2011 (1) TMI 613 - AT - Central Excise

Tribunal includes art charges in assessable value of packaging tubes, longer limitation period applies

The Tribunal upheld the decision that extra consideration for art work/design charges should be included in the assessable value of plastic packaging ... Assessable value - Plastic packaging tubes - Whether the consideration received by the appellant from their client on account of art work/design charges, development charges, mould making charges etc. are required to be included in the assessable value of their final product or not - Held that:- the Tribunal in the later decision in the case of Paper Products Ltd. Vs. CCE Mumbai [2005 -TMI - 54184 - CESTAT, WEST ZONAL BENCH, MUMBAI] has held that the development/maintenance of design and art work charges recovered from the customers are includable in the assessable value. Issues:1. Inclusion of art work/design charges in assessable value2. Applicability of limitation period for recovery of extra chargesAnalysis:1. Inclusion of art work/design charges in assessable value:The appellant, engaged in manufacturing plastic packaging tubes, recovered costs for art work/design on the tubes separately from customers without paying duty on these amounts. The issue revolved around whether these additional charges should be included in the assessable value of the final product. The lower authorities, citing a previous Tribunal decision, held that such charges for art/design should be added to the assessable value. However, a subsequent Tribunal decision in the case of Paper Products Ltd. Vs. CCE Mumbai clarified that charges for development/maintenance of design and art work are indeed includable in the assessable value. Consequently, the Tribunal in this case upheld the decision that the extra consideration for art work/design charges should be included in the assessable value.2. Applicability of limitation period for recovery of extra charges:The appellant also challenged the order on the grounds of limitation, arguing that the recovery of extra charges from customers was not disclosed to the Revenue. The Tribunal noted that while these charges may have been recorded in the appellant's private books of account, the failure to reflect them in statutory records and inform the Revenue justified invoking the longer period of limitation. Citing the case of Paper Products Ltd., the Tribunal emphasized that the non-disclosure of additional recovery of service charges to the department during the relevant period constitutes suppression of fact, warranting the use of the longer limitation period. Therefore, the Tribunal found no merit in the appellant's contention regarding the limitation period and upheld the impugned order, ultimately rejecting the appeal.