Judgment:
1. The issue in the appeal relates to the quantum of freight charges required to be abated for arriving at the assessable from the sale price.
2. Shri Vijayaraghavan, learned Consultant for the appellants has pleaded that while the appellants have paid the premium of paise 17.45 per Rs. 100/- of the value and they sought abatement @ 20 paise per Rs. 100/- for the reason that the appellants incurred some further expenses towards insurance by way of deployment of staff and correspondence etc.
He has pleaded that the Hon'ble Supreme Court in the case of Bombay Tyre International reported in 1983 ECR 1627D (SC) : ECR C 663 SC : 1983 (14) ELT 1896 (SC) has held that transportation and freight charges will include costs of insurance incurred by the assessee for the purpose of assessment. He has pleaded that the amount to be abated should be reckoned taking into consideration premium paid by the appellants and the cost attributable to the insurance activity carried out by the appellants. He in this connection referred us to the Judgment of the Hon'ble Supreme Court in the case of Indian Oxygen Ltd. v. CCE wherein in para 5 the Hon'ble Supreme Court has held that delivery and collection charges have nothing to do with manufacture as they are for delivery of the filled cylinders and collection of the empty cylinders. These charges, the Hon'ble Supreme Court has held, have to be excluded from the assessable value. He has pleaded that the inference to be drawn is that insurance being not part of the manufacturing activity, the same has to be excluded and any expenses with reference to the assessable value of the goods should also be likewise treated. He has further pleaded that the Hon'ble Supreme Court in the Bombay Tyres International cited (supra) has held that transportation charges will also cover insurance charges of the goods and the Hon'ble Supreme Court has not laid down any law as to how the quantum of insurance charge to be worked out. He has pleaded that as in the case of freight charges the actual amount incurred towards insurance should be taken into reckoning for arriving at the assessable value.
At this stage the learned Consultant for the appellants has pleaded that the demand has been raised by invoking the longer period of limitation and there was no element of suppression involved as the appellants had come on record in regard to the insurance charges. He has pleaded that the learned lower authority has merely stated that the facts relating to the quantum of the insurance charges being actually paid was not brought on record. He has urged that the appellants bona fide believed that the insurance expenses incurred towards the insurance activity undertaken by the appellants were entitled to be reckoned towards the insurance cost.
3. Shri V. Thyagaraj the learned SDR has pleaded that the appellants have accepted that the premium paid was @ 17.45 paise per 100 rupees and the appellants had not shown the basis regarding claiming 20 paise per 100 rupees. This amounted to suppression of fact and therefore, longer period of limitation has been correctly invoked by the learned lower authority.
4. We have considered the pleas made by both the sides. We observe that the position in regard to abatement of the transportation charges which have been held to include the insurance charges, is well settled in law and there is no dispute that these charges have to be excluded. The question before us is as to the quantum of the charges for the insurance which has to be given abatement. Admittedly the appellants have paid premium @ 17.45 paise per 100 rupees value of the goods which is the actual insurance charge paid. By a number of decisions of the Tribunal and the Hon'ble Supreme Court it has been held that the actual freight charges are abatable. Likewise, it is the actual premium paid which can be abated. The cost incurred towards processing of insurance papers etc. within the factory of the appellants in our view will not be abatable. The Hon'ble Supreme Court in the cases cited (supra) has clearly held that in the case of the goods loading charges incurred within the factory will not be abatable. What is therefore, abatable is the expenditure which is incurred with reference to activity that is charged for the transport of the goods from the factory. Insurance therefore is relatable to the removal of the goods from the factory and the premium paid alone will become abatable. The appellants' claim is for abatement of interest and the cost of processing the insurance papers that might have been incurred. If the interest amount is also to be reckoned then, it will have to be done for sales tax also for the purpose of abatement and which is not permissible under Section 4 of the CESA, 1944. The law is quite clear as to the quantum that is to be abated. Section 4(4) of the CESA, 1944 talks about abatement only in respect of duty amount and transportation charges incurred in respect of the sales made ex-depot and since the expenditure in regard to insurance is also incurred, the same will also be abatable to the extent the premium paid in respect of the same. In the above view of the matter we find no force in the plea of the appellants so far as the plea of abatement in respect of cost of insurance is concerned.
5. In regard to the plea of limitation, the appellants had not come on record to give the break-up for arriving at the figure of 20 paise per 100 rupees of the value of the goods. When the appellants themselves had paid premium @ 17.45 paise per 100 rupees, while claiming higher abatement they should have come on record and informed the department on their own as to the actual premium paid. Since the position in law is clear that the actual insurance charges have to be abated there could not be any doubt about the amount to be abated. We, therefore, hold that the appellants held back information from the department in this regard with the intention to evade duty. We, therefore, hold that longer period of limitation has been correctly invoked against the appellants. The appeal is dismissed.