2013 (3) TMI 730 - HC - Central Excise

Summary

Issues Involved:
1. Valuation of excisable goods cleared for trial and demonstration.
2. Applicability of Rule 4 vs. Rule 8 of the Central Excise Valuation Rules.
3. Alleged suppression of information and non-filing of Form E.R.-1.
4. Maintainability of the writ petition without exhausting statutory remedies.

Summary:

1. Valuation of Excisable Goods Cleared for Trial and Demonstration:
The petitioner, engaged in manufacturing Tungsten Carbide Tools, Tips, and Inserts, cleared these goods for trial and demonstration purposes. The internal audit observed that the petitioner adopted a value at 110% of the cost of production u/s Rule 8 of the Central Excise Valuation Rules, 2000, based on Board's Circular No. 643/34/2002-CX, dated 1-7-2002. However, the audit noted that these goods were not consumed in the production or manufacture of other excisable goods, thus necessitating valuation under Rule 4 of the Valuation Rules.

2. Applicability of Rule 4 vs. Rule 8 of the Central Excise Valuation Rules:
The Additional Commissioner opined that the petitioner contravened Sec. 4(b) of the Central Excise Act, 1944, r/w Rule 4 of the Valuation Rules by failing to adopt the correct value for goods cleared for trial and demonstration. The petitioner argued that Rule 8 was applicable as the goods were not sold, but the court held that Rule 4 applies to goods cleared for trial and demonstration, as they are not cleared for use in the production or manufacture of other articles.

3. Alleged Suppression of Information and Non-filing of Form E.R.-1:
The petitioner did not show the goods cleared for trial and demonstration separately in Form E.R.-1, leading to allegations of suppression of information to evade Cenvat duty. The court noted that these allegations need to be examined by the Appellate Authority, where an appeal is pending.

4. Maintainability of the Writ Petition Without Exhausting Statutory Remedies:
The respondents contended that the writ petition is not maintainable as the petitioner did not exhaust the statutory remedy of an appeal u/s 35 of the Central Excise Act, 1944. The court agreed and directed the petitioner to pursue the appeal process.

Conclusion:
The court concluded that the valuation of goods cleared for trial and demonstration should be determined under Rule 4 of the Valuation Rules. The petition was rejected, and the appellate authority was directed to provide a reasonable opportunity of hearing to the petitioner regarding the allegations of suppression and non-filing of Form E.R.-1.