1990 (10) TMI 179 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of handling charges in the assessable value of oxygen gas.
2. Alleged suppression of facts and evasion of Central Excise duty.
3. Applicability of the extended time limit for issuing the show cause notice.

Detailed Analysis:

1. Inclusion of Handling Charges in the Assessable Value:

The appellants, M/s. Jabalpur Oxygen Co., were found to have executed contracts with M/s. Eastern Air Products, where handling charges were initially included in the price list but later omitted in subsequent contracts. Despite this, handling charges were still recovered through debit notes. The central issue was whether these handling charges should be included in the assessable value of oxygen gas.

The tribunal examined the nature of the handling charges, which included unloading, stacking, and loading of cylinders within the factory premises. According to the Supreme Court judgment in Indian Oxygen Ltd. v. Collector of Central Excise, such charges incurred within the factory are to be included in the assessable value. The tribunal concluded that unloading and stacking charges are part of the manufacturing process and must be included in the assessable value, rejecting the appellants' argument that these were post-manufacturing expenses.

2. Alleged Suppression of Facts and Evasion of Central Excise Duty:

The appellants were accused of suppressing the fact that they were recovering handling charges separately, which was not disclosed in the price list or the contract. The tribunal noted that the appellants' agreement with M/s. Eastern Air Products did not mention the inclusion of handling charges in the declared price. This omission led to the allegation of suppression of facts with the intent to evade duty.

The tribunal found that the handling charges were not disclosed in the price list, and the recovery was only discovered upon scrutiny of private records. This supported the Department's claim of suppression of facts.

3. Applicability of the Extended Time Limit for Issuing the Show Cause Notice:

The show cause notice was issued on 22-8-1981 for the period from 1st August 1979 to January 1981, invoking the extended time limit due to alleged suppression of facts. The appellants argued that the demand was time-barred, claiming that the Central Excise Officer was aware of the handling charges through the submitted agreement.

The tribunal rejected this argument, stating that the agreement did not explicitly disclose the handling charges. The Department's discovery of the charges during record scrutiny justified invoking the five-year limitation period under the Central Excise Rules. The tribunal upheld the Department's action as justified.

Conclusion:

The tribunal upheld the Additional Collector's order, confirming that handling charges are includible in the assessable value and that the appellants had suppressed facts, justifying the extended time limit for the show cause notice. The appeal was dismissed, and the cross-objection by the Revenue was disposed of accordingly.