2006 (4) TMI 323 - AT - Central Excise

Tribunal includes loading charges in assessable value, no penalty imposed, duty paid before notice

The tribunal ruled in favor of the appellants, holding that loading charges within the factory premises should be included in the assessable value of ... Valuation - Demanded - Limitation - Extended period - Penalty and interest Issues:1. Assessment of excise duty on waste products sold under open tenders.2. Inclusion of loading charges in the assessable value of waste products.3. Limitation period for raising demands.4. Imposition of penalty under Section 11AC of the Central Excise Act.5. Charging of interest on the duty amount.6. Interpretation of contract price and loading charges.7. Application of Supreme Court and Tribunal decisions in determining assessable value.8. Consideration of wilful misrepresentation in limitation cases.9. Suppression of facts and misrepresentation in penalty and interest imposition.Analysis:1. The appellants, engaged in manufacturing chemicals and fertilizers, sold waste products generated during manufacturing through open tenders. The dispute arose when the department objected to the method of determining the assessable value based on the sale being on 'as is where is' basis. The department contended that loading charges should be included in the assessable value, leading to a demand for differential duty, interest, and penalty.2. The appellant argued that the contract price, arrived at after inviting tenders, should be accepted as the transaction value. They relied on various decisions supporting this position and contended that no additional amount flowed back to them beyond the contract price, hence loading charges should not be added to the assessable value.3. Regarding the limitation period, the appellants maintained that they had consistently cleared products under the same terms and conditions, with approved price lists indicating the goods were sold on 'as is where is' basis. They argued that the demand cannot be raised for an extended period based on their compliance history and cited relevant court decisions in support.4. On the issue of penalty, the appellant highlighted that they had paid the duty before the show cause notice was issued, making the penalty under Section 11AC unsustainable. They referenced specific decisions to support their stance and challenged the corrigendum raising the penalty amount.5. Concerning interest, the appellant contended that since the duty was paid before the show cause notice, no interest should be charged, citing a Tribunal decision to support their argument.6. The department argued that loading charges, even if borne by the buyer, should be included in the assessable value based on the Supreme Court decision. They emphasized that loading charges incurred within the factory premises are relevant for assessable value determination.7. The tribunal considered the submissions of both parties and held that loading charges within the factory premises should be included in the assessable value, irrespective of who incurs them. The tribunal differentiated between loading charges incurred inside and outside the factory gate for assessment purposes.8. Regarding the limitation issue, the tribunal found that there was no suppression of facts by the appellant, limiting the demand period and amount accordingly.9. Ultimately, the tribunal set aside the penalty and interest imposition, concluding that there was no suppression of facts or misrepresentation by the appellant, and the duty was paid before the show cause notice, aligning with relevant legal precedents.This detailed analysis of the judgment covers the various issues involved and the arguments presented by both parties, leading to the tribunal's decision on each aspect of the case.