2000 (3) TMI 74 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of amortized cost of moulds and dies in the assessable value of components.
2. Applicability of extended period for issuing the show cause notice.

Summary:

1. Inclusion of Amortized Cost of Moulds and Dies in Assessable Value:
The appellants, engaged in manufacturing moulded plastic components, faced a demand for duty based on the non-inclusion of amortized costs of moulds and dies in the assessable value of their components. The Department issued a show cause notice on 25-10-1991, raising a demand of Rs. 45,16,746 for the period from 1-10-1986 to 31-8-1990, and imposed a penalty of Rs. 4 lacs u/r 173Q of the Central Excise Rules, along with confiscation of land, buildings, plant, and machinery u/r 173Q(2).

The Tribunal examined conflicting decisions from Flex Industries Ltd. v. CCE, Meerut - 1997 (91) E.L.T. 120 and CCE, Aurangabad v. Marathwada Glass Co. Pvt. Ltd. - 1999 (85) ECR 94. It was concluded that the value of moulds supplied by customers must be included in the assessable value of the finished product, as the moulds are essential for manufacturing the components. The Tribunal upheld the principle of proportional value addition as seen in Flex Industries Ltd. case, rejecting the contrary view from Marathwada Glass Co. Pvt. Ltd.

2. Applicability of Extended Period for Issuing the Show Cause Notice:
The Tribunal found that the show cause notice issued on 25-10-1991, invoking the extended period of five years, was not justified. The appellants had filed classification lists and price lists during the relevant period, making all transaction details available to the Department. The Tribunal held that there was no suppression or concealment of facts by the appellants, and the Department's delay in noticing the non-inclusion of mould costs did not warrant the extended period. Consequently, the show cause notice was deemed barred by limitation.

Conclusion:
The appeal was allowed, setting aside the impugned order in its entirety due to the show cause notice being barred by limitation. The Tribunal upheld the Department's action regarding the inclusion of mould costs but invalidated the demand due to the time-barred notice.