2005 (4) TMI 177 - AT - Central Excise

Summary

Issues:
1. Whether the Product Price Adjustment (PPA) received by the appellant should be included in the assessable value for duty calculation.
2. Whether there was suppression of facts justifying the invocation of a larger period and imposition of fines and penalties.
3. Whether the Commissioner's order, which included the PPA in the assessable value and imposed penalties, was justified.
4. Whether the Board Circular and relevant judgments on the non-inclusion of subsidies in sale price should be followed.

Analysis:

1. The appellant, a PSU unit, received indigenous and imported Superior Kerosene Oil (SKO) at their terminal. The issue revolved around whether the PPA received from the Oil Pool Account should be considered as additional consideration under Rule 5 of the Valuation Rules and included in the assessable value. The Board Circular clarified that such compensation cannot be added to the assessable value. The Tribunal agreed with the Board Circular and relevant judgments, emphasizing that the PPA should not be part of the assessable value, leading to setting aside the Commissioner's order.

2. The Tribunal noted that there was no suppression of facts as all information was known to the department, and the matter was under clarification before the Board. Therefore, invoking a larger period and imposing fines and penalties were deemed unjustified, especially considering the Board Circular's stance on the issue.

3. The Commissioner's order, which included the PPA in the assessable value and imposed penalties, was deemed unacceptable by the Tribunal. It was considered a case of judicial indiscipline as the Commissioner did not apply relevant judgments and the Board Circular, which clearly stated that the PPA should not be included in the assessable value.

4. The Tribunal reiterated the importance of following the Board Circular and relevant judgments that established subsidies given to manufacturers should not be added to the sale price. The Tribunal found the Commissioner's order to be perverse and not acceptable, particularly highlighting the lack of justification for imposing fines and penalties based on the inclusion of the PPA in the assessable value. The appeal was allowed based on the Tribunal's agreement with the Board Circular and applicable judgments.