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2012 (5) TMI 575 - HC - Central Excise
Issues involved: Appeal challenging Tribunal's order under Section 35G of Central Excise Act, 1944 regarding inclusion of tooling cost in assessable value of products and imposition of penalty.
Summary: The High Court of Allahabad heard an appeal under Section 35G of the Central Excise Act, 1944, challenging a Tribunal's order dated 28-1-2005, which allowed the appeal regarding the inclusion of tooling cost in the assessable value of products. The Assessing Officer had confirmed the duty demand, imposed penalty, and interest in an order dated 26-2-2004. The Commissioner (appeals) upheld the duty demand and interest but reduced the penalty due to the appellant's deposit of duty before the show cause notice. The Customs, Excise and Service Tax Appellate Tribunal then allowed the appeal by judgment and order dated 28-1-2005. The Tribunal accepted the appellant's case that they did not include the tooling cost in the assessable value of products under a bona fide belief, setting aside the penalty and interest. The Tribunal noted conflicting decisions on the issue, including a Larger Bench decision in Mutual Industries Ltd. v. Collector of Central Excise, Mumbai, which held that the cost of moulds supplied free by customers should be included in the assessable value. The Tribunal also referred to a previous order in Bright Brothers Ltd. v. CCE, Mumbai-II, where a plea of bona fide belief was accepted. The appeal raised the question of whether the Tribunal could set aside the penalty amount under Section 11AC of the Central Excise Act, 1944. The appellant's counsel argued against the Tribunal's finding that the non-inclusion of tooling cost was done bona fide, stating that the penalty was imposed by the Assessing Officer and Commissioner (appeals) for this reason. However, as the Tribunal found that the conditions for penalty under Section 11A were not fulfilled, it was within its rights to delete the penalty and interest. The appeal was dismissed, and no costs were awarded.
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