1996 (2) TMI 205 - AT - Central Excise

Summary

Issues Involved:
1. Inclusion of the price of optional accessories in the assessable value of vacuum cleaners.
2. Applicability of the extended period of limitation for issuing show cause notices.
3. Imposition of penalties without prior proposal in the show cause notice.

Summary:

1. Inclusion of the price of optional accessories in the assessable value of vacuum cleaners:

The appellants manufacture vacuum cleaners and clear them with standard accessories, including their price in the assessable value. The department issued show cause notices alleging evasion of Central Excise duty by not including the price of optional accessories in the assessable value. The Collector confirmed the duty demands and imposed penalties, holding that the optional accessories were integral components of the vacuum cleaners.

The appellants argued that the optional accessories are not essential for the functioning of the vacuum cleaners and are supplied separately from depots. They cited various judgments supporting their claim that the price of optional accessories should not be included in the assessable value. The Tribunal reviewed several decisions, including International Tractor Co. of India Limited v. Union of India, Auto Control (P) Limited v. Collector of Central Excise, and National Radio & Electronics Co. Ltd. v. Collector of Central Excise, which supported the exclusion of the value of optional accessories from the assessable value.

The Tribunal found that the vacuum cleaners are complete articles when cleared from the factory, and the optional accessories provide additional facilities and are not essential components. The optional accessories are supplied from depots and not fitted to the vacuum cleaners at the factory. Therefore, their price should not be included in the assessable value. The appeals succeeded on merits.

2. Applicability of the extended period of limitation for issuing show cause notices:

The appellants contended that the show cause notices were time-barred as they had disclosed all facts and provided the required information. They argued that there was no suppression or misstatement. The Tribunal did not find it necessary to decide on the limitation issue as the appeals succeeded on merits.

3. Imposition of penalties without prior proposal in the show cause notice:

The appellants argued that there was no proposal for penalty in the first show cause notice, yet penalties were imposed. The Tribunal set aside the impugned orders, allowing the appeals, and did not specifically address the penalty issue due to the success of the appeals on merits.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders, and held that the price of optional accessories should not be included in the assessable value of vacuum cleaners. The issue of limitation and penalties was not specifically addressed due to the success of the appeals on merits.