2015 (10) TMI 1341 - AT - Central Excise

Valuation - Determination of assessable value - Clandestine removal of goods - Held that - They have also not quantified the amount before the lower authorities and even before the Tribunal. The contention of the learned Advocate that the duty was not properly quantified cannot be accepted, at this stage. However, we agree with the submission of the learned Advocate that penalty should not be imposed on the Director of the Appellant Company. We do not find any material available on record for imposition of penalty on the Director of the Appellant Company. We have also considered that the Adjudicating authority has not given the option to pay penalty 25% of the duty within specified period imposed under Section 11AC of Central Excise Act, 1944. - Appellant would pay the penalty equal to 25% of the duty within 30 days alongwith duty and interest from the receipt of this order, failing which they have to pay the entire amount of penalty - Decided partly in favour of assessee.

Summary

Issues:
- Inclusion of pattern charges in assessable value
- Proper quantification of duty
- Imposition of penalty on the Director of the Appellant Company

Analysis:
1. Inclusion of pattern charges in assessable value:
The case involved the Appellants engaged in manufacturing iron casting, S.G. iron & steel casting, and alloy steel castings. The Central Excise officers found that the Appellants issued debit notes for pattern charges to customers but did not include this amount in the assessable value. A Show Cause Notice was issued, proposing a duty demand along with penalties. The Adjudicating authority confirmed the demand and penalties. The Appellants contended they do not make molds or dyes, and patterns are manufactured by third parties. The Adjudicating authority, following a CBEC Circular, held that the cost of the pattern should be included in the assessable value. The Appellants had not disclosed this fact earlier. The Tribunal upheld the inclusion of pattern charges in the assessable value.

2. Proper quantification of duty:
The Appellants did not pay duty on the amortization cost and did not quantify the amount before the authorities or the Tribunal. The Tribunal noted that the duty quantification issue could not be accepted at that stage. However, the Tribunal agreed with the Appellant's submission that penalty should not be imposed on the Director of the Appellant Company. The Adjudicating authority did not provide the option to pay a reduced penalty within a specified period as per the Central Excise Act, 1944.

3. Imposition of penalty on the Director of the Appellant Company:
The Tribunal found no material on record justifying the imposition of a penalty on the Director of the Appellant Company. It was noted that the Adjudicating authority did not offer the option to pay a reduced penalty as per the relevant section of the Central Excise Act. The Tribunal allowed the appeal filed by the Appellant No.2, setting aside the penalty imposed on the Director.

In conclusion, the Tribunal rejected the appeal filed by Appellant No.1, subject to the condition that they pay the penalty equal to 25% of the duty within 30 days, along with duty and interest. Failure to comply would result in the payment of the entire penalty amount. The appeal filed by Appellant No.2 was allowed, overturning the penalty imposed on the Director of the Appellant Company.