M/S.Shriram Holographics vs Cce, Noida

IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/ Decision:18.08.2015

Excise Appeal No.E/2768 of 2006-EX(DB)

[Arising out of Order-in-Appeal No.90/CE/APPL/NOIDA/2006 dated 30.05.2006 of the Commissioner (Appeals), Central Excise, Noida].

M/s.Shriram Holographics .Appellants

Vs.

CCE, Noida Respondent

Appearance:

Rep. by Shri Rajesh Chibber, Advocate for the appellants.

Rep. by Shri Pramod Kumar, Joint CDR for the respondent.

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Coram: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. dated:18.08.2015

Per B. RAVICHANDRAN:

The appellants are manufacturers of self adhesive holograms subject to central excise duty. They were collecting certain amounts from their clients as Mastering Charges which was not included in the assessable value for payment of excise duty on holograms.

2. Proceedings were initiated against the appellants, which resulted in confirmation of demand of Rs.11,02,470/- and penalty of equal amount. On appeal being filed, the original order was upheld by the ld. Commissioner (Appeals). Aggrieved by the said order, the appellant is before us.

3. In the appeal, they have pleaded that the master developed by them for the holograms has indefinite life and as such, could not be proportionately loaded to the assessable value of the excisable goods. Further, they are getting the master developed from outside. The master remains the property of the customer and same is required to be returned after completion of the supply of finished goods.

4. The appellants also contested the demand on time bar. The fact that they were recovering charges from the customers for making masters came to the knowledge of the department on 31.03.2000 when the officers of the DGCEI conducted the examination of their records.

5. During the arguments, ld. Counsel for the appellants reiterated their grounds of appeal. He further stated that the cost of the masters cannot be amortized as the same has unlimited life span. He further pleaded that DGCEI officers, who conducted the verification of their records in March, 2000 itself, were well aware of the transactions relating to the collection of mastering charges and as such, the demand is hit by time bar.

6. Ld. AR on the other hand reiterated the findings of the lower authorities and stated that any amount collected as extra consideration towards the clearance of the excisable goods is to be added in the assessable value. The appellants themselves are admitting the collection of these charges from their clients.

7. Heard both the sides and examined the appeal records.

8. The admitted facts of the case are that the appellants were collecting certain amounts from their clients towards master charges. These charges are apparently for the purpose of developing masters to produce a particular design of hologram as per the specifications of the clients. These charges are specifically attributable and linked to the hologram developed and produced specifically for different clients. These charges are rightly includible in the assessable value as they are to be considered as part and parcel of the value of the finished excisable goods in terms of Section 4 read with Rule 6 of the Central Excise Valuation Rules, 2000.

9. Regarding the appellants contention that there could be no amortization of these charges in view of the indefinite life span of the master, we find that the same is not directly relevant in the present case. The appellant themselves are admitting that these master charges are collected for producing specific holograms for their clients and the masters are returned to the clients once the required supplies are made. When the appellant receive these charges as additional consideration for holograms, they are liable for inclusion in the assessable value. As such, we find that the appellants plea on these grounds is un-sustainable.

10. The appellants also contested the demand on time bar. We find that admittedly, the officers of DGCEI, New Delhi, conducted detailed verification of the records in March, 2000. The appellants submitted that the various documents resumed by the officers of DGCEI included documents relating to recovery of mastering charges and as such, the demand of extended period was not sustainable. The fact that the appellants documents were resumed by the officers has not been disputed. The lower authorities concluded that the officers were examining only the aspect of the classification of the goods and so, the question of non-inclusion of certain charges in the assessable value was not the subject matter of investigation. We find that such conclusion is not sustainable.

11. When an investigation is conducted regarding duty liability of the appellant after resuming all the relevant records, it cannot be argued later that the intention behind the investigation was limited to a specific issue and the other aspects like valuation, etc. were not examined. It is a fact that at least some of the documents relevant to the present demand were available with the Department in March, 2000 itself and hence, we find that the demand for extended period invoking suppression, fraud, collusion, etc. is not sustainable in this case. Accordingly, we restrict the demand to the normal period holding that the demand for extended period is not sustainable. The appeal is disposed of in the above terms.

[Operative part of the order pronounced in the open Court]

( Ashok Jindal )

Member (Judicial)

( B. Ravichandran)

Member (Technical)

Ckp.

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