2023 (12) TMI 839 - AT - Central Excise

Valuation of Excise Duty - 'facility charges' collected by the Appellant from TISCO is includable in the assessable value or not - invocation of extended period of limitation - HELD THAT - The facility charges' are recovered from TISCO in terms of Para 7.15.2 of the agreement. These charges are payable towards the fixed assets developed/ deployed and the operation and maintenance of the same, irrespective of the supply of DM water. The Appellant submits that they were under the bonafide belief that the same did not merit inclusion in the assessable value. It is observed that contention of the Appellant is supported by the decision of the Tribunal, Kolkata in the case of BOC INDIA VERSUS COMMISSIONER OF CENTRAL EXCISE, JAMSHEDPUR 2004 (11) TMI 219 - CESTAT, KOLKATA . In the said decision, the Tribunal kolkata has held that the 'facility charges' collected by the assessee from those customers on whose factory they have erected and maintained Vacuum Insulated Storage Tank, is not includable in the assessable value as these charges are no way connected with the sale of gases. Extended period of limitation - HELD THAT - There are merit in the contention of the Appellant that there is no suppression of fact involved in this case. It is observed that penalty cannot be imposed when the Appellant is acting under a bona fide belief - the extended period of limitation is not invocable in this case and for the same reason no penalty imposable on the Appellant. The demand of duty confirmed in the impugned order and the penalty imposed set aside, by invoking the extended period of limitation.

Summary

Issues involved:
The issues involved in the present appeal are whether 'facility charges' collected by the Appellant from TISCO are includable in the assessable value for computing duty liability and whether the extended period of limitation can be invoked to demand duty and impose penalty.

Details of the Judgment:

Issue 1: Inclusion of 'facility charges' in assessable value
The Appellant, M/s. NLC Nalco India Limited, had set up a plant inside the premises of Tata Steel and Iron Company Limited (TISCO) for the supply of De-Mineralised water (DM Water) in accordance with an agreement. The Appellant sought clarification on the excitability and classification of DM Water from authorities but received no reply. They began discharging excise duty on DM Water and disclosed it in their returns. The 'facility charges' recovered from TISCO were argued to be payable towards fixed assets developed/deployed, regardless of DM Water supply, hence not includable in the assessable value. The Appellant's belief was supported by a previous decision. The Commissioner (Appeals) held that 'facility charges' are includable in the assessable value due to lack of clarity in the Appellant's letter. The Appellant contended there was no suppression of facts as the 'facility charge' realization was known to the department.

Issue 2: Extended period of limitation
A Show Cause Notice was issued proposing a duty demand by including 'facility charges' in the assessable value, invoking the extended period of limitation. The Ld. Adjudicating Authority dropped part of the demand due to limitation but confirmed the rest. The Appellant argued that no deliberate withholding of information occurred and the 'facility charge' realization was disclosed to the department. The Tribunal observed that 'facility charges' were not connected with the sale of gases, citing a relevant precedent. The Appellant's bona fide belief that no duty was required on 'facility charges' was upheld, and the extended period of limitation was deemed inapplicable. The demand of duty confirmed in the impugned order was set aside, and no penalty was imposed on the Appellant.

Conclusion:
The Tribunal allowed the appeal filed by the Appellant, setting aside the impugned order based on the findings related to the inclusion of 'facility charges' in the assessable value and the invocation of the extended period of limitation.