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2015 (7) TMI 266 - MADRAS HIGH COURT

2015 (7) TMI 266 - MADRAS HIGH COURT - 2015 (323) E.L.T. 524 (Mad.) - Invocation of extended period of limitation - Intention to evade payment of duty - valuation - service charges had not been included in the assessable value of housing containers and freight containers - Held that:- It has been held by the Tribunal that there is a clear case of suppression for invocation of extended period of limitation for the period prior to August, 1996, as the activities of the appellant/assessee came to l .....

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riod could be invoked post August, 1996 and, therefore, the same analogy will have to be applied for the period prior to August, 1996 as well. That plea cannot be sustained as all the activities of the appellant/assessee came to light based on investigation by the Department and recording of statement in August, 1996. - Therefore, for the period prior to August, 1996, the department was justified in invoking the plea of suppression for larger period - there is no error on record warranting inter .....

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ng substantial question of law for consideration :- " In the facts and circumstance where it has been held that there is no intention to evade payment of duty and extended period of limitation cannot be invoked for the period subsequent to August, 1996, whether the Tribunal was correct in holding that the extended period of limitation can be invoked for the period prior to August, 1996, when facts involved is identical for both the periods?" 2. The facts, in a nutshell, are as follows .....

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vide covered space of a minimum area of 200 sq.ft., for the purpose of storage of materials; ii) provide open space of a minimum area of 12,500 sq.ft., including electrical power upto a maximum of 5HP for taking up furnishing work of housing containers/insulated containers, etc.; iii) provide all necessary facilities including manpower and personal computer and undertake the stores management including receipting, issues, storage accounting etc., and taking up the responsibilities for the physic .....

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d M/s.Balmer Lawrie explicitly specifies that apart from the above-mentioned service charges, furnishing charges for individual containers would be determined based on the model, nature of work, etc. The Department was of the view that these expenses incurred for providing the services were in the nature of overheads essential for manufacturing activity and therefore were required to be reckoned while the assessable value of the finished goods was calculated for the purpose of payment of duty. S .....

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including interest and penalty, were upheld by the adjudicating authority by passing the following order :- 1) I demand an amount of ₹ 2,55,000/- under Rule 9 (2) of Central Excise Rules, 1944 read with proviso to Section 11A (1) of Central Excise Act, 1944; 2) I impose a penalty of ₹ 2,55,000/- under Section 11AC of Central Excise Act, 1944 read with Rule 173Q, 226 of Central Excise Rules, 1944; 3) Interest payable under Section 11AB also to be paid in terms of Section 11A of Centra .....

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at the demand was barred by limitation. The Tribunal also upheld that the intention of the assessee to evade payment of duty for the receipt of service charges from their principal has been established by the Department for the period upto August, 1996 and confirmed the order. However, the Tribunal held that for the period post August, 1996, the department having recorded a statement from the officials of the assessee-company, it is clear that the department knew of the nature of activity theref .....

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have heard both sides. We find no merit in the contention of the assessee that the service charges are not required to be included in the assessable value of housing containers and freight containers. From the nature of the services it is clear that they were provided to facilitate manufacture of the goods and, therefore, the expenses incurred for providing such services were in the nature of overheads essential for manufacturing activity. We, therefore, uphold the duty demand. We also find no m .....

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subsequent to August, 1996 is not sustainable as suppression cannot co-exist with knowledge and it is not disputed that all the facts came to the knowledge of the Department by August, 1996 when the statements of the officials were recorded. We, therefore, set aside the demand for the period subsequent to August, 1996. Interest under Section 11AB and penalty under Section 11AC are also set aside as a consequence of the setting aside of the demand for the period subsequent to August 1996. However .....

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uestion of law raised by the assessee is found in para-2 of the order of the Tribunal itself. It has been held by the Tribunal that there is a clear case of suppression for invocation of extended period of limitation for the period prior to August, 1996, as the activities of the appellant/assessee came to light subsequent to an investigation by the Department. However, insofar as the period post August, 1996, on the plea of suppression, the Tribunal was correct in setting aside the demand on the .....

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