1997 (5) TMI 143 - AT - Central Excise

Summary

Issues: Challenge to Order-in-Original regarding duty payment on package air conditioners for the period 1983-1986, dispute over the supply of accessories along with air conditioners, contention on the assessable value of air conditioners, demand for differential duty and penalty imposition based on alleged suppression of value in excise records.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi challenged the Order-in-Original issued by the Additional Collector of Central Excise regarding the duty payment on package air conditioners manufactured by the appellant during the period 1983-1986. The dispute centered around the supply of accessories along with the air conditioners. The Preventive Staff's visit to the appellant's factory revealed discrepancies where the invoices and packing lists only referred to the air conditioners, not the accessories. It was alleged that the cost of accessories shown in separate bills was significantly higher than the air conditioners' value, indicating a suppression of value in the excise records. A notice was issued to the appellant for demanding differential duty and imposing a penalty of Rs. 75,000, which was contested by the appellant but upheld by the Additional Collector.

The appellant contended that the accessories supplied were optional and aimed at enhancing the air conditioners' efficiency, not required to be included in the assessable value. However, the department argued that no accessories were actually supplied by the appellant, as evidenced by the absence of documents related to bought-out items. The appellant's failure to produce such evidence suggested that no accessories were purchased or supplied, leading to the conclusion that the price shown for accessories was part of the air conditioners' price. The Tribunal examined the bills for accessories, which showed a substantial price difference between the air conditioners and accessories, supporting the department's claim of shifting a significant part of the air conditioners' price to accessories.

The Tribunal upheld the confirmation of the duty demand and penalty imposition by the Additional Collector, noting the leniency in quantifying the penalty. The decision was based on the appellant's inability to provide evidence of purchased accessories and the significant price difference between the air conditioners and alleged accessories. Consequently, the appeal was dismissed, affirming the Additional Collector's order.