2009 (11) TMI 746 - AT - Central Excise

Summary

Issues Involved:
1. Valuation Dispute
2. Limitation Period
3. Penal Liability

Summary:

1. Valuation Dispute:
The primary issue in these appeals is a valuation dispute concerning the period from April 1996 to November 2001. The department issued two show-cause notices demanding differential duty based on the inclusion of loading costs within the factory in the assessable value of goods. The Larger Bench, referencing the Hon'ble Supreme Court's judgment in Indian Oxygen Ltd. v. CCE, 1988 (36) E.L.T. 723 (S.C.), held that pre-1-7-2000, such expenses were includable in the assessable value. Post-1-7-2000, these expenses are includable unless the assessee proves they did not bear the burden. For the period prior to 1-7-2000, the respondent must include the loading expenses in the assessable value. For the period from 1-7-2000, the expenses are not includable as the buyer incurred them.

2. Limitation Period:
The first show-cause notice invoked the extended period of limitation u/s 11A(1) of the Central Excise Act, alleging suppression of facts by the assessee. The department argued that the assessee suppressed the non-inclusion of loading charges with intent to evade duty. The assessee contended that they believed, based on consistent Tribunal rulings, that such expenses were not includable. The Tribunal found merit in the assessee's claim of bona fide belief, supported by the Supreme Court's judgments in Continental Foundation Jt. Venture v. CCE, 2007 (216) E.L.T. 177 (S.C.) and Jaiprakash Industries Ltd. v. CCE, 2002 (146) E.L.T. 481 (S.C.), which held that genuine doubts preclude invoking the extended period of limitation. Thus, the extended period of limitation was not applicable, and only differential duty for the normal period could be demanded.

3. Penal Liability:
The show-cause notices invoked penalties u/s 11AC and Rule 173Q of the Central Excise Rules, 1944. The Tribunal ruled that no penalty u/s 11AC could be imposed due to the non-invocation of the extended period of limitation. However, the assessee's conduct of short-paying duty attracted penal provisions under Rule 173Q for the normal period. The original authority was directed to quantify the duty and determine the penalty amount under Rule 173Q, ensuring a fair hearing for the assessee. The appeals were disposed of accordingly.