2003 (6) TMI 129 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of the value of moulds and dies in the assessable value of the moulded products.
2. Correct determination of the amortized value of the moulds and dies.
3. Applicability of the extended period of limitation for the demand of duty.
4. Liability for interest and penalty under Sections 11AB and 11AC of the Central Excise Act.

Issue-wise Detailed Analysis:

1. Inclusion of the Value of Moulds and Dies:
The primary issue was whether the value of moulds and dies supplied free of cost by customers should be included in the assessable value of the moulded products manufactured by the assessee. This issue had already been settled by the Tribunal's Larger Bench in Mutual Industries Ltd. v. CCE, Mumbai, which held that the value of such moulds and dies is proportionately includible in the assessable value of the moulded products. The Tribunal's previous remand order directed the Commissioner to take a fresh decision in line with this principle. The Commissioner confirmed the inclusion of the value of moulds and dies in the assessable value, which was upheld by the Tribunal.

2. Correct Determination of the Amortized Value:
The Commissioner determined the amortized value of the moulds and dies based on their costs and quantities, as mentioned in the SCN. However, the assessee contended that the amortization was not correctly done, arguing that the life span and production capacity of the moulds were not properly considered. The Tribunal found that the Commissioner did not adequately consider the Cost Accountant's certificates and other evidence provided by the assessee. The Tribunal directed the Commissioner to re-determine the amortized value by accepting the relevant certificates of the Cost Accountant in accordance with the Board's Circular No. 170/4/96-CX., dated 23-1-96, which was binding on the Commissioner.

3. Applicability of the Extended Period of Limitation:
The assessee argued that the demand was time-barred, stating that they acted in bona fide belief based on previous Tribunal decisions that the cost of moulds was not includible in the assessable value. However, the Tribunal rejected this argument, noting that the assessee did not file fresh declarations under Rule 173C despite receiving additional consideration in the form of free moulds and dies. The Tribunal found that there was suppression of material facts with intent to evade duty, justifying the invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act.

4. Liability for Interest and Penalty:
Given the suppression of facts, the Tribunal upheld the liability for interest under Section 11AB and penalty under Section 11AC. However, the penalty of Rs. 18,36,340/- imposed by the Commissioner was set aside due to the partial setting aside of the duty demand. The Tribunal allowed the Commissioner to re-determine the penalty amount after requantifying the duty demand, ensuring the assessee is given a reasonable opportunity to be heard on all remanded questions.

Conclusion:
The appeal was disposed of with directions to the Commissioner to re-determine the amortized value of the moulds and dies and requantify the duty demand accordingly. The Tribunal upheld the inclusion of the value of moulds and dies in the assessable value and the applicability of the extended period of limitation. The liability for interest and penalty was affirmed, subject to re-determination of the penalty amount.