2007 (12) TMI 377 - AT - Central Excise

Scope of the remand order - determine the valuation under the provisions of Rule 7A of Customs Valuation Rules - Whether remand order has given the liberty to the Commissioner to go beyond Rule 7A which was adopted by the Commissioner in his Order of 1998 or the Commissioner could have decided the issue afresh including the issue as to which valuation rule was applicable? - HELD THAT - We are in agreement with the appellants views that once the remand was given on their appeals in which it has been asserted by them as well as confirmed by the Tribunal in its order, that the correct value is to be determined under Rule 7A, which they are not challenging but they are only contesting the computation of demand under Rule 7A, the remand order cannot affect that part of order which they are not challenging. The Revenues contention that the remand order could not have gone beyond the scope of the show cause notice which sought the determination of value under Rule 3 as has also been observed by the Apex Court in the case of Hindustan Polymers Co. Ltd. v. CCE 1996 (12) TMI 84 - SUPREME COURT that the Tribunal proceeded upon a basis altogether different from that of the demand notice served upon the assessee is not moulding relief but making of new case and also by the Tribunal in the case of Volvo India Private Ltd. v. CC, 2004 (10) TMI 218 - CESTAT, BANGALORE holding that the Commissioner (Appeals) cannot travel beyond the scope of original show cause notice, we observe that it was the Commissioner who if at all has gone beyond the show cause notice in his order-in-original and that part has not been challenged by the Revenue before the Tribunal as its appeal was firstly dismissed as time barred and second time again this aspect was not looked into and this order was again not challenged by the Revenue and therefore this plea cannot be taken at this stage. We also notice from the appeal filed by the Revenue against the Commissioner s order of 1998 that it was never a ground that remand proceedings of the Commissioner could not have gone beyond the show cause notice. It only stated that the correct rule was Rule 3 and not Rule 7 as held by the Commissioner. In view of this the Commissioner order so far as it is relate to determination of value of under Rule 7A has attained finality and in the remand proceedings the same could not have been disturbed. This was also the view of the Tribunal in the case of CC, Chennai v. Vishal Exports Overseas Ltd. 2004 (11) TMI 201 - CESTAT, CHENNAI and Paper Products Ltd. v. CCE 2007 (7) TMI 422 - SUPREME COURT . We hold that the Tribunal s remand order regarding determination of value was restricted in scope as the value was required to be determined under Rule 7A only which was not contested and all that the Commissioner was required to do was to look into computation of duty under Rule 7A and give an opportunity to the assessee to present their case and thereafter to determine the value after considering all aspects under Rule 7A. We, therefore, set aside the order of the Commissioner and remand the matter back to the Commissioner for the limited purpose of computing the value under Rule 7A itself by giving the methodology by which it has been determined after giving an opportunity to the assessee to present its case. It is also made clear that the demand shall be computed for the normal period of six months as Revenue has not come up in appeal against setting aside the demand on the ground of time bar. The Revenue s appeal is also dismissed as we have already held that the value has to be determined under Rule 7A. We may state that long submissions were made by the Jt. CDR regarding the correct interpretation of Section 3 of Central Excise Act under which the duty in respect of clearances made by 100% EOU in DTA are to be determined and what should be the value that is the FOB value or the prices at which the goods are sold by the 100% EOU to its dealers etc in support of which various case laws were cited. But since remand order was restricted to Rule 7A, we are not discussing these submissions nor giving any findings thereon as to what should have been the correct value and limiting our order as to what value was required to be determined as per the terms of remand. Appeals are disposed of accordingly.

Summary

Issues Involved:

1. Mis-declaration of DTA sale price by adopting export price instead of actual transaction value.
2. Determination of the appropriate valuation rule for DTA sales.
3. Applicability of extended period for demand of duty.
4. Correct computation of duty liability under Rule 7A of the Customs Valuation Rules.
5. Scope of the remand order and whether the Commissioner could go beyond Rule 7A.

Issue-wise Detailed Analysis:

1. Mis-declaration of DTA Sale Price:

The appellant, M/s. Kalyani Sharp India Ltd., was issued a show cause notice alleging mis-declaration of the Domestic Tariff Area (DTA) sale price by adopting the export price of VCRs instead of the actual transaction value when sold in the DTA. The notice proposed valuing these goods under Section 14 of the Customs Act, 1962, read with Rule 3 of the Customs Valuation Rules, 1988, based on the transaction value charged from buyers in the DTA, demanding differential duty amounting to Rs. 4,27,31,173/- for the period from 19-10-1995 to 31-3-1998.

2. Determination of the Appropriate Valuation Rule:

The Commissioner initially held that the VCRs cleared into the DTA should be valued under Rule 7A of the Customs Valuation Rules, 1988, confirming a duty liability of Rs. 25,20,344/-. However, subsequent adjudications and appeals questioned whether Rule 7A or Rule 3 was the appropriate valuation rule. The Tribunal's remand order dated 2-3-2000 required the Commissioner to determine the value under Rule 7A, which was not contested by the appellant.

3. Applicability of Extended Period for Demand of Duty:

The Commissioner initially invoked the extended period for demand of duty, but the Tribunal's remand order required reconsideration of the applicability of the extended period. The Tribunal noted that the appellant had communicated the method of valuation to the department, which should be considered in determining whether the extended period was applicable.

4. Correct Computation of Duty Liability under Rule 7A:

The Tribunal remanded the matter to the Commissioner to reconsider the computation of duty liability under Rule 7A. The appellant argued that the Commissioner had not indicated the basis of costs and expenses used to arrive at the value under Rule 7A, and they were not given an opportunity to question its correctness. The Tribunal directed the Commissioner to provide the basis for valuation under Rule 7A and allow the appellant to present their case.

5. Scope of the Remand Order and Commissioner's Authority:

The Tribunal clarified that the remand order was restricted to determining the value under Rule 7A and did not permit the Commissioner to go beyond this rule. The Tribunal emphasized that the Commissioner should adhere to the remand order's scope, which limited the valuation to Rule 7A and required the Commissioner to compute the duty based on this rule. The Tribunal rejected the Revenue's contention that the remand order was open-ended, asserting that the remand was specific to Rule 7A.

Conclusion:

The Tribunal set aside the Commissioner's order and remanded the matter back to the Commissioner for the limited purpose of computing the value under Rule 7A, providing the methodology used, and giving the appellant an opportunity to present their case. The demand was to be computed for the normal period of six months, as the Revenue had not appealed against the setting aside of the demand on the grounds of time bar. The Revenue's appeal was dismissed, and the Tribunal did not address submissions regarding the interpretation of Section 3 of the Central Excise Act, as the remand was restricted to Rule 7A.

Disposition:

The appeals were disposed of accordingly, with the Tribunal emphasizing the need for adherence to the specific terms of the remand order.