2005 (11) TMI 13 - AT - Central Excise

Central Excise Provisional assessment (1) Final assessment (2) Demand (3) Limitation (4) Show cause notice

Summary

Issues:
1. Provisional vs. Final Assessment under Rule 9B of the Central Excise Rules, 1944.
2. Allegations of Suppression of Facts and Manipulation of Accounts.
3. Inclusion of Post-Manufacturing Charges in Assessable Value.
4. Validity of Show Cause Notice.

Detailed Analysis:

1. Provisional vs. Final Assessment under Rule 9B of the Central Excise Rules, 1944:
The main controversy centered around whether the assessments continued to be provisional even on the date of issuance of the show cause notice, making the show cause notice premature. The provisional assessment order dated 6-8-91 was never finalized under Rule 9B(5). The Assistant Commissioner's order dated 10-3-97, which was assumed to be a final assessment order, was actually only an approval of final price lists for a limited period and directed that provisional assessments be finalized. The endorsements on RT-12s by the Superintendent, referring to the order dated 10-3-97, were erroneous and did not constitute a final assessment under Rule 9B(5). Therefore, the assessments continued to be provisional, and the show cause notice was premature.

2. Allegations of Suppression of Facts and Manipulation of Accounts:
The Commissioner's findings that the assessee suppressed material facts and manipulated accounts were based on the assumption that the assessee did not disclose the collection of higher amounts as per consolidated commercial invoices. However, the assessee had clearly informed the department through various communications about the issuance of consolidated commercial invoices for the convenience of their customers (DOT/MTNL). These invoices included items supplied from other units and bought-out items, not just those manufactured at Palakkad. The Commissioner's adverse inference of suppression was unwarranted as the procedure was fully intimated to and not objected by the department.

3. Inclusion of Post-Manufacturing Charges in Assessable Value:
The Commissioner included post-manufacturing charges such as installation, commissioning, and supervision in the assessable value, which was contested by the assessee. The contract and purchase orders indicated that these charges were for services and incidental activities, not part of the manufacturing process. The Commissioner failed to consider the terms of the contract, which clearly separated the supply of goods from the provision of services. Therefore, including these charges in the assessable value was erroneous.

4. Validity of Show Cause Notice:
The show cause notice dated 14-2-2000 was found to be premature as the assessments continued to be provisional under Rule 9B. The Commissioner's reliance on an order dated 21-9-2001, which rejected the request for provisional assessment, was misplaced as it was issued after the show cause notice. The assessments for the period covered by the show cause notice should have been finalized under Rule 9B(5) before any demand could be raised.

Final Order:
All appeals were allowed, and the impugned order was set aside. The Commissioner was directed to make final assessments under Rule 9B(5) for the period covered by the show cause notice in accordance with the law and the observations made in the judgment. The deposit of Rs. 1 crore made by the assessee was to be retained by the Revenue and adjusted as per the outcome of the final assessment.