1999 (8) TMI 431 - AT - Central Excise

Summary

Issues:
1. Recovery proceedings dropped by the Collector of Central Excise.
2. Alleged collection of service charges by the respondents.
3. Discrepancy in the nature of service charges collected.
4. Allegations of evasion of duty and suppression of facts.
5. Appeal against the Collector's decision by the Revenue.
6. Review by the Central Board of Excise and Customs.
7. Correct assessment of duty on additional collections.

Issue 1:
The appeal was against the dropping of recovery proceedings by the Collector of Central Excise initiated under a show cause notice. The Collector had held that the extended period was not applicable in this case and suggested that if the respondents were not paying sales tax despite collecting it, it was the buyers' responsibility to seek refunds rather than the Central Excise authorities recovering duty.

Issue 2:
The respondents, manufacturers of sulphuric acid and oleum, were alleged to be collecting service charges under the guise of servicing tankers for transporting goods. However, investigations revealed that these charges were not related to actual services rendered for the tankers. The notice contended that the service charges were a part of the goods' price, and duty should be paid on a value inclusive of these charges.

Issue 3:
The Revenue argued that the service charges were a disguise for collecting additional amounts, constituting part of the goods' price. They contended that the duty demand should have been confirmed, and the matter should have been remanded to determine the duty on the correct amount, rather than dropping the proceedings.

Issue 4:
The Central Board of Excise and Customs found that the Collector's order dropping the proceedings was not legal as the recovery of additional consideration from customers was not disclosed. The Board stated that duty demand was recoverable for the extended period due to non-disclosure of service charges in documents submitted to the department.

Issue 5:
The appeal contended that the Collector's decision was erroneous regarding both the time bar and merits of the case. The documents submitted to the Central Excise authorities gave the impression that the collections were sales tax/service charges, but they were not related to such charges. The order was set aside, directing a correct assessment of duty on the additional collections.

Issue 6:
The Board highlighted that the recovery of additional amounts from customers, despite no sales tax being payable, constituted an additional realization of price. As Central Excise duty is payable on the normal price of goods, this additional amount should have been included in the assessable value, contrary to the Collector's finding.

Issue 7:
The Tribunal accepted the Revenue's submission that the order was erroneous in terms of findings on time bar and merits. It was directed to work out the correct duty on the additional collections made by the respondents during the notice period, allowing the appellants to present their case on the duty leviable. The appeal was allowed on these terms.