2011 (8) TMI 830 - AT - Central Excise

Extended Period of limitation - valuation - Penalty - Held That - Appellant themselves stated raw materials and components/parts are supplied by their clients free of cost and their value is not includible as per Section 4. They also intimated that they will be paying excise duty only on the inputs used by the appellants in the manufacture of final product. Therefore, there cannot be any suppression of fact. - Extended period cannot be invoked.

Summary

Issues:
- Whether the cost of components supplied free of cost should be included in the sale value of final excisable goods.
- Whether the extended period under Section 11A of the Central Excise Act can be invoked due to suppression of facts.

Analysis:

Issue 1:
The appellants, manufacturers of control panels and distributor boards, supplied some dutiable final products with parts supplied free of cost by buyers. The Revenue contended that the cost of such free-supplied parts should be included in the sale value of goods. A show-cause notice was issued demanding differential duty and penalties. The Addl. Commissioner initially dropped the proceedings, but the Commissioner (Appeals) set aside this decision. The appellants argued that they had informed the department in 1995 about the free parts and raw materials supplied by clients, stating these costs need not be added to the assessable value. They contended that the extended period for the show-cause notice was not valid as there was no suppression of facts. The Tribunal found that the facts were disclosed to the department in 1995, and since there was no suppression, the extended period under Section 11A could not be invoked. Consequently, the Tribunal set aside the impugned order and restored the order-in-original in favor of the appellants.

Issue 2:
The Revenue, represented by the learned SDR, supported the decision of the Commissioner (Appeals) and argued for upholding the order-in-appeal. However, the Tribunal, after considering the submissions from both sides, determined that the show-cause notice was time-barred due to the absence of any suppression or misstatement of facts by the appellants. As a result, the Tribunal allowed the appeal in favor of the appellants, emphasizing that the extended period under Section 11A could not be invoked in this case. The judgment was pronounced in open court, concluding the matter in favor of the appellants.