1995 (7) TMI 168 - AT - Central Excise

Summary

Issues:
- Classification of product under Central Excise Item 68
- Allegation of excess recovery of transportation charges
- Application of extended period of limitation for demand of excise duty
- Imposition of penalty under Rule 173Q(1)
- Interpretation of Section 4(2) of the Central Excises & Salt Act, 1944
- Applicability of Supreme Court decision in Collector of Central Excise v. Indian Oxygen Ltd.
- Justification for invoking the larger period for demand and penalty
- Consideration of correct sale pattern in assessing excess recovery of transportation charges
- Time-barring issue for demand beyond six months

Detailed Analysis:

The appeal concerns a dispute arising from the classification of a product under Central Excise Item 68 and the alleged excess recovery of transportation charges by the appellants. The Additional Collector of Customs & Central Excise, Rajkot, confirmed a demand for differential Excise duty and imposed a penalty on the appellants under Rule 173Q(1) for the period in question. The appellants contended that the recovery of transportation charges was in line with equalized freight and should be deductible under Section 4(2) of the Central Excises & Salt Act, 1944. They cited the Supreme Court decision in Collector of Central Excise v. Indian Oxygen Ltd. to support their argument that the excise duty is on the manufacture, not on profit from transportation charges. The Department, however, argued that the excess recovery of transportation charges should be included in the assessable value of the product.

The Tribunal examined the submissions and records, noting that the appellants recovered more in transportation charges than they actually incurred. It was determined that the freight charges were directly attributable to the product and should be included in the assessable value. The Tribunal distinguished the case law cited by the appellants, stating that the recovery of carting charges was not a profit or gain of an ancillary venture. Additionally, the Tribunal found that the Department was justified in invoking the larger period due to the appellants' failure to disclose the excess recovery of carting charges and comply with Notification No. 120/75 requirements.

Regarding the time-barring issue, the Tribunal considered the earlier order by the Assistant Collector, where the demand was dropped based on the separate disclosure of carting charges. Given this history and the lack of examination by the Department within the statutory period, the Tribunal concluded that the demand beyond six months was barred by time. Consequently, the appeal was disposed of in favor of the appellants, emphasizing the importance of timely and thorough examination of relevant issues in excise duty assessments.