2016 (3) TMI 128 - AT - Central Excise

Assessable value - Mastering Charges not included in the assessable value for payment of excise duty on holograms - Held that - Regarding the appellant s contention that there could be no amortization of these charges in view of the indefinite life span of the master is not directly relevant as the appellant themselves are admitting that these master charges are collected for producing specific holograms for their clients and the masters are returned to the clients once the required supplies are made. When the appellant receive these charges as additional consideration for holograms, they are liable for inclusion in the assessable value. As such, we find that the appellant s plea on these grounds is un-sustainable. Extended period of limitation - Demand being time bar - Held that - When an investigation is conducted regarding duty liability of the appellant after resuming all the relevant records, it cannot be argued later that the intention behind the investigation was limited to a specific issue and the other aspects like valuation, etc. were not examined. It is a fact that at least some of the documents relevant to the present demand were available with the Department in March, 2000 itself and hence, we find that the demand for extended period invoking suppression, fraud, collusion, etc. is not sustainable in this case. Accordingly, we restrict the demand to the normal period holding that the demand for extended period is not sustainable.

Summary

Issues:
1. Inclusion of "Mastering Charges" in the assessable value for excise duty.
2. Amortization of charges with indefinite life span.
3. Contention on time bar for demand of excise duty.

Issue 1: Inclusion of "Mastering Charges" in assessable value:
The appellants, manufacturers of self-adhesive holograms, collected "Mastering Charges" from clients, which were not included in the assessable value for excise duty. The appeal argued that the masters developed by them had an indefinite life and were not directly linked to the assessable value. However, the tribunal held that these charges were rightly includible in the assessable value as they were specifically attributable to the holograms produced for different clients, in accordance with Section 4 read with Rule 6 of the Central Excise Valuation Rules, 2000.

Issue 2: Amortization of charges with indefinite life span:
The appellants contended that the charges for developing masters with an indefinite life span could not be amortized. The tribunal found this argument irrelevant, stating that the charges were collected for producing specific holograms for clients, and the masters were returned to clients after supply completion. As these charges were additional consideration for holograms, they were deemed liable for inclusion in the assessable value.

Issue 3: Contention on time bar for demand of excise duty:
The appellants contested the demand on the grounds of time bar, asserting that the DGCEI officers were aware of the mastering charges during a verification in March 2000. The tribunal noted that relevant documents were indeed available with the department at that time, and the demand for an extended period invoking suppression, fraud, or collusion was deemed unsustainable. Consequently, the demand was restricted to the normal period, as the investigation had not specifically examined issues related to the assessable value. The appeal was disposed of accordingly.

This judgment clarifies the inclusion of specific charges like "Mastering Charges" in the assessable value for excise duty, emphasizing their direct link to the production of excisable goods. It also highlights the importance of considering additional considerations received for goods in the valuation process. Additionally, the tribunal's decision on the time bar issue underscores the necessity for comprehensive investigations covering all relevant aspects to sustain demands for extended periods.