2010 (12) TMI 1136 - AT - Central Excise

Issues Involved:
1. Duty on acetoning charges.
2. Duty on repair and handling charges.
3. Bar of limitation.
4. Imposition of personal penalties under Rule 209A and Rule 210.
5. Imposition of penalty under Section 11AC and Rule 173Q.
6. Claim regarding Cenvat credit.

Issue-wise Detailed Analysis:

1. Duty on Acetoning Charges:
The appellants were engaged in the manufacture of dissolved acetylene gas, which required acetone as a solvent to keep the gas in a dissolved condition. The authorities concluded that the process of acetoning is essential to the manufacturing process of acetylene gas and, therefore, the cost of acetoning should be included in the assessable value of the goods. The Tribunal referenced the case of *Best Liquifiable Gases Ltd.*, which held that acetoning charges should be part of the assessable value because acetone is necessary for the safe packaging and marketing of acetylene gas. The appellants' argument that acetone is not consumed by customers and thus should not be included in the assessable value was rejected, as the acetone plays a crucial role in the manufacturing process until the product is cleared for customer use.

2. Duty on Repair and Handling Charges:
The appellants were found to have included the cost of acetoning in the repair and handling charges for certain customers, thereby avoiding its inclusion in the assessable value. The Tribunal noted that the appellants' modus operandi was confirmed by the statements of company officers and was not disputed in their reply to the show cause notice. The authorities concluded that there was clear suppression of facts with the intention to evade payment of proper duty, justifying the inclusion of these charges in the assessable value.

3. Bar of Limitation:
The appellants argued that the demand was time-barred as the show cause notice was issued in January 2000 for the period from February 1995 to November 1999. However, the authorities found that the appellants had not disclosed relevant facts to the department, which justified the invocation of the extended period of limitation. The Tribunal upheld this finding, noting that the appellants had not rebutted the evidence of suppression of facts.

4. Imposition of Personal Penalties under Rule 209A and Rule 210:
The Tribunal found that the authorities did not establish that the company officers had knowledge or reason to believe that the excisable goods were liable for confiscation, which is a requirement under Rule 209A. Thus, the personal penalties under Rule 209A were set aside. However, the Tribunal upheld the penalties under Rule 210, which applies to any breach of the rules, regardless of whether the individual is the assessee. The penalties under Rule 210 were reduced to one thousand rupees each.

5. Imposition of Penalty under Section 11AC and Rule 173Q:
The Tribunal disagreed with the view that combined penalties under Section 11AC and Rule 173Q were impermissible. It held that penalties could be imposed under both provisions for defaults occurring before and after the introduction of Section 11AC on 28-9-1996. The Tribunal found no infirmity in the imposition of penalties under both provisions, provided they corresponded to the relevant periods.

6. Claim Regarding Cenvat Credit:
The Tribunal noted that the claim for Cenvat credit must be made in accordance with the provisions of law before the competent authority. It was deemed premature to address this issue in the judgment, but the appellants were not precluded from pursuing their claim through proper channels.

Conclusion:
The appeals by the individual appellants regarding personal penalties under Rule 209A were successful, but the penalties under Rule 210 were upheld and reduced to one thousand rupees each. The appeal by the appellant company was dismissed, affirming the inclusion of acetoning and repair and handling charges in the assessable value, the invocation of the extended period of limitation, and the imposition of penalties under Section 11AC and Rule 173Q.

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