2002 (2) TMI 621 - AT - Central Excise

Appellant overturns order for non-inclusion of handling charges in Central Excise Act

Appellant successfully appealed against an order confirming a demand under the Central Excise Act for non-inclusion of handling charges in the assessable ... Assessable value and additional consideration - evasion of duty by non-inclusion of handling charges in the assessable value - scope of show cause notice and limitation of adjudication to pleaded allegations - requirement that findings of liability must be founded on allegations in the show cause noticeScope of show cause notice and limitation of adjudication to pleaded allegations - requirement that findings of liability must be founded on allegations in the show cause notice - Whether the adjudicating authority and the Commissioner (Appeals) could sustain a finding that sales took place from a godown at Delhi when the show cause notice did not allege sale from any godown at Delhi. - HELD THAT: - The show cause notices alleged that the assessee charged an extra Re. 1/- per kg. as handling charges in the name of freight, cartage, local conveyance, insurance, loading and unloading etc., which was contended to be additional consideration and therefore part of the assessable value. There was no reference in the notices to any godown at Delhi or to sales taking place from a Delhi godown. The assessee specifically pleaded before the Commissioner (Appeals) that it had no depot at Delhi and that goods were assigned from its Shahjahanpur factory. Despite this, the adjudicating authority and the Appellate Authority proceeded on a different basis-namely, that sales took place from the Delhi godown-and made findings of liability accordingly. Because the authorities decided the case on a factual basis not covered by the allegations in the show cause notices, their orders were not founded on the pleaded case and could not be sustained. [Paras 3, 4]Orders of the adjudicating authority and Commissioner (Appeals) set aside for proceeding on a basis not alleged in the show cause notices.Final Conclusion: The orders confirming demand, interest and penalty were set aside and the appeal allowed because the authorities based their decision on findings (sale from a Delhi godown) that were not within the scope of the show cause notices. Appellant Spectrum Paints Pvt. Ltd. appealed against order confirming demand of Rs. 1,84,915 under Central Excise Act, 1944 for non-inclusion of handling charges in assessable value. Appellant argued that charges were for freight, cartage, etc., not additional consideration. Tribunal found no mention of sale from Delhi godown in show cause notice. Orders set aside, appeal allowed.