1994 (3) TMI 247 - AT - Central Excise

Summary

Issues Involved:
1. Transportation Charges
2. Advertisement/Publicity and Management Service Charges
3. Suppression of Material Facts
4. Invocation of Extended Period of Limitation
5. Penalty Imposition

Issue-wise Detailed Analysis:

1. Transportation Charges:
The appellants, engaged in manufacturing aerated waters, collected transportation charges from their dealers through separate debit notes. The Collector of Central Excise allowed deductions for transport, handling, distribution, and vehicle maintenance but disallowed other expenses such as salary and bonus for sales staff, breakages in transit, interest on loans, and depreciation on vehicles and trolleys. The Tribunal found that although the appellants collected sums higher than the actual transportation costs, the charge of suppression could not be sustained due to prior communication from the department indicating that approval of transport charges was not necessary. Consequently, the extended period of limitation was not justified for transportation charges.

2. Advertisement/Publicity and Management Service Charges:
The appellants also raised separate debit notes for advertisement and publicity/management service charges, which were not disclosed to the department. These charges were considered additional consideration for sales and were includible in the assessable value of the goods. The Tribunal observed that the expenses for promotional activities were essential for the marketability of the products, as per the Supreme Court's decision in Union of India v. Bombay Tyre International. The appellants' explanation of these charges raised questions about the necessity and appropriateness of such expenses being borne by the dealers.

3. Suppression of Material Facts:
The Tribunal found that the appellants had deliberately suppressed the fact of collecting advertisement expenses separately under specific debit notes from the buyers. The filing of a list of private records did not amount to a declaration of these charges, and the department was not aware of the practice adopted by the appellants. The Tribunal cited multiple decisions to support the conclusion that non-disclosure of such charges amounted to suppression.

4. Invocation of Extended Period of Limitation:
For transportation charges, the Tribunal ruled that the extended period of limitation was not justified due to the department's prior communication indicating no need for approval of transport charges. However, for advertisement and publicity charges, the extended period was correctly invoked as there was no disclosure to the department, and the appellants consciously withheld information.

5. Penalty Imposition:
Given the deliberate suppression of advertisement and publicity charges, the Tribunal upheld the imposition of a penalty but reduced the amount from Rs. 2,02,000/- to Rs. 50,000/-. The Tribunal emphasized that once deliberate suppression is established, penalty imposition is warranted.

Conclusion:
The Tribunal vacated the part of the impugned order relating to transportation charges, providing consequential relief to the appellants. However, it confirmed the order concerning advertisement and publicity charges, reducing the penalty imposed. The appeal was thus partly allowed.