1998 (6) TMI 294 - AT - Central Excise

Summary

Issues involved:
Whether the value of Malleable Cast Iron Inserts (M.C.I. Inserts) supplied free of cost by Indian Railways and used in the manufacture of Pre-stressed Monoblock Concrete Sleeper is liable to be included in the assessable value of the final product for excise duty payment.

Detailed Analysis:

1. Limitation Issue:
The appellant argued that the show cause notice issued beyond the normal six-month limitation period was time-barred. They contended that being a Small Scale Industry (S.S.I.) unit, they were not required to file a price list under Rule 173 of the Central Excise Rules, 1944. The appellant also claimed they were not directed by officers to file a price list, thus implying no suppression on their part. However, the respondent argued that the appellants, working on the basis of invoice-price, were obligated to disclose the correct assessable value on the invoice as per Section 4. The non-disclosure of receiving free M.C.I. Inserts from Indian Railways and using them in manufacturing the final product was crucial information withheld from the Department. The respondent contended that the larger limitation period was rightly invoked due to intentional suppression by the appellants.

2. Assessable Value Issue:
The Tribunal observed that the primary issue was whether the demand was time-barred. Despite being a S.S.I. unit under Rule 173C(11), the appellants were required to adhere to the normal assessable value determinable under Section 4 of the Act, even without filing a price list. The Tribunal noted that the appellants did not dispute that the M.C.I. Inserts were supplied free of cost by the Railways and were not included in the invoice value. The value of these inserts was integral to determining the manufacturing cost of the final product accurately. The Tribunal held that the appellants had suppressed this fact to evade duty payment, justifying the use of the larger limitation period. Consequently, the demand was upheld, and no interference was found necessary in the penalty imposed by the adjudicating authority.

In conclusion, the Tribunal rejected the appeal, emphasizing that the appellants' failure to disclose the receipt of free M.C.I. Inserts and their deliberate intent to evade duty payment warranted the application of the larger limitation period. The decision highlighted the importance of accurate disclosure of all relevant information in determining the assessable value for excise duty purposes, even for S.S.I. units.