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2019 (4) TMI 1412 - AT - Central ExciseValuation - inclusion of packing and forwarding charges in assessable value - HELD THAT - The issue is no more res-entigra in view of the decision of the Hon ble Supreme Court in the case of UNION OF INDIA ORS. ETC., ETC. VERSUS BOMBAY TYRE INTERNATIONAL LTD. ETC., ETC. 1983 (10) TMI 51 - SUPREME COURT OF INDIA is applicable to the period prior the introduction of transaction value with effect from 1/7/2000 and for the period after 1/07/2000 the issue is covered by the decision of the Larger Bench of COMMISSIONER OF CENTRAL EXCISE, INDORE VERSUS M/S GRASIM INDUSTRIES LTD. THROUGH ITS SECRETARY 2018 (5) TMI 915 - SUPREME COURT . The goods are otherwise marketable without packing and the same is done only at the request of the customers. The activity being a post manufacturing activity, the value of such packing material is not includible in the assessable value. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Inclusion of packing and forwarding charges in the assessable value. 2. Allegation of evasion of Central Excise Duty. 3. Limitation period for issuing the Show Cause Notice. 4. Applicability of the Supreme Court's decisions and Board's Circulars. Detailed Analysis: 1. Inclusion of Packing and Forwarding Charges in the Assessable Value: The appellant was manufacturing HDPE Silver Can and parts, classifiable under Chapter 39 & 76 of the Central Excise Tariff Act, 1985. The department alleged that the appellant raised commercial invoices including "packing and forwarding charges" over and above the assessable value shown in their Central Excise invoices. The Adjudicating Authority confirmed the demand of ?50,298/- along with interest and imposed a penalty under Section 11AC of the Central Excise Act, 1944. The appellant argued that the cost of such packing and forwarding charges is not includible in the assessable value prior to 01/07/2000 and even thereafter with the introduction of the transaction value. The Tribunal found that the issue was settled by the Supreme Court in Union of India vs. Bombay Tyre International Ltd. and CCE Indore vs. Grasim Industries Ltd., which held that expenses enriching the value of the article till its clearance are permissible additions to the price for determining the assessable value. 2. Allegation of Evasion of Central Excise Duty: The department charged the appellant with evasion of Central Excise Duty amounting to ?50,298/- for the period from 01/04/2000 to 08/08/2003. The appellant contended that there was no suppression of facts or misstatement with the intent to evade payment of duty, as the commercial invoices for packing and forwarding charges were maintained and statutory returns were submitted. The Tribunal, referencing the Supreme Court's decisions, concluded that the inclusion of such charges in the assessable value was permissible, negating the allegation of evasion. 3. Limitation Period for Issuing the Show Cause Notice: The appellant argued that the demand was barred by limitation since the Show Cause Notice was issued on 24/03/2005, while the period of dispute was from 01/04/2000 to 08/08/2003. The Tribunal did not explicitly address the limitation issue in its final decision but focused on the substantive legal principles regarding the inclusion of packing and forwarding charges. 4. Applicability of the Supreme Court's Decisions and Board's Circulars: The Tribunal referenced the Supreme Court's decisions in Bombay Tyre International Ltd. and Grasim Industries Ltd., which clarified that the measure of the levy is the price charged at the stage of clearance, including certain value additions. The Tribunal also noted the Supreme Court's observation in CCE Bolpur vs. Ratan Melting & Wire Industry, stating that circulars are not binding if they contradict statutory provisions or judicial decisions. Consequently, the Tribunal held that the value of packing material, being a post-manufacturing activity, is not includible in the assessable value. Conclusion: The Tribunal set aside the impugned order and allowed the appeal filed by the appellant, granting consequential relief. It concluded that the goods were marketable without packing, which was done only at the customer's request, and thus, the value of such packing material should not be included in the assessable value. The decision was pronounced in court on 02/01/2019.
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