1996 (10) TMI 262 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification 120 of 75 regarding duty exemption.
2. Compliance with conditions stipulated in the proviso to the Notification.
3. Influence of commercial or financial relationships on invoice price.
4. Consideration of loading expenses in the assessable value.
5. Time limitation for issuing show cause notice.

Analysis:

1. The case involved the interpretation of Notification 120 of 75 granting duty exemption for goods under Tariff Item 68. Duty was leviable based on the invoice price charged by the manufacturer for the sale of such goods. The benefit was subject to conditions specified in the proviso to the Notification.

2. The Collector contended that one of the conditions in Proviso (iv) was not satisfied by the appellants. Proviso (iv) required that the invoice price should not be influenced by any commercial or financial relationship between the manufacturer and the buyer, other than the relationship created by the sale of the goods. The appellants argued that this condition was met in their case.

3. The Department alleged that the contract between the appellants and the buyer influenced the invoice price, as it locked the prices of cement and steel despite market escalations. However, the Tribunal found that the relationship created by the contract for sale of goods did not violate Proviso (iv) of the Notification.

4. Another issue was the inclusion of loading expenses within the assessable value. Citing previous Supreme Court judgments, it was established that loading expenses incurred within the factory premises should be part of the assessable value. However, the show cause notice for demanding duty on loading charges was found to be time-barred.

5. The Tribunal held that the claim regarding loading charges was barred by time as the show cause notice did not justify invoking the extended period of five years under Section 11A of the Central Excise Act, 1944. As the allegation of suppression of facts was not accepted in the impugned order, the claim was deemed time-barred.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, finding in favor of the appellants on the issues of compliance with the conditions of the Notification and the time limitation for the show cause notice.