2016 (5) TMI 1045 - AT - Central Excise

Extended period of limitation - Valuation - Inadmissibility of deduction of transportation charges on equalized basis - Rule 5 of Central Excise Valuation Rules, 2000 - Duty demanded alongwith penalty - Revenue contended that assessee did not disclose any vital facts to the Department that they were not including freight and insurance charges in the assessable value while making the delivery at FOR destination - Held that - the respondent assessee have filed the paper book enclosing the two letters dated in 11.09.2001 and 30/11/2001 along with annexure for copies of purchase contracts. Therefore, I hold that the respondent assessee have sufficiently disclosed the facts to the Revenue. - Decided against the revenue

Summary

Issues:
1. Extended period of limitation for Central Excise duty demand based on transportation charges deduction.
2. Disclosure of facts by the assessee to the Department regarding inclusion of freight and insurance charges in the assessable value.

Analysis:
1. The appeal was against the Commissioner (Appeals) order where it was held that the extended period of limitation was not applicable for a Central Excise duty demand related to transportation charges deduction. The respondent assessee had cleared products to BSNL based on composite prices for sale of goods on FOR basis, deducting transportation charges on a percentage basis. The revenue contended that deduction of transportation charges on an equalized basis was not admissible under Rule 5 of Central Excise Valuation Rules, 2000. The appellant argued compliance with valuation rules, citing relevant tribunal and Supreme Court rulings. The show cause notice invoking the extended period was adjudicated, confirming the demand and imposing penalties. The Commissioner (Appeals) allowed the appeal, noting that the show-cause notice was time-barred due to the absence of suppressed facts, as the Department was aware of the relevant information, setting aside the order-in-original.

2. The revenue contended that the appellant did not disclose vital facts regarding the exclusion of freight and insurance charges from the assessable value during delivery at FOR destination. They argued that submission of letters enclosing purchase orders was insufficient to justify the appeal's allowance based on limitation. Citing tribunal cases, the revenue claimed that non-disclosure of contract existence or adoption of different clearance values amounted to suppression of facts. The respondent assessee presented letters and contract details showing clear disclosure of pricing basis and terms, refuting the revenue's suppression allegation. The Tribunal upheld the Commissioner (Appeals) findings, stating that the respondent adequately disclosed facts to the Revenue, leading to the dismissal of the Revenue's appeal with potential consequential benefits for the assessee.