1995 (2) TMI 167 - AT - Central Excise

Summary

Issues:
- Determination of Central Excise duty evasion by lowering assessable value of products.
- Challenge to duty amount confirmed by Collector and Collector (Appeals).
- Delegation of power to Assistant Collector for determining duty amount.
- Inclusion of various charges in assessable value.
- Bar on time limitation for raising demand.
- Remand of matter by Collector (Appeals) on violation of natural justice principles.
- Reassessment of quantum of penalty.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi involved two interlinked appeals filed by M/s. LML Ltd., a manufacturer of Motor Vehicles (Scooters), against orders passed by the Collector of Central Excise, Kanpur, and Collector (Appeals), Allahabad. The appellants were accused of evading Central Excise duty by lowering the assessable value of their products. The Collector confirmed a duty amount of Rs. 24,18,712.00 and imposed a penalty of Rs. 15,00,000. The Assistant Collector raised additional demands related to excess transit insurance and salaries paid to Field Service Engineers (FSEs), which were challenged by the appellants.

The first issue revolved around the inclusion of forwarding charges in the assessable value of scooters. The appellants argued that these charges were part of transportation costs and should not be included. They provided evidence, including a certificate from a Chartered Accountant, to support their claim. However, the Collector confirmed the demand without providing reasons for rejecting the evidence, leading to a dispute over the assessable value determination.

The second issue concerned the inclusion of various charges, such as monsoon packing charges and expenses on advertisements, in the assessable value. The appellants contended that these charges were not properly considered, and the Collector's determination lacked a clear basis. Additionally, the appellants argued that the demand was time-barred, citing a case law precedent.

Regarding the delegation of power to the Assistant Collector for determining the duty amount, the Tribunal held that such delegation was impermissible. The Collector was directed to reexamine the issues and determine the duty payable himself after considering the submissions of the party, as argued by the appellants' Counsel, citing relevant case law.

Furthermore, the Tribunal emphasized the importance of adhering to principles of natural justice and directed the Collector to confine the reassessment to the issues covered by the appeals. The matter was remanded to the concerned Collector for a fresh determination, including reassessment of the quantum of penalty based on the outcome of the reassessment. The appellants were instructed to cooperate for the speedy disposal of the matter and present any additional evidence to support their contentions.