2005 (5) TMI 509 - AT - Central Excise

Summary

Issues: Valuation of goods sold to sister concern under Central Excise Tariff Act, applicability of Valuation Rules 1975, invocation of special provisions under Section 4(1)(a)(iii), determination of value under Rule 6(b) of Valuation Rules, waiver of pre-deposit of duty and penalty.

In this case, the applicants manufactured goods falling under specific chapters of the Central Excise Tariff Act, with one product, Para-cresidine, being sold to their sister concern and unrelated buyers. The dispute centered around the valuation of the product sold to the sister concern compared to unrelated buyers during the period from May 1996 to July 2000. The Department sought to adopt the price of goods sold to unrelated buyers for those sold to the sister concern. The show cause notice was issued on 30-4-2001, with a part of the period falling under the normal period of limitation.

The lower appellate authority confirmed a demand for differential duty and an equal penalty in the impugned order. The applicants sought a waiver of pre-deposit of duty and penalty. The period of dispute was governed by the old Section 4 and Valuation Rules 1975. The value was determined under Rule 6(b) of the Valuation Rules, applicable to goods valued under Section 4(1)(b) of the Central Excise Act. The Tribunal's decision in the case of PEPSICO India Holdings (P) Ltd. was cited, emphasizing the special provisions under Section 4(1)(a)(iii) for goods sold exclusively to or through related persons. However, the Commissioner did not invoke these special provisions and determined the value under Rule 6(b) of the Valuation Rules, as the buyer and seller were related divisions of the same company. The Tribunal noted the applicability of the larger period of limitation and deferred detailed examination of issues related to adjustments under Rule 6(b) for later consideration.

The Tribunal found that the applicant did not establish a strong prima facie case to warrant a waiver of pre-deposit of duty. Consequently, the applicant was directed to deposit a specified amount within a stipulated time frame, failing which the appeal would be dismissed without further notice. Compliance was required by a specific date to avoid dismissal of the appeal.