1988 (5) TMI 296 - AT - Central Excise

Summary

Issues:
1. Demand of duty on after-sale service charges and delivery charges.
2. Time limitation for issuing show cause notice.
3. Clarification on inclusion of delivery charges in assessable value.

Analysis:
1. After-sale service charges:
The show cause notice demanded duty from the appellants on after-sale service charges and delivery charges. The notice was issued beyond the normal time limit of six months, invoking the extended period of limitation due to alleged suppression of facts. However, the tribunal found that the charge of suppression regarding after-sale service charges was incorrect. The appellants had consistently disclosed all relevant facts, including the optional nature of the service charge, during previous proceedings. The tribunal held that the department was not entitled to reopen the issue as it had already been adjudicated upon and finalized in earlier orders. The tribunal also noted that the show cause notice was incompetent as the assessments were not provisional before a specific date, rendering the notice invalid. Therefore, the tribunal set aside the duty demand related to after-sale service charges.

2. Time Limitation and Suppression Allegation:
The tribunal analyzed the allegation of suppression of facts by the appellants. Despite delays in producing sale invoices and proving the optional nature of the service charge, the tribunal held that the charge of suppression or fraud could not be established without evidence contradicting the appellants' declarations. The tribunal emphasized that the charge of suppression could not be upheld based on procedural delays alone. Additionally, the tribunal clarified that the time limit for recovery of short levy applied even to provisional assessments, highlighting the specific date when the assessments became provisional in this case. Consequently, the show cause notice and the order-in-appeal were deemed not maintainable for after-sale service charges.

3. Delivery Charges Inclusion in Assessable Value:
Regarding delivery charges and forwarding and handling charges, the tribunal referred to a Supreme Court judgment clarifying that only charges incurred up to the factory gate stage should be included in the assessable value. The appellants accepted duty liability for charges up to the factory gate stage and any excess recovery from customers post-factory gate. The tribunal directed the Collector to re-determine the duty liability based on this clarification and ordered the appellants to pay the determined duty amount. The appeal was partly allowed in accordance with these terms.