2002 (1) TMI 221 - AT - Central Excise

Summary

Issues Involved:
1. Demand of duty and assessable value enhancement.
2. Personal penalties under Rule 209A of Central Excise Rules, 1944.
3. Collection of transportation/freight charges.
4. Collection of advertisement charges.
5. Limitation and provisional assessments.
6. Cum-duty price consideration.
7. Applicability of Section 11AC and Rule 173Q for penalties.

Summary:

1. Demand of Duty and Assessable Value Enhancement:
The Commissioner confirmed a demand of duty of Rs. 74,86,886.00 against M/s. Tripty Drinks Pvt. Ltd. for the period from 1-3-94 to 31-10-95 by enhancing the assessable value of Aerated Water. The enhancement was based on findings that extra money was collected under the guise of transportation/freight and advertisement charges.

2. Personal Penalties:
Personal penalties were imposed on several individuals under Rule 209A of Central Excise Rules, 1944, including:
- Shri S.K. Goenka: Penalty reduced from Rs. 10 lakh to Rs. 3.5 lakh.
- Smt. Pravadevi Goenka: Penalty of Rs. 1 lakh set aside due to lack of evidence of active participation.
- Shri G.P. Singh: Penalty reduced from Rs. 25,000 to Rs. 10,000.

3. Collection of Transportation/Freight Charges:
The Commissioner found that M/s. Tripty Drinks Pvt. Ltd. was collecting extra transportation charges from wholesale dealers, which were not reflected in their regular accounts. This was substantiated by statements from various individuals and the maintenance of "kacha books." The adjudicating authority's order for inclusion of these amounts in the assessable value was upheld, though the matter was remanded to re-quantify the demand after allowing actual transportation charges incurred by M/s. Kanu Carriers.

4. Collection of Advertisement Charges:
The Commissioner added advertisement charges collected by M/s. Mataji Trading Company to the assessable value. M/s. Mataji Trading Company was found to be a non-entity created to divert the cost of Aerated Waters. The collections were compulsory and not reflected in regular accounts. The adjudicating authority's inclusion of these charges in the assessable value was upheld.

5. Limitation and Provisional Assessments:
The argument that the demand is hit by the bar of limitation was dismissed as the assessments were provisional. The Commissioner finalized the provisional assessment as per the Tribunal's directions.

6. Cum-Duty Price Consideration:
The Tribunal allowed the appellant's request to consider the entire collections as cum-duty and directed the Commissioner to re-calculate the duty accordingly, following the Larger Bench decision in Sree Chakra Tyres.

7. Applicability of Section 11AC and Rule 173Q for Penalties:
The Tribunal agreed that Section 11AC, enacted with effect from 28-9-96, cannot be applied retrospectively. However, penalties under Rule 173Q were upheld but reduced. The penalty on M/s. Tripty Drinks Pvt. Ltd. was reduced to Rs. 35 lakh.

Conclusion:
The appeals were disposed of with modifications in penalties and directions for re-quantification of duty, maintaining the inclusion of extra collections in the assessable value.