2004 (1) TMI 691 - AT - Central Excise

Summary

Issues:
1. Inclusion of amortized cost of moulds in the assessable value of plastic components/parts.
2. Imposition of penalty and recovery of interest under Central Excise Act.
3. Conflict in Tribunal decisions regarding inclusion of amortized cost of moulds.

Analysis:
1. The judgment dealt with the issue of whether the amortized cost of moulds supplied free of cost by customers should be included in the assessable value of plastic components/parts manufactured by the appellants. The department contended that the amortized cost of moulds should be included, leading to a differential duty payment by the appellants. The Additional Commissioner initially dropped the penalty proposal, but the Commissioner (Appeals) directed the recovery of interest and imposed a penalty equal to the duty amount. The Tribunal referred to conflicting decisions but ultimately followed the Mutual Industries case, holding that the amortized cost of moulds should be included in the assessable value. However, since the issue was not free from doubt during the relevant period, the Tribunal held that penal action was not warranted, setting aside the interest and penalty imposed.

2. The judgment also addressed the imposition of penalty and recovery of interest under the Central Excise Act. Despite the initial imposition of penalty and recovery of interest by the Commissioner (Appeals), the Tribunal, following the Mutual Industries case and considering the lack of clarity on the issue during the relevant period, set aside both the interest and penalty, allowing the appeal of the appellants. The Tribunal emphasized that the intention to evade payment of duty was not established, leading to the decision that the extended period of limitation was not applicable in this case.

3. The judgment highlighted the conflict in Tribunal decisions regarding the inclusion of the amortized cost of moulds in the assessable value of products. The Tribunal referred to cases such as Flex Industries Ltd. vs. CCE and Creative Cartons vs. CCE, where conflicting views were taken. Ultimately, the Tribunal resolved the conflict by following the decision in Mutual Industries Ltd. vs. CCE, which upheld the inclusion of the amortized cost of moulds in the assessable value. The Tribunal also noted that penal action was not warranted when the issue was not clear, as evidenced by the setting aside of penalties in similar cases, including that of WIL.