2013 (12) TMI 985 - AT - Central Excise

Disallowance of the value of rubber ring - Cost of rubber ring includes other costs to bring it to factory gate and other incidental costs Held that - The deduction in respect of bought out item should be limited to the cost of rubber ring only and not beyond that - Claim of deduction by the appellant being excess over the cost of the rubber ring, the excess amount had depressed the assessable value which should be dutiable - Mere information to the department does not erode the culpability nor with the passage of time legalises an illegality the contravention does not vanish by plea of time bar thus, penalty was rightly imposed Decided against assessee. Levy of duty on the excess transport charges recovered from the buyers Held that - Levy of duty not being forming part of assessable value, such profit is out of scope of levy of duty under Central Excise Act, 1944 Decided in favour of Assessee.

Summary

Issues:
1. Disallowance of the value of rubber ring claimed by the appellant.
2. Levy of duty on excess transport charges recovered from buyers.

Analysis:

Dispute 1 - Disallowance of the value of rubber ring claimed by the appellant:
The first issue in this appeal pertains to the disallowance of the value of the rubber ring claimed by the appellant. The appellant sought to deduct not only the cost of the rubber ring but also other associated costs to bring the item to the factory gate and other incidental expenses. The Revenue contended that the claim should be limited to the value of the rubber ring as a bought-out item. It was observed that the appellant claimed a deduction higher than the actual cost, leading to a depressed assessable value of the goods cleared. Consequently, a duty demand of Rs. 32,223 was imposed. The Tribunal agreed with the Revenue that the deduction should be restricted to the cost of the rubber ring alone. The excess deduction beyond the cost of the rubber ring was deemed to have reduced the assessable value, justifying the duty demand and penalty. The Tribunal emphasized that mere information provided to the department does not absolve the appellant of culpability, nor does the passage of time legalize any wrongdoing. Therefore, the penalty imposed on this ground was upheld.

Dispute 2 - Levy of duty on excess transport charges recovered from buyers:
The second issue concerns the levy of duty on the excess transport charges collected from buyers. The appellant contended that such charges should not be subject to duty. The Tribunal concurred with the appellant on this point, ruling that excess transport charges, not forming part of the assessable value, fall outside the scope of duty under the Central Excise Act, 1944. Consequently, the appellant succeeded in challenging the duty levy on excess transport charges. As a result, the appeal was partially allowed, with the Tribunal upholding the duty demand and penalty related to the disallowed deduction of the rubber ring's value while setting aside the duty levy on excess transport charges.

In conclusion, the Tribunal's judgment addressed the disputes regarding the disallowance of the rubber ring's value and the levy of duty on excess transport charges, providing a detailed analysis of each issue and rendering a decision that partially favored the appellant by allowing the appeal in part.