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2019 (8) TMI 382 - AT - Central ExciseJob-work - manufacture of “Cadbury Perk with Glucose Energy” on behalf of M/s Mondelez - benefit of N/N. 03/2006 (Sl. No. 19) - Inclusion of dealer’s margin, RD markup and post manufacturing expenses claimed by the appellant in assessable value - extended period of limitation - demand of differential duty alongwith interest - imposition of penalties. Whether the assessees are eligible for exemption notification No. 3/2006 (S.No. 19) issued under Section 5A claimed by them which is sought to be denied by the Revenue? - HELD THAT:- A plain reading of the exemption notification does not show that it is intended to cover all products covered by the tariff heading 1905 3290 or wafers (coated or uncoated) falling under tariff heading. It specifically includes only wafer biscuits falling under tariff heading. If the intention of the notification was to exempt ‘wafers’ also, it would have said so. The assessees’ products are not described as ‘wafer biscuits’ by the assessee themselves either to the department or in any of the documents or to the ultimate consumers on their wrappers. Thus, we find nobody in the chain of trade from the manufacturer to the ultimate consumer know the products as ‘wafer biscuits’ but know them only called as coated wafers - It is not for this Tribunal to enlarge the scope of an exemption notification meant for ‘wafer biscuits’ to cover ‘coated wafers’ as well - Even if it is held that ‘wafers’ could possibly be broadly considered as wafer biscuits, the matter is definitely not free from doubt/ambiguity - the assessee is not entitled to the benefit of exemption notification No. 03/2006. What value should be adopted for reckoning the Central Excise duty? - inclusion of Dealer’s margin, RD Markup and Post Manufacturing expenses in assessable value - HELD THAT:- It is not in dispute that the assessee is manufacturing the goods on job work basis and are therefore covered by Rule 10A of Central Excise Valuation (Determination of price of Excisable Goods) Rules, 2000 - As far as the dealer’s margin is concerned, in a commodity which costs ₹ 2/- per piece, it is inconceivable that M/s Mondelez was selling these goods directly to individual retailers across the country. Therefore, there is no room for disallowing dealer’s margin as a deduction - As far as the RD Mark up is concerned, the Ld. Commissioner considered this to be an R&D cost and Ld. Counsel for the appellant clarifies that this is a margin given to the re-distributors. There is no evidence on record to show that this actually pertains to R&D expenses. Therefore, inclusion of R&D mark up in the assessable value is not sustainable and it deserves to be set aside - As far as the PME (post manufacturing expenses) is concerned, inclusion of these expenses depends upon the nature of the post manufacturing expenses. In case where these are expenses incurred upto the place of removal, the same have to be included in the assessable value. However, if these represent other expenses such as cheque discounting charges as has been asserted by the Ld. Counsel before us, they cannot be included in the assessable value. Whether extended period of limitation under Section 11A can be invoked for raising the demand? - HELD THAT:- Once all facts were noted in the department and the department has come to some tentative conclusion regarding the classification and valuation under section 4A of the Central Excise Act and thereafter after a period of one year based on the same facts issued a different show cause notice, coming to a different set of conclusion, all that can be said, it was a question of interpretation which the department itself was not sure about it. Therefore, the demand of extended period of limitation cannot be sustained. Whether penalties are imposable upon the appellants? - HELD THAT:- Penalties under section 11AC can be imposed where there is fraud, collusion, wilful misstatement, suppression of facts or contravention of any provisions of the Act or the rules made there under with an intent to evade payment of duty - In the present case, we have already held with respect to the invocation of the extended period on limitation that these factors have not been established. Clearly, this is only a question of interpretation regarding the exemption notification and value - the penalties imposed under Section 11AC need to be set aside. Penalty under Rule 26 upon Mondelez - HELD THAT:- The elements of fraud, collusion, wilful misstatement, suppression of facts or violation of act of Rules with an intent to evade payment of duty, have not been established - penalty do not sustain. Appeal filed by Little Star are partly allowed as above by way of remand for the limited purpose of verification of nature of post manufacturing expenses and re-determining the duty and interest excluding any demand for extended period of limitation.
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