2015 (6) TMI 539 - AT - Central Excise

Waiver of pre deposit - Valuation u/s 4A - Inclusion of freight - Held that - duty is required to be paid inclusive of freight amount. As far as invoking the extended period of limitation is concerned, there also, we find that issuance of the other show cause notice does not affect the present show cause notice. In the other show cause notice, the department was of the view that the applicant is required to pay duty under Section 4A (as was being done by the applicant before August, 2006). The fact that the applicant was not including the freight element for discharging duty was suppressed from the department. In any case, the question of invoking extended period of time is a matter of facts and law combined together and will have to be gone through at the time of final hearing. We have also gone through the annual reports. Keeping in view the financial condition, we direct the applicant to deposit 25% of the duty demanded, minus the amount already deposited, within a period of eight weeks and report compliance on 8 th June, 2015 - Decided partly in favour of assessee.

Summary

Issues:
1. Invoking extended period of limitation for duty demand under Section 4A.
2. Exclusion of freight charges from transaction value.
3. Financial condition of the company affecting duty payment.

Analysis:
1. The case involved the applicant, a confectionary items manufacturer, clearing goods on transaction value under Section 4 of the Central Excise Act, 1944. The issue arose when the duty was not being paid on the depot sale price inclusive of freight charges, leading to a show cause notice invoking extended period of limitation for duty demand under Section 4A. The applicant argued against the extended period, citing a previous show cause notice and the company's financial condition as grounds for defense.

2. The department contended that the applicant was not truthfully declaring the transaction value by excluding the freight element, which was a clear case of suppression of facts to evade duty payment. The Tribunal noted that the duty should be paid inclusive of the freight amount, regardless of the applicant's previous practices. The Tribunal emphasized that the question of invoking the extended period of limitation required a detailed examination of facts and law, which would be addressed during the final hearing.

3. In considering the financial condition of the company, the Tribunal directed the applicant to deposit 25% of the duty demanded, minus any amount already deposited, within eight weeks. The compliance report was to be submitted by a specified date, with the deposit to be made in cash. The Tribunal's decision aimed to balance the duty enforcement requirements with the financial constraints faced by the applicant, ensuring a fair resolution to the matter.

This detailed analysis of the judgment highlights the key issues of invoking extended period of limitation, exclusion of freight charges from the transaction value, and the impact of the company's financial condition on duty payment obligations.