2015 (10) TMI 2270 - AT - Central Excise

Valuation - Non inclusion of cost of loading/handling charges and insurance at the rate of 8% (under the Employees State Insurance Scheme) incurred on the sale of such scrap - Held that - Issue is settled by the Larger Bench of this Tribunal in the case of Supreme Petrochem Ltd. (2009 (6) TMI 51 - CESTAT, MUMBAI). We have also gone through the show-cause notice as also a copy of the audit objection/ audit memo. From these documents we are unable to understand the basis of taking an amount of ₹ 1300/MT over and above the invoice price. While the expenditure incurred on loading of the goods may be included in the assessable value but anything beyond that would not be includable for pre 01.07.2000. In the present case, we find that the barring 2-3 vouchers wherever a paltry sum of few hundreds rupees for certain labours, there is no evidence whatsoever for an expenditure of ₹ 1300/MT. We are unable to appreciate how a contribution @ 8% which is under Employees State Insurance Scheme will be includable in the assessable value. Similarly, in respect of their own transfer it is not clear how a figure of ₹ 2000/MT has been arrived at. - demand has been issued without proper price analysis or investigation - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
- Inclusion of loading/handling charges and insurance in the assessable value of waste and scrap
- Invocation of extended period of limitation for demand
- Discrepancy in the calculation of additional amounts of Rs. 1300/MT and Rs. 2000/MT
- Applicability of Employees State Insurance Scheme contribution in assessable value

Analysis:
1. Inclusion of loading/handling charges and insurance: The appellant, engaged in manufacturing aluminium products, faced a demand for duty based on the alleged non-inclusion of loading/handling charges and insurance in the assessable value of waste and scrap. The appellant contended that they did not recover any amount beyond the sale price, and loading was the buyer's responsibility. The Tribunal noted that the expenditure for loading could be included in the assessable value, but the additional amounts were not justified. The Tribunal found no evidence supporting the arbitrary figures of Rs. 1300/MT and Rs. 2000/MT, and questioned the inclusion of an 8% contribution under the Employees State Insurance Scheme in the assessable value.

2. Invocation of extended period of limitation: The appellant challenged the invocation of the extended period of limitation for the demand raised. They argued that the issue of including loading charges had been settled by a Larger Bench previously, indicating differing views on the matter. The Tribunal agreed that the demand lacked proper price analysis or investigation, leading to the setting aside of the impugned order and allowing the appeal.

3. Discrepancy in the calculation of additional amounts: The Tribunal observed that the demand was issued without a clear basis for the additional amounts of Rs. 1300/MT and Rs. 2000/MT. Except for a few vouchers with minimal expenses, there was no substantial evidence supporting the demanded amounts. The lack of clarity in the show-cause notice and the arbitrary nature of the figures contributed to the decision to overturn the original order.

4. Applicability of Employees State Insurance Scheme contribution: The appellant's argument regarding the inclusion of an 8% insurance charge under the Employees State Insurance Scheme was dismissed by the Tribunal. They emphasized that such charges should not be included in the assessable value, especially when the loading of goods was the buyer's responsibility. The Tribunal's thorough analysis led to the conclusion that the demand was unjustified and not sustainable, ultimately resulting in the appeal being allowed.