1997 (7) TMI 253 - AT - Central Excise

Summary

Issues: Challenge to Order-in-Original regarding demand of duty on Head Office expenses and transportation charges.

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the appellant, engaged in the manufacture of polyurethane foam and articles, challenged the Order-in-Original passed by the Additional Collector of Central Excise, Chandigarh. The appellant was found to be collecting Head Office Expenses and transportation charges from buyers without paying duty on these elements. The show cause notice issued proposed a demand of duty on these amounts, alleging suppression of material facts and non-disclosure of extra collections. The appellant contested the notice, but the Additional Collector confirmed the demand.

Regarding the Head Office expenses, the appellant argued that the demand related to a period beyond the six-month limitation under the proviso to Section 11A of the Central Excise Act. Citing the Supreme Court decision in Voltas Limited case, the appellant contended that post-manufacturing expenses should be excluded from the assessable value. The appellant ceased collecting Head Office expenses from May 1983 onwards, believing it would not be part of the assessable value based on legal precedents. The Tribunal agreed that the demand on Head Office expenses was time-barred as there was no intent to evade duty.

Concerning transportation expenses, the Tribunal noted that the M.R.F. decision allowed deduction of transportation costs along with insurance on freight, as per the Bombay Tyre International case. The appellant argued that the transportation charges collected were based on actual costs incurred, including using own trucks and hiring additional trucks. The Tribunal observed that the Additional Collector did not assess whether profits were made from transportation charges exceeding actual costs. The Tribunal directed a fresh consideration on whether duty should be payable on the alleged excess transportation charges, emphasizing the need for a detailed examination and a personal hearing for the appellant.

In conclusion, the Tribunal set aside the demand on Head Office expenses and remanded the case for a fresh decision on the transportation charges issue. The appeal was allowed, providing an opportunity for the adjudicating authority to reevaluate the duty liability on transportation charges in light of the Tribunal's observations and legal principles.