2010 (5) TMI 274 - AT - Central Excise

Valuation Service Charges Labour charges paid by principle and a fixed amount paid for services like providing space, manpower, security, furnishing charges, etc. Demand holding such expenses incurred as overheads essential for manufacturing activity. Clear that service provided to facilitate manufacture. Held that no merit in contention that service charges not includible. Demand Limitation service charges, inclusion in value of goods manufactured. Submission that intention to evade absent as assessee under bonafide belief that charges not includible. Held that- demand for period subsequent to Aug. 96 set aside, however penalty under Rule 173 and Rule 226 upheld.

Summary

Issues Involved:
Assessable value determination for manufactured goods, Inclusion of service charges in assessable value, Duty demand calculation, Limitation period for demand, Penalty imposition, Interest levy determination.

Assessable Value Determination:
The judgment dealt with whether service charges provided by the assessee to facilitate the manufacture of goods should be included in the assessable value of housing containers and freight containers. The tribunal upheld the duty demand, stating that the expenses for such services were essential overheads for manufacturing activity.

Inclusion of Service Charges in Assessable Value:
The tribunal rejected the contention that the service charges need not be included in the assessable value. It emphasized that the nature of services provided was to aid in manufacturing, making the expenses incurred essential for production.

Duty Demand Calculation:
Regarding the duty demand calculation, the tribunal found no merit in the argument that the demand was barred by limitation. It noted that the assessee failed to establish a legitimate basis for excluding the charges from the assessable value, indicating an intention to evade duty payment.

Limitation Period for Demand:
The judgment addressed the limitation period for the demand, highlighting that suppression cannot exist alongside knowledge. It was noted that all relevant facts were known to the Department by August 1996, leading to the setting aside of the demand for the period post that date.

Penalty Imposition:
In terms of penalty imposition, the tribunal set aside the penalty for the period subsequent to August 1996, along with interest levy, due to the lack of sustainable suppression post that date. However, it upheld the penalty imposed under specific rules for the period before September 28, 1996.

The judgment partially allowed the appeal, affirming the duty demand and penalty for the period before September 28, 1996, while setting aside the demand, interest, and penalty for the period subsequent to August 1996.