2019 (1) TMI 899 - AT - Central Excise

Valuation - inclusion of freight charges borne by the customer of the appellant separately in the assessable value - extended period of limitation - Held that - It is on record that all such cases the freight element has been borned by the customer. The assessee has not paid any amount towards the freight charges. The CBEC Circular No. 988/12/2014-CX. dated 20.10.2014 has clarified in their circular that in such a situation the freight charges are not to be included in the assessable value - This issue is also decided by the various Court and Tribunal that when the factory gate price is available and freight is borned separately by the customer in view of the decision cited supra, the same is not includible in the assessable value. Extended period of limitation - Held that - It is on record that the demand has been raised as per the audit objection and the entire activity of appellant was known to the department - in this case the entire demand is also time barred as the extended period is not available to the department. Appeal allowed on merit as well as on limitation.

Summary

Issues:
- Inclusion of freight charges in the assessable value under Central Excise Valuation Rules, 2000.
- Applicability of penalty under Section 11AC(1)(c) of the Central Excise Act, 1994.
- Time-barred demand for recovery of Central Excise duty.

Inclusion of Freight Charges in Assessable Value:
The case involved a limited company manufacturing supercera ceramic fiber facing show cause notices for not including freight charges in the assessable value of goods sold from the factory gate and depot. The appellant argued that when the factory gate price is available and freight is borne separately by the customer, the freight charges should not be included in the assessable value. They cited CBEC circulars and legal precedents to support their stance. The Tribunal agreed, referencing decisions in various cases and ruled in favor of the appellant, stating that the freight charges were not to be included in the assessable value.

Applicability of Penalty under Section 11AC(1)(c):
The appellant challenged the penalty imposed under Section 11AC(1)(c) of the Central Excise Act, 1994. The impugned order reduced the penalty to 50%, modifying the original adjudicating authority's decision. The appellant contended that the ld. Commissioner (Appeals) erred by not following departmental instructions, arguing that the departmental instructions are binding. They referred to relevant case law to support their argument. However, the Tribunal did not delve into this issue in detail in the judgment.

Time-Barred Demand for Recovery of Central Excise Duty:
The appellant claimed that the demand for recovery of Central Excise duty was time-barred as the show cause notice was issued after the period specified in the Central Excise Act. They argued that there was no suppression of facts, as the department was aware of the issue before the audit objection was raised. The Tribunal considered the appellant's submissions, citing relevant legal precedents, and concluded that the demand was indeed time-barred. They referenced specific cases to support their decision, ultimately allowing the appeal on both merit and limitation with any consequential benefits.

This comprehensive analysis of the judgment highlights the key issues involved, the arguments presented by the parties, and the Tribunal's decision on each issue, providing a detailed overview of the legal proceedings and outcome.