2018 (7) TMI 1666 - AT - Central Excise

Valuation - inclusion of the design, drawing and layout charges in the assessable value of printed cartoons - Section 4 (3)(d) of the Central Excise Act, 1944 read with Valuation Rules - Held that - The matter is no longer res-integra and the present issue has already been decided by this Tribunal in the case of Paper Products Ltd. Vs. Commr. of Central Excise, Mumbai III 2005 (7) TMI 153 - CESTAT, MUMBAI , where it was held that he customers of the appellants paid the price as reflected in invoice of flexible packaging and plus charges on account of Development & Maintenance of Design and Art work . If the charges were included in the invoice value of the finished product no customer will pay these prices against such debit notes again. This would go to prove beyond doubt that the amount charged by raising debit notes on account of Development & Maintenance of Design and Art work are not incorporated in the value of finished product and is required to be included in assessable value. Demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
- Inclusion of design, drawing, and layout charges in the assessable value of printed cartoons.
- Justification for the imposition of penalty under Section 11AC of the Central Excise Act, 1944.

Analysis:
1. Inclusion of design, drawing, and layout charges: The case revolved around whether charges towards design and layout preparation should be included in the assessable value of printed cartoons. The Revenue argued that such charges should be included as per Section 4(3)(d) of the Central Excise Act, 1944. The appellant contended that not all design expenses could be linked directly to the final product as some designs were rejected by customers, constituting business expenditure. The Tribunal referred to a previous decision and upheld that charges for design and art work were not incorporated in the value of the finished product, as evidenced by the fact that customers paid these charges separately.

2. Imposition of penalty: The Commissioner found that the appellant had suppressed the fact of recovering additional amounts from customers as service charges, leading to duty evasion and justifying a penalty under Rule 173Q of the Central Excise Rules, 1944. The appellant argued that there was no suppression as the department was aware of the facts. The Tribunal upheld the penalty, stating that the appellant failed to disclose relevant information during the assessment period, justifying the penalty imposed for duty evasion.

In conclusion, the Tribunal dismissed the appeal, finding no merit in challenging the impugned Order-in-Appeal. The decision was based on the precedent set by previous cases and the failure of the appellant to demonstrate any shortcomings in the initial order. The Tribunal's decision highlighted the importance of accurately valuing products for excise duty purposes and the consequences of non-disclosure leading to penalties for duty evasion.