1994 (2) TMI 178 - AT - Central Excise

Issues Involved:
1. Assessable value determination under Section 4(1)(a) of the Central Excises and Salt Act, 1944.
2. Inclusion of delivery charges in the assessable value.
3. Inclusion of container recovery charges in the assessable value.
4. Inclusion of advertisement charges in the assessable value.
5. Validity of extended period of limitation under Section 11A of the Act.
6. Validity of penalty imposed under Rule 173Q(1) of the Central Excise Rules, 1944.

Detailed Analysis:

1. Assessable Value Determination under Section 4(1)(a) of the Central Excises and Salt Act, 1944:
The core issue was whether the additional charges raised by the appellants in a second bill should be included in the assessable value of the goods. The Tribunal emphasized that the assessable value is the price at which goods are sold for delivery at the time and place of removal. The Tribunal noted that the appellants had raised a second bill for additional charges such as delivery, container recovery, and advertisement costs, which were not declared in the price list as required under Rule 173C of the Central Excise Rules, 1944. The Tribunal held that the actual prices and details of deductions must be declared in the price list for proper assessment.

2. Inclusion of Delivery Charges in the Assessable Value:
The Tribunal held that transportation and delivery charges incurred outside the factory gate are not includible in the assessable value. This decision was based on the Supreme Court ruling in the case of Indian Oxygen Ltd. v. Collector of Central Excise, which stated that expenses incurred for loading of goods within the factory up to the stage of delivery are includible, but charges for loading and unloading done outside the factory gate are not.

3. Inclusion of Container Recovery Charges in the Assessable Value:
The Tribunal ruled that rent and retention charges for empty bottles and crates are not includible in the assessable value. This decision was supported by the case of Collector of Central Excise v. Indian Oxygen Ltd., where it was held that rental charges, although ancillary, do not constitute the price for the manufacture and thus do not form part of the assessable value.

4. Inclusion of Advertisement Charges in the Assessable Value:
The Tribunal did not accept the appellants' argument that advertisement charges were job charges incurred on behalf of area dealers. The Tribunal held that, in the absence of an agreement or prior request, it was difficult to accept that the advertisement was done at the behest of the customers. Citing the Supreme Court decision in Bombay Tyre International Ltd., the Tribunal concluded that advertisement and publicity charges are includible in the assessable value.

5. Validity of Extended Period of Limitation under Section 11A of the Act:
The Tribunal found that the department was justified in invoking the extended period of limitation. The Tribunal noted that the appellants had not disclosed the additional charges in the price list, which amounted to suppression of facts. Therefore, the extended period for recovery of duty was applicable.

6. Validity of Penalty Imposed under Rule 173Q(1) of the Central Excise Rules, 1944:
The Tribunal set aside the penalty imposed on the appellants, noting that the appellants had provided detailed charts showing item-wise recovery and expenses, and there was no evidence of charging over and above the cost price. The Tribunal concluded that penal action was not justified in the absence of mens rea.

Conclusion:
The Tribunal directed the adjudicating authority to re-determine the assessable value by excluding delivery and container recovery charges but including advertisement charges. The exact duty payable was to be calculated after hearing the appellants, considering the discrepancies pointed out during the arguments. The penalty imposed was set aside. The appeal was disposed of in these terms.

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