2024 (9) TMI 1165 - AT - Central Excise

Valuation of Excise Duty - inclusion of handling charges which consists of loading/unloading of goods, freight and transit insurance charged separately in the assessable value - Extended period of limitation - HELD THAT - The issue involved is interpretation of valuation provisions under Section 4 of the Central Excise Act, 1944. All the transactions of the appellant have been duly accounted for and the goods were cleared under proper invoices and excise duty has been paid on the value which as per the appellant s bonafide belief, is correct. Therefore the department was aware of all the activities performed by the appellant. Regular periodical returns were also filed wherein transaction of duty payment thereon were declared. In these facts, entire information was disclosed before the department and there is no suppression of facts. Accordingly, the demand for the extended period is not sustainable on the ground of limitation itself. In identical issue, the Hon ble Gujarat High Court in the case of Prolite Engineering Company vs. UOI 1990 (3) TMI 89 - HIGH COURT OF GUJARAT has held that information which is not required to be disclosed or recorded by statutory provision or prescribed proforma does not amount to suppression or concealment - it is found that the appellant s case is on better footing than that of the case before the Hon ble High Court. Thus, the demand beyond the normal period of limitation i.e. for April 2003 to February 2007 is liable to be set-aside. Demand for the normal period - HELD THAT - As regards freight and transit insurance, the issue is covered by Hon ble Supreme Court decision in the case of CCE vs. Ispat Industries Limited 2015 (10) TMI 613 - SUPREME COURT . However, regarding loading-unloading, if the said activity was carried out within the factory then the expenses are incurred before the place of removal therefore, same is prima-facie includible in the assessable value. However, if the said loading and unloading has taken place after the removal from the place of removal, in such case, the same may not be includible in the assessable value. However, this issue is to be reconsidered after verifying the facts. Accordingly, only for the issue of duty relates to loading-unloading of goods, the matter is remanded to the Adjudicating Authority. The appeal of appellant company is partly allowed and partly remanded to the Adjudicating Authority.

Summary

Issues:
Whether handling charges, including loading/unloading of goods, freight, and transit insurance, separately charged in invoices, are includible in the assessable value for excise duty payment.

Analysis:
The appellant argued that the demand was based on a judgment that has been overruled by a subsequent Supreme Court decision, making the earlier judgment not applicable. They contended that the handling charges beyond the factory gate, shown separately in invoices, should not be included in the assessable value. The appellant also claimed that the demand was time-barred due to the issue being one of interpretation, and all relevant facts were disclosed to the department. The appellant cited various judgments to support their arguments.

The Revenue reiterated the findings of the impugned order.

The Tribunal first addressed the issue of limitation, noting that most of the demand fell under the extended period. They found that the appellant had disclosed all transactions, filed regular returns, and there was no suppression of facts. Citing legal precedents, the Tribunal held that the demand for the extended period was not sustainable due to lack of evidence of intent to evade duty.

For the demand within the normal period, the Tribunal held that charges related to freight and transit insurance were covered by a Supreme Court decision. However, regarding loading and unloading charges, if done within the factory, they may be included in the assessable value. The Tribunal remanded the matter to the Adjudicating Authority for further verification of facts on this issue.

Due to the lack of malicious intent, the penalties imposed on the appellants were set aside. The appeal of the appellant company was partly allowed and partly remanded to the Adjudicating Authority, while the appeal of the General Manager was allowed.

In conclusion, the Tribunal set aside the demand beyond the normal limitation period and remanded the issue of loading/unloading charges for further consideration, while also nullifying the penalties imposed on the appellants.