2003 (7) TMI 107 - AT - Central Excise

Summary

Issues:
Confirmation of demand of duty and personal penalty based on inclusion of notional testing charges in the assessable value of monoblock concrete railway sleepers supplied to Ministry of Railways. Invocation of extended period of limitation for demand.

Analysis:
1. Confirmation of Demand and Penalty: The Commissioner confirmed a demand of duty and imposed a personal penalty against the appellants for notional testing charges included in the assessable value of monoblock concrete railway sleepers supplied to the Ministry of Railways. The appellants contended that the testing charges were not collected from the railways as the inspection was done by railway employees themselves, incurring no expenses on the appellants. The Tribunal found no justification for adding notional testing charges in the assessable value, as the sleepers were fully manufactured and inspected post-production by the railways without any cost to the appellants. The Tribunal referenced previous decisions holding that inspection charges paid by buyers are not includible in the assessable value, especially when no charges were paid to the appellants in this case. Thus, the Tribunal allowed the appeal on merits, rejecting the inclusion of notional testing charges.

2. Invocation of Extended Period of Limitation: The appellants argued that the demand was barred by limitation as the show cause notice was issued beyond the normal period, and the purchase orders in question were previously scrutinized by the Revenue authorities. The Tribunal agreed, stating that there was no suppression of facts by the appellants to justify the invocation of a longer limitation period. Consequently, the Tribunal held that the demand was indeed barred by limitation. As a result, the Tribunal also ruled out the confirmation of interest and the imposition of personal penalty due to the findings on the limitation issue. In summary, the appeal was allowed both on merits and the limitation point.

In conclusion, the Tribunal set aside the demand of duty and personal penalty based on notional testing charges, as well as dismissed the invocation of extended period of limitation for the demand. The decision was made in favor of the appellants, emphasizing that no charges were collected for testing by the appellants from the Ministry of Railways, and the demand was beyond the normal limitation period without any suppression of facts.