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2024 (5) TMI 616 - AT - Central ExciseDemand of differential Central Excise Duty with interest and penalty - inflating freight charges through their dummy transport unit - reduction in the assessable value within the average composite price paid by oil companies - contravention of proviso to Section 4(1)(b) of Central Excise Act, 1944 read with Rule 5 of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000, Rules 4, 6, 8 and 11 of Central Excise Rules, 2002 - HELD THAT - In view of the settled decision of law and the judgment of this Tribunal in MM Cylinders 2011 (9) TMI 779 - CESTAT, BANGALORE being confirmed by Hon ble Supreme Court in MM Cylinders Vs C 2012 (1) TMI 368 - SUPREME COURT OF INDIA , where it was held that ' The mere fact that the jurisdictional Superintendent of Central Excise might be aware that the SMT has been used for transport of goods and freight was claimed as abatement may not lead to any conclusion to say that the department was aware of intricate manipulation by the appellant-company'. The appeal is dismissed.
Issues Involved: Central excise duty liability on inflated freight charges, imposition of penalties under Central Excise Rules.
Central Excise Duty Liability on Inflated Freight Charges: The appellant, a manufacturer of LPG cylinders, was found to be inflating freight charges through a dummy transport unit and claiming them as deductions from the gross delivery price/net delivery price of their final products. This practice led to undervaluation of the final products and evasion of central excise duty. The Central Excise authorities issued a show cause notice for the recovery of the differential duty amount along with interest and penalties under relevant sections of the Central Excise Act, 1994. The respondent confirmed the demand and penalties imposed, citing contravention of proviso to Section 4(1)(b) of the Act and other relevant rules necessitating recovery measures for the duty short paid. The penalties were also imposed on individuals and entities involved in the scheme. Imposition of Penalties under Central Excise Rules: Penalties were imposed under Rule 26 of the Central Excise Rules, 2002 on the Managing Director, Director, General Manager of the appellant company, as well as on M/s Sri Mehala Transport and its partner. The penalties were confirmed by the respondent after a thorough examination of the issue. The appellant appealed before the Commissioner (Appeals) but the appeals were dismissed, leading them to approach the Tribunal. Appellant's Arguments: The appellant contended that the assessable value for calculating excise duty should be determined as per Rule 5 of Central Excise Valuation Rules, 2000 read with Section 4(1)(a) of the Act. They argued that the outward freight charges incurred were deducted from the contracted delivery price to determine the assessable value. The appellant also claimed that the freight charges shown were not inflated willingly and were lower than those claimed by the Revenue. They relied on a precedent ruling and argued that even if there was inflation, it should not affect the assessable value as freight charges are liable for service tax. The appellant maintained that the demand was based on assumptions and presumptions and should be set aside. Revenue's Response: The Revenue, represented by Learned AR Shri Pradeep Saxena and Shri V. Srikanth Rao, supported the impugned order. They cited a similar case in the same Commissionerate where the Tribunal dismissed the appeal of another company on similar grounds of inflating transport charges to reduce assessable value. The Revenue argued that the issue was settled in their favor based on the decision of the Tribunal and the subsequent dismissal of the appeal by the Supreme Court. Tribunal's Decision: Considering the settled decision of law and the precedent set by the Tribunal in a similar case, the Tribunal dismissed the appeals as lacking merit. The Tribunal referenced the confirmation of the decision in the case of MM Cylinders by the Supreme Court, reinforcing the dismissal of the present appeals.
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