Tribunal allows deduction of Turn Over Tax from assessable value; penalties waived for individual appellants

The Tribunal held that the Turn Over Tax (TOT) was deductible at the rate of 0.25% from the assessable value of excisable goods. The extended period of limitation was invoked due to the appellants' failure to declare both TOT rates, leading to a partial demand for duty. Penalties under sections 11AC and interest under section 11AB could only be imposed post-28-9-1996. Penalties on individual appellants were set aside as they were not directly involved in excise matters. All three appeals were disposed of accordingly.

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Issues Involved:
1. Deductibility of Turn Over Tax (TOT) from the assessable value of excisable goods.
2. Applicability of extended period of limitation for demanding duty.
3. Imposition of penalty u/s 11AC and interest u/s 11AB of the Central Excise Act.
4. Penalty on individual appellants involved in the case.

Summary:

1. Deductibility of Turn Over Tax (TOT):
The primary issue was whether TOT @ 2% is deductible from the assessable value of excisable goods manufactured by M/s. Modipon Fibre Co., even when the goods were sold to 'backward area' customers where the TOT rate is only 0.25%. The Tribunal held that as per Section 4(4)(d)(ii) of the Central Excise Act, only taxes "payable" will not form part of the assessable value. The Tribunal referenced the case of Bajaj Auto Ltd., 1997 (93) E.L.T. 705 (T), which clarified that "payable" does not mean "paid" and includes consideration of any exemptions granted by the Government. Therefore, the appellants could only deduct TOT at the rate of 0.25% from the assessable value when applicable.

2. Applicability of Extended Period of Limitation:
The Tribunal examined whether the extended period of limitation was applicable. It was found that the appellants did not declare both rates of TOT in their Price Declaration, thus suppressing the lower rate from the Department. The Tribunal upheld the invocation of the extended period of limitation, referencing the Larger Bench decision in Nizam Sugar Factory v CCE, Hyderabad, 1999 (114) E.L.T. 429 (T). However, it was noted that the Department acquired knowledge of the reduced TOT rate on 14-1-1997. Therefore, the demand for duty up to this date was upheld, while the demand after 14-1-1997 was considered time-barred.

3. Imposition of Penalty u/s 11AC and Interest u/s 11AB:
The Tribunal ruled that penalties u/s 11AC and interest u/s 11AB of the Central Excise Act could only be imposed for the period after these sections came into effect on 28-9-1996. The Adjudicating Authority was directed to re-quantify the amount of duty, penalty, and interest accordingly.

4. Penalty on Individual Appellants:
The Tribunal set aside the penalties imposed on the Vice President (Business) and Manager (Sales) of the appellant company. It was determined that these individuals were responsible for pricing and rates but not for excise-related matters, and thus they did not have personal knowledge or reasonable belief that the goods were liable for confiscation.

Disposition:
All three appeals were disposed of in the above terms.

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