2001 (5) TMI 131 - AT - Central Excise

Summary

Issues:
1. Calculation of duty on gas cylinders including insurance and freight charges.
2. Validity of invoking the extended period of limitation under proviso to Section 11A(1) for demanding duty.
3. Reduction of penalty and imposition of penalty under Section 11AC.

Analysis:

Issue 1:
The dispute in this case revolved around the calculation of duty on gas cylinders, specifically whether insurance and freight charges should be included in the assessable value. The appellant argued that expenses incurred till clearance at the factory gate should be considered for duty calculation, excluding insurance and freight charges reimbursed at the buyer's premises. However, based on previous tribunal decisions, it was held that insurance and freight charges should indeed be reckoned for computing duty on gas cylinders. The appellant's contentions were thus dismissed.

Issue 2:
The appellant contested the invocation of the extended period of limitation under the proviso to Section 11A(1) for demanding duty. The show cause notice (SCN) was challenged for lacking specific statements justifying the extended period. Citing a Supreme Court decision, it was emphasized that the SCN must clearly indicate the reasons for invoking the extended period. Upon examination, it was found that the SCN did not allege any deliberate suppression of facts to evade duty payment, rendering the invocation of the extended period unjustified. The authorities were deemed to have erred in extending the period beyond six months.

Issue 3:
Regarding the reduction of penalty and imposition of penalty under Section 11AC, the appeal by the Revenue questioned the penalty reduction. However, the Commissioner's decision aligning with tribunal orders was considered valid. As the Department failed to substantiate grounds for invoking the extended period, penalty under Section 11AC could not be imposed. Consequently, the appeal by the Revenue was dismissed, affirming the reduction of penalty and the absence of penalty under Section 11AC due to the lack of justification for invoking the extended period.

In conclusion, the tribunal upheld the inclusion of insurance and freight charges in duty calculation for gas cylinders, rejected the invocation of the extended period of limitation due to insufficient grounds in the SCN, and dismissed the appeal by the Revenue concerning penalty reduction and imposition under Section 11AC. The matter of assessing differential duty for specific clearances was remitted back to the jurisdictional authority for prompt resolution.