1998 (5) TMI 288 - AT - Central Excise

Tribunal excludes costs for excise duty, remands for labor cost assessment. Jurisdiction dispute noted. Duty liability upheld.

ESCORTS TRACTORS LIMITED Versus COLLECTOR OF CENTRAL EXCISE, DELHI

The Tribunal held that certain costs should not be included in the assessable value for excise duty calculation, setting aside the demand for those costs ... Valuation Issues:1. Inclusion of various costs in the assessable value for excise duty calculation.2. Jurisdictional dispute regarding the issuance of show cause notice.3. Allegations of incorrect duty liability determination and suppression of material facts.Analysis:Issue 1: Inclusion of Costs in Assessable ValueThe Tribunal held that the costs of certain elements like P.D.I., free services, and training to customers should not be included in the assessable value for excise duty calculation. Citing precedents like Mahindra and Mahindra and PSI Data Systems Limited, the Tribunal determined that only the cost of labor involved in replacing defective parts during the warranty period should be included in the assessable value. The demand was set aside for the costs of P.D.I., free services, and training to customers, and the matter was remanded for quantification of the demand based on the labor cost.Issue 2: Jurisdictional DisputeThe appellant raised a dispute regarding the jurisdiction of the Deputy Collector to issue the show cause notice. Subsequently, a fresh show cause notice was issued by the Director General (AE). The Tribunal acknowledged the jurisdictional issue but proceeded to make decisions based on the merits of the case, ultimately remanding the matter to the Adjudicating Authority for a fresh order.Issue 3: Allegations of Incorrect Duty Liability DeterminationThe show cause notice alleged that the appellant did not determine the duty liability correctly, declared incorrect assessable value, and suppressed material facts. The Tribunal found merit in the department's case, noting that the documents, including circulars issued to dealers, indicated suppression of material facts regarding the adjustment of dealer's margin towards service costs. The Tribunal held that the show cause notice was not barred by time and supported the department's case based on the evidence presented.In conclusion, the Tribunal set aside the impugned order regarding certain costs in the assessable value, remanded the matter for quantification of the demand, and directed a fresh order by the Adjudicating Authority. The confiscation and penalty imposed were also set aside due to the appellant's success in the appeal. The case was remanded for further proceedings in line with the Tribunal's findings and observations, with a restriction on the demand period as per the proviso to Section 11A of the Act.