Tribunal rules auto cess in assessable value, upholds interest & penalty. Appellants get reduced penalty benefit.

The tribunal held that automobile cess, not eligible for CENVAT credit, must be included in the assessable value of the final product. The extended period of limitation was justified due to the suppression of material facts by the appellants. Interest under Section 11AB and penalty under Section 11AC were upheld, with the appellants given the benefit of paying a reduced penalty within 30 days. The appeal was partly allowed, granting relief to the appellants in discharging their liabilities for duties, interest, and penalty.

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Issues Involved:
1. Inclusion of Automobile Cess in Assessable Value
2. Applicability of Extended Period of Limitation
3. Justification for Interest and Penalty

Issue-wise Detailed Analysis:

1. Inclusion of Automobile Cess in Assessable Value:
The appellants argued that the automobile cess, being a form of excise duty, should not be included in the assessable value of the final product. They contended that the decision of the Supreme Court in Dai Ichi Kakaria was not relevant to their case. However, the tribunal held that the automobile cess, not being eligible for CENVAT credit, must be included in the cost of production of the final product. The tribunal referred to the Supreme Court's decision in Dai Ichi Kakaria, which stated, "the excise duty paid on raw material also covered by the Modvat scheme is not to be included" in the cost of the final product. Since automobile cess is not Cenvatable, it must be added to the assessable value of the finished goods.

2. Applicability of Extended Period of Limitation:
The tribunal found that the appellants had suppressed material facts by not including the automobile cess in the assessable value, thus justifying the invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944. The tribunal cited the Supreme Court's decision in Dai Ichi Kakaria and noted that after this decision, the appellants could not claim a bona fide belief that the automobile cess was not includable. The tribunal also referenced the case of Air Cell Digi link India Ltd., where it was held that suppression of material facts justifies the invocation of the extended period of limitation.

3. Justification for Interest and Penalty:
The tribunal upheld the demand for interest under Section 11AB, as it is a natural consequence of the delay in payment of duty. The tribunal also upheld the penalty under Section 11AC read with Rule 25 of the Central Excise Rules, 2002, citing the Supreme Court's decision in Rajasthan Spinning and Weaving Mills, which held that penalty under Section 11AC is justified in cases of deliberate deception with intent to evade duty. The tribunal extended the benefit of the proviso to Section 11AC to the appellants, allowing them to discharge their liabilities by paying a reduced penalty within 30 days from the date of the communication of the order.

Conclusion:
The appeal was partly allowed, with the tribunal extending the benefit of the proviso to Section 11AC to the appellants for discharging their liabilities in respect of duties, interest, and penalty.

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