2015 (1) TMI 447 - AT - Central Excise

Penalty u/s 11AC - Valuation of goods - Inclusion of handling charges - Held that - Expenses of handling charges were paid by M/s ACC Ltd. to M/s Suraj Logistics and such expenses were not borne by the Appellant. Besides, we find that the demand notice is issued for normal period of limitation and we do not find any materials adduced by the Revenue that the duty has not been paid on account of suppression of facts, mis-declaration etc.. On the contrary, in view of the decision of the Larger Bench in case of Supreme Petrochem Ltd. (2009 (6) TMI 51 - CESTAT, MUMBAI), the Appellant is not required to discharge any duty. In these circumstances, we are of the view that penalty is not warranted under Section 11AC of the Central Excise Act, 1944 and accordingly, we set aside the imposition of penalty - Decided in favour of assessee.

Summary

Issues involved: Challenge to imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. Facts of the Case: The Appellants, engaged in cement manufacturing, sold slag to M/s ACC Ltd. on an "as is where is" basis. A show-cause notice alleged under-valuation of goods due to exclusion of railways freight and handling charges paid by M/s ACC Ltd. to a third party. The Adjudicating Authority confirmed a demand on handling charges and imposed a penalty under Section 11AC.

2. Appellant's Submission: The Appellants challenged only the penalty imposition, not the duty or interest paid. They argued that handling charges paid by M/s ACC Ltd. to a third party should not be included in the assessable value of the slag based on a contractual agreement. The Appellant relied on a Tribunal judgment (Commr. of Central Excise, Mumbai III Vs. Supreme Petrochem Ltd.) to support their position that handling charges need not be borne by them to be excluded from assessable value.

3. Revenue's Argument: The Revenue supported the Commissioner's decision but failed to provide a contrary judgment to the Tribunal's ruling in the Supreme Petrochem Ltd. case.

4. Judgment: The Tribunal noted that the issue of including handling charges in assessable value was not settled at the relevant time. Referring to the Supreme Petrochem Ltd. case, the Tribunal ruled that if the burden of handling charges was not borne by the assessee, they need not be included in the assessable value. Since M/s ACC Ltd. paid the handling charges, not the Appellant, and no evidence of duty evasion was found, the penalty under Section 11AC was deemed unwarranted. The Tribunal set aside the penalty and allowed any consequential reliefs as per law.

5. Conclusion: The Tribunal disposed of the appeal by overturning the penalty imposition based on the lack of burden of handling charges on the Appellant and the absence of evidence of duty evasion. The judgment emphasized adherence to legal precedents and the absence of grounds for penalty imposition under Section 11AC.