4. Another issue raised was the discrepancy in prices between computer booking order sheets and commercial invoices. The appellants argued that there was no actual difference, and the Commissioner's decision was based on a statement rather than documentary evidence. The Tribunal directed the Commissioner to reevaluate this issue based on a comparison of the entries.

5. A typographical error in the duty demand calculation was highlighted, leading to an incorrect amount being confirmed. The Tribunal acknowledged this error and directed the rectification of the duty amount.

6. The benefit of cum-duty price, as per a Larger Bench decision, was not extended to the appellants. The Tribunal agreed that the entire realization should be treated as cum-duty price, aligning with legal precedents and judgments.

7. The issue of the limitation period for filing objections was discussed, with the Tribunal agreeing that the normal limitation period did not apply due to the detection of private records during the officers' visit and the non-disclosure of certain facts to the Revenue.

8. Finally, the Tribunal remanded the appeals for quantification of demands based on specific directions, including the exclusion of excess freight charges, inclusion of brokerage to agents in the assessable value, rectification of the typographical error in duty demand, treating the entire realization as cum-duty price, and extending the benefit of duty deduction to the appellant. The imposition of penalties was left to be decided afresh.

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