2003 (4) TMI 474 - AT - Central Excise

Summary

Issues:
1. Duty payment based on tariff value withdrawal.
2. Alleged short payment of duty on clearances.
3. Contention regarding selling goods at any price.
4. Requirement of price declaration and pattern of sale.
5. Assessment of duty value under Section 4.
6. Application of earlier prices as a standard for assessment.
7. Relevance of tariff values in assessment.

Analysis:

1. Duty payment based on tariff value withdrawal:
The appellant, engaged in manufacturing polyester filament yarn, faced duty payment issues post the withdrawal of the tariff value notification in June 1995. The duty was leviable at Rs. 98 per kg before the withdrawal, leading to disputes over subsequent clearances.

2. Alleged short payment of duty on clearances:
Six notices were issued to the appellant for alleged short payment of duty between June 1996 and August 1997. The Deputy Commissioner and Commissioner (Appeals) confirmed the demand for duty and imposed penalties, which led to the appeals.

3. Contention regarding selling goods at any price:
The appellant argued that without a tariff value, they had the liberty to sell goods at any price. As long as the value paid for duty was in compliance with Section 4 of the Act, selling below the earlier tariff value should not be the sole basis for demanding duty.

4. Requirement of price declaration and pattern of sale:
The department highlighted the absence of price declaration and sales pattern from the appellant. However, Rule 173C did not mandate a formal price declaration except in specific circumstances, which were not applicable in this case.

5. Assessment of duty value under Section 4:
To establish short levy, it was crucial to prove that the value declared for duty payment did not align with Section 4 provisions. Mere fluctuations in selling prices over time could not be a conclusive basis for determining undervaluation.

6. Application of earlier prices as a standard for assessment:
The judgment emphasized that using earlier prices as a benchmark for future assessments was impractical. Market dynamics and price fluctuations necessitated a flexible approach, and past prices could not dictate current valuation standards.

7. Relevance of tariff values in assessment:
While tariff values aimed to streamline tax assessment for fluctuating goods, they were not absolute benchmarks for all future assessments. The withdrawal of a tariff value notification rendered it irrelevant for subsequent market conditions, and the department failed to prove undervaluation based on this premise.

In conclusion, the appeals were allowed, and the impugned order demanding duty payment was set aside based on the lack of substantial evidence supporting the alleged undervaluation of goods.