2016 (6) TMI 664 - AT - Central Excise

Valuation - Demand of duty on 3% commission given to through whom goods were supplied to the customers - Held that - We find that this fact is not under dispute that 3% service charge was billed to M/s. MSSIDC in their commercial invoices in addition to the value shown in the excise invoices therefore it is apparent that 3% service charge was escaped from payment of excise duty. As regard claim of the appellant that the said amount is in form of commission which was passed on to M/s. MSSIDC, the appellant could not produce any piece of evidence as against billing of this 3% service charge, whether the payment was received less to the extent of said service charge, even they failed to produce contract which can put some light on the nature of the 3% service charge and whether it is deductible for releasing the payment to the appellant. In absence of any evidence and with the fact that 3% service charge was admittedly billed by the appellant to the M/s. MSSIDC, we do not have any option except to agree with the lower authority - Decided against assessee

Summary

Issues:
1. Demand of duty on 3% commission charged by the appellant.
2. Whether the 3% service charge should be included in the assessable value for excise duty.

Analysis:
1. The appellant appealed against the Order-in-Appeal confirming the demand of duty on a 3% commission charged to M/s. MSSIDC. The appellant contended that the 3% service charge was a commission passed on to M/s. MSSIDC, which should not be part of the assessable value for excise duty. The appellant failed to produce crucial documents like contracts and payment particulars due to management changes, relying only on a letter dated March 1, 2006, to support their claim.

2. The Revenue argued that the 3% service charge billed by the appellant to M/s. MSSIDC was not proven to have been deducted from payments received. The terms of the service charge in the contract with M/s. MSSIDC were also unclear. The Revenue maintained that since the service charge was billed, it should be considered part of the assessable value for excise duty. The Tribunal found that the 3% service charge was indeed billed to M/s. MSSIDC, indicating that it had escaped excise duty payment. Due to the lack of evidence from the appellant regarding the nature and deduction of the service charge, and the absence of a contract clarifying the terms, the Tribunal upheld the lower authority's decision, dismissing the appeal and disposing of the Misc. Application accordingly.

This detailed analysis of the judgment highlights the key arguments presented by both parties and the Tribunal's reasoning in determining the outcome of the case.