2007 (6) TMI 3 - AT - Central Excise

Demand and penalty Alleged that assessee had deliberately failed to include the value of item bush in the assessable value of pulsator in order to short pay duty and extended period invoked on assessee alongwith duty demand and penalty Held that allegation is right and demand and penalty sustained

Summary

Issues Involved:
1. Inclusion of the cost of bushes in the assessable value of pulsators.
2. Invocation of the extended period of limitation under Section 11A of the Central Excise Act.
3. Imposition and quantum of penalty under Section 11AC of the Central Excise Act.

Detailed Analysis:

1. Inclusion of the Cost of Bushes in the Assessable Value of Pulsators:
The adjudicating authority determined that the "pulsator," a part of a washing machine, should include the value of "bushes" fitted as its integral part in the assessable value for the purpose of excise duty. The respondent's argument that bushes received for job work should not be treated as inputs free of cost was rejected. The authority held that the value of all goods going into the manufacture of a product should be included in the assessable value under Section 4 of the Central Excise Act. The respondent did not inform the department about the non-inclusion of the value of bushes, leading to a confirmed duty demand of Rs. 73,042/-.

2. Invocation of the Extended Period of Limitation Under Section 11A:
The adjudicating authority found that the respondent deliberately failed to include the value of bushes in the assessable value of pulsators to evade duty, justifying the invocation of the extended period of five years under Section 11A. The Appellate Commissioner initially set aside the demand as time-barred but overlooked the adjudicating authority's clear finding of deliberate suppression. The Tribunal confirmed the duty demand and the invocation of the extended period, noting the suppression of material facts and intentional evasion of duty.

3. Imposition and Quantum of Penalty Under Section 11AC:
The Tribunal initially reduced the penalty from Rs. 73,042/- to Rs. 10,000/-, but the Revenue appealed, arguing that under Section 11AC, the penalty should equal the duty confirmed. The High Court of Punjab and Haryana remanded the case, directing the Tribunal to reconsider the penalty, emphasizing that if penalty is warranted, it must equal the duty amount. The Tribunal found that the respondent's actions met the criteria for penalty under Section 11AC, which requires fraud, collusion, or wilful mis-statement or suppression of facts with intent to evade duty. The Tribunal concluded that the imposition of penalty was warranted and, as per the statute, must equal the duty amount of Rs. 73,042/-. The Tribunal restored the adjudicating authority's order, fully imposing the original penalty.

Conclusion:
The Tribunal confirmed the duty demand and the invocation of the extended period of limitation due to deliberate suppression of facts by the respondent. It also concluded that the imposition of penalty under Section 11AC was warranted and restored the original penalty equal to the duty amount, as directed by the High Court. The appeal of the Revenue was allowed, and the order of the adjudicating authority was fully restored.