2023 (5) TMI 294 - AT - Central Excise

Valuation - inclusion of differential amount - it is alleged that appellant had collected insurance premium from their customers which was more than the actual premium paid to the insurance company - HELD THAT - The issue involved is in respect of addition of certain amounts to the assessable value determined in the light of the decision of Hon ble Supreme Court in the case of UJAGAR PRINTS, ETC. ETC. VERSUS UNION OF INDIA AND OTHERS 1988 (11) TMI 106 - SUPREME COURT , i.e. on the basis of cost of raw materials job charges. Revenue has proceeded against the appellant without adducing any evidence to the effect that the transaction between the job worker and the merchant manufacturer was not on arm s length. Without disputing the job charges, certain figures have been filled up from the accounts of the appellant under the head of insurance premium collected from the customers and premium paid to the insurance company. It has not even been pointed out as to what was collected from a particular customer in this regard. Further, Revenue has not even disputed in the show cause notice that the job charges recovered by the appellant were suppressed in any manner for making the demand. In the case of BARODA ELECTRIC METERS LTD. VERSUS COLLECTOR OF CENTRAL EXCISE 1997 (7) TMI 126 - SC ORDER , Hon ble Supreme Court has held that It was clearly held in INDIAN OXYGEN LTD. VERSUS COLLECTOR OF CE. 1988 (7) TMI 58 - SUPREME COURT , that the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. The decisions relied upon by the learned AR are distinguishable as in the case of PHARMASIA LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, HYDERABAD 2004 (7) TMI 170 - CESTAT, BANGALORE , the issue was in regard to addition of amounts collected under the category of other work overheads , the fact which was admitted by the assessee in their statements. Hon ble Supreme Court order is only limited to the issue of suppression etc. for invoking period of limitation. The appeal is allowed.

Summary

Issues Involved:
1. Demand of Central Excise Duty
2. Recovery of Interest
3. Imposition of Penalty
4. Inclusion of Insurance Premium in Assessable Value
5. Bar of Limitation

Summary:

1. Demand of Central Excise Duty:
The appeal was directed against the Order-in-Appeal which upheld the demand of Rs. 61,628/- under Section 11A(1) of the Central Excise Act, 1944. The appellant was found to have collected insurance premiums from customers exceeding the actual premiums paid to the insurance company.

2. Recovery of Interest:
The Commissioner (Appeals) ordered the recovery of interest at the appropriate rate under Section 11AB of the Central Excise Act, 1944, from the appellant.

3. Imposition of Penalty:
A penalty of Rs. 61,628/- was imposed under Section 11AC of the Central Excise Act, 1944, on the appellant.

4. Inclusion of Insurance Premium in Assessable Value:
The appellant argued that the excess insurance premium collected should not be included in the assessable value as it pertains to non-manufacturing activity. The Tribunal referred to several decisions, including Baroda Electric Meters Ltd. [1997 (94) ELT 13 (SC)], which held that such profits on non-manufacturing activities could not be included in the assessable value. The Tribunal found that the Revenue did not provide evidence that the transaction between the job worker and the merchant manufacturer was not at arm's length or that job charges were suppressed. The excess insurance premium collected was not to be included in the assessable value, following the decisions in U.P. Twiga Fiberglass Ltd. [2015 (316) ELT 304 (Tri.-Del.)] and Marpol Pvt. Ltd. [2017-TIOL-567-CESTAT-MUM].

5. Bar of Limitation:
The appellant contended that the demand was barred by limitation as there was no suppression of facts. The Tribunal found merit in this argument, noting that the Revenue did not dispute the job charges recovered by the appellant or provide evidence of suppression.

Conclusion:
The appeal was allowed, setting aside the impugned order. The Tribunal found that the excess insurance premium collected was not includible in the assessable value and that the demand was barred by limitation.