2006 (6) TMI 356 - AT - Central Excise

Summary

Issues: Duty demand and penalty based on lower value of petroleum products, Interpretation of Section 4 of the Central Excise Act regarding assessable value.

In this case, the Appellate Tribunal CESTAT, New Delhi, addressed the duty demand and penalty imposed on the appellant amounting to over Rs. 60 lakhs for discharging Central Excise duty liability on a lower value of petroleum products delivered to a specific entity. The Tribunal noted that the goods were sold on 5-10-1999 at prevailing prices, but delivered on 6-10-1999 after a price revision. The Departmental Representative argued that duty should be paid based on the revised higher prices effective from 6-10-1999 due to government price control on petroleum products. However, the appellant's Counsel contended that since the sale price was based on the prevailing price on the day of sale and payment was received accordingly, there was no basis for short levy. The Counsel argued that the normal sale price should be considered the assessable value under Section 4 of the Central Excise Act.

The Tribunal analyzed Section 4 of the Central Excise Act, which mandates valuation of goods at the normal sale price. In this case, as the goods were sold on 5-10-1999 at the prevailing price without subsequent revision, the sale price was deemed the normal price. There was no evidence of price revision or payment based on revised prices. Therefore, the Tribunal concluded that the normal sale price should be treated as the assessable value, rejecting the argument that assessable value should be determined based on the price at the time of delivery when there is a time gap between sale and delivery. The Tribunal held that the duty demand based on the delivery date and not the sale date was contrary to Section 4 of the Central Excise Act, rendering it unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting any consequential relief.