2005 (6) TMI 497 - AT - Central Excise

Summary

Issues: Valuation of furniture for central excise duty - Distinction between wholesale and retail sales - Allegation of duty evasion on extra consideration from retail customers.

In this case, the appeal was filed by the Commissioner of Central Excise against the order of the Commissioner (Appeals) regarding the valuation of furniture cleared by the respondents to wholesalers and retail customers. The dispute centered around the contention that the respondents had two different prices for their furniture, one for wholesalers and another for retail customers. The Revenue alleged that the price difference constituted extra consideration received by the respondents, leading to duty evasion. Multiple show cause notices were issued based on this allegation.

The Commissioner (Appeals) observed that the manufacturer had indeed maintained different prices for wholesale and retail sales, supported by stamps on the invoices. He found that the Revenue failed to provide evidence that the manufacturer was charging more than the indicated invoice value from wholesalers. The Commissioner rejected the argument that retail sales should be treated as wholesale sales for assessment purposes. He directed the authorities to conduct further inquiries to ascertain the nature of buyers and set aside the lower authority's order, allowing for the possibility of issuing additional show cause notices based on findings from spot checks.

During the hearing, it was noted that the Revenue did not dispute the fact that the manufacturer sold furniture to both retail customers and wholesalers. The assessment of value should consider both types of sales, with suitable adjustments for retail prices. As per Section 4(1)(a), the assessable value is based on wholesale prices, not retail prices. Therefore, the burden was on the Revenue to determine the assessable value for goods sold to actual users in retail, which they failed to do. The Commissioner (Appeals) correctly held that the Revenue did not provide evidence to support the claim that the manufacturer was disguising wholesale sales as retail sales to charge extra amounts. Consequently, the Revenue's appeal was deemed to lack merit.

Overall, the judgment emphasized the importance of correctly assessing the value of goods for central excise duty, considering the distinction between wholesale and retail sales and ensuring that the Revenue provides sufficient evidence to support allegations of duty evasion based on price differentials.