2018 (4) TMI 759 - AT - Central Excise

Valuation - Printed Circuit Board - inclusion of the design/ Art work/Photo film supplied by their customers - extended period of limitation - Held that - The order passed by the Tribunal was not challenged by the Appellant or the revenue and has thus attained finality. Therefore no fault can be found with the method of such valuation. The issue involved has remained disputed. In such case we also do not find any intention to evade duty payment by the Appellant as all the information were appearing and no attempt has been made to suppress the same. - extended period and penalty not invokable. Appeal allowed.

Summary

Issues:
1. Inclusion of development charges in assessable value of Printed Circuit Board (PCB).
2. Amortization of development charges over the period.
3. Validity of demand raised by invoking extended period.
4. Imposition of penalties on the company and its directors.

Analysis:

1. The Appellants were engaged in manufacturing Printed Circuit Boards (PCB) and faced show cause notices for the period 01.04.98 to 31.05.2006 regarding the inclusion of development charges in the assessable value of PCBs manufactured based on design supplied by customers. The adjudicating authority confirmed the demand, interest, and penalties. The Appellant challenged the inclusion of charges, arguing that the cost should be amortized over the production period based on a Larger Bench judgment. They contended that dividing the cost by the number of PCBs produced results in negligible value, thus no addition is required. The Appellant also claimed no suppression of facts to evade duty.

2. The revenue supported the findings of the impugned order. The Tribunal noted previous litigations and observed that the adjudicating authority had amortized the development charges as directed by the Tribunal. The method of valuation was upheld as it followed Tribunal's directions, which were not challenged earlier and had attained finality. The assessable value was calculated based on the cost of films per sq cm, in accordance with the Tribunal's order. Despite the disputed nature of the issue, no intent to evade duty was found, and no suppression of information was evident. Consequently, the demands for the extended period and penalties were deemed unsustainable.

3. The Tribunal held that the demand for the extended period and penalties against the Appellant were not sustainable due to the lack of intention to evade duty and the absence of suppression of information. Therefore, the penalties imposed on both directors were set aside, and the impugned order was modified accordingly. The appeal of the company was partly allowed, and the appeal of the directors was fully allowed. The judgment was pronounced on 22/03/2018 by the Tribunal comprising SHRI RAMESH NAIR, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL).