2008 (3) TMI 566 - AT - Central Excise

Summary

Issues: Valuation method for transfer of goods between units

Analysis:
The judgment revolves around the valuation method to be applied for the transfer of goods between units of the same entity during the impugned period. The key issue is whether the transfer of goods should be considered a sale-transaction and how the valuation should be determined in such cases.

Valuation Methodology:
The Tribunal notes that under both the earlier and present laws of valuation, the transfer of goods cannot be equated to a sale-transaction. In the present case, only a part of the goods was transferred between units, while independent sales to buyers also occurred. Therefore, the Tribunal opines that the valuation of such transfers should be based on the prices at which the goods were sold to independent buyers at arm's length price. The Tribunal emphasizes that any additional duty paid by the entity would be available as credit for the receiving unit.

Decision and Remand:
The Tribunal decides to remand the matter to the Original Authority for re-determination of the duty amount, considering the dispute over the appropriate valuation method. Consequently, the penalty imposed in the original order is set aside. The Lower Appellate Authority's order is also overturned, and the department's appeal is allowed based on the terms outlined in the judgment.

This comprehensive analysis of the judgment highlights the Tribunal's reasoning behind the valuation method for inter-unit transfers and the subsequent decision to remand the case for re-determination of duty amount based on the prices charged to independent buyers.