2002 (3) TMI 148 - AT - Central Excise

Summary

Issues Involved: Whether the extended period of limitation is invokable for demanding Central Excise duty.

Details of the Judgment:

1. The Appellants manufactured rough iron castings and also manufactured patterns for the castings as per customer requirements. The dispute arose regarding whether the cost of patterns should be included in the assessable value of the castings for excise duty purposes. The Department demanded excise duty and imposed a penalty, alleging that the price charged for the patterns should have been included in the assessable value.

2. The Appellants argued that the Department was aware of the facts regarding the non-inclusion of pattern costs in the assessable value, as evidenced by various communications and documents submitted by the Appellants. They contended that the extended period of limitation should not be invoked as the Department had the necessary information prior to issuing the show cause notice.

3. The Department, on the other hand, claimed that the Appellants bifurcated production expenses to evade excise duty payment and did not declare the correct value in the price list as required by Central Excise Rules. The Department argued that the Appellants suppressed facts by not disclosing the receipt of money for patterns from customers, leading to a misdeclaration of the assessable value.

4. The Tribunal considered the arguments and held that while the cost of patterns should be included in the assessable value, the extended period of limitation was not applicable in this case. Citing previous decisions, the Tribunal ruled that when statutory documents are relied upon in the show cause notice, the larger period of limitation is not invokable. The demand for excise duty for the extended period was set aside, and the Adjudicating Authority was directed to recompute the duty within the specified period prior to the show cause notice issuance.

This judgment clarifies the treatment of pattern costs in the assessable value for excise duty purposes and emphasizes the importance of compliance with disclosure requirements to avoid disputes over duty liability.