2011 (10) TMI 432 - AT - Central Excise

Demand - Undervaluation - Admission of additional evidence - The department was of the view that there are no sales at the factory gate and the sales are actually taking place from the premises of the distributors and hence the freight/transport expenses upto the distributor s premises distributor s commission and also the rental for the canisters would be includible in the assessable value of the goods - learned Counsel for the appellant pleaded that all the sales of the appellant during the period of dispute were at the factory gate that the transactions between the appellant and their distributors were on principal to principal basis - Held that the Tribunal in its judgment dated 15-6-2007 in the appellant s own case for the period from January 2004 to September 2004 and as mentioned above in this judgment the Tribunal after considering the evidence on record has given a clear finding that sales were taking place at the distributor s premises and therefore the distributor s commission and freight expenses upto the distributor s premises would be includible in the assessable value Regarding inclusion of rental for canisters - Tribunal in favour of the appellant in their own case vide judgment reported in (2007 -TMI - 31573 - CESTAT NEW DELHI) - Decided in favor of the assessee by way of direction to re-quantification of duty demands

Summary

Issues Involved:
1. Whether the sales of post mix syrup (POM) occurred at the factory gate or at the distributor's premises.
2. Inclusion of distributor's commission and freight expenses in the assessable value.
3. Inclusion of rental for canisters in the assessable value.
4. Validity of invoking the extended period under proviso to Section 11A(1) of the Central Excise Act.
5. Admission of additional evidence.

Detailed Analysis:

1. Sales Location: Factory Gate vs. Distributor's Premises
The appellant contended that all sales were at the factory gate, with transactions between the appellant and distributors being on a principal-to-principal basis. The department argued that sales occurred at the distributor's premises, making the distributors consignment agents. The Tribunal had previously ruled against the appellant on this issue, determining that sales took place at the distributor's premises. This finding was based on the evidence that the appellant arranged transit insurance, indicating ownership during transit. The Tribunal upheld this view, noting that the evidence presented was already considered in a prior judgment.

2. Inclusion of Distributor's Commission and Freight Expenses
The department argued that distributor's commission and freight expenses up to the distributor's premises should be included in the assessable value. The appellant disagreed, stating that these costs were not part of the factory gate price. The Tribunal referenced its earlier decision, which included these expenses in the assessable value, as sales were deemed to occur at the distributor's premises. This position was reaffirmed, with the Tribunal holding that the distributor's commission and freight expenses are includible in the assessable value.

3. Inclusion of Rental for Canisters
The appellant argued that rentals for canisters should not be included in the assessable value. The Tribunal supported this view, citing a previous judgment in the appellant's favor, which excluded canister rentals from the assessable value. This position was maintained, and the Tribunal ruled that canister rentals are not includible in the assessable value.

4. Validity of Invoking Extended Period under Section 11A(1)
The appellant challenged the use of the extended period for the show cause notice dated 8-10-2002, arguing that a previous notice for a similar issue did not invoke the extended period. The Tribunal agreed, referencing the Supreme Court's judgment in Nizam Sugar Factory v. C.C.E., A.P., which limits the use of the extended period if a prior notice on the same facts did not invoke it. Consequently, the Tribunal ruled that only the normal limitation period applies for the notice dated 8-10-2002.

5. Admission of Additional Evidence
The appellant sought to introduce additional evidence, including invoices and an affidavit, to support their claim that sales occurred at the factory gate. The Tribunal denied this request, stating that the evidence had already been considered in a previous ruling. The Tribunal emphasized that the same evidence cannot be reintroduced and reconsidered.

Conclusion and Remand:
The Tribunal held that distributor's commission and freight charges are includible in the assessable value, while canister rentals are not. The matter was remanded to the Commissioner (Appeals) for re-quantification of duty demands and penalties based on this ruling. In the case of the show cause notice dated 8-10-2002, the duty demand was limited to the normal limitation period. The penalties were to be adjusted accordingly.