2011 (3) TMI 123 - AT - Central Excise

Demand with interest and equal amount of penalty As per the decision in Modi Gas & Chemicals Ltd. case could be said to be applicable only from 1st July 2000 onwards in view of the amendment brought about to Section 4 particularly in relation to the meaning of the expression transaction value but as far as the case prior to 1st July 2000 is concerned, the same is fully covered by the decision of the Supreme Court in Indian Oxygen Gas case (1988 -TMI - 42289 - SUPREME COURT OF INDIA) - The impugned order to that extent it relates to the period from 1st July 2000 is set aside - Hence the appeal is partly allowed.

Summary

Issues:
Valuation of goods for excise duty - Differential pricing based on cylinder ownership - Applicability of precedents post and pre-July 2000 - Setting aside of penalty and duty calculation.

Analysis:
The appeal before the Appellate Tribunal arose from an order by the Commissioner (Appeals) setting aside the demand and penalty imposed by the Additional Commissioner, Chandigarh. The case involved the manufacturing of liquid chlorine gas classified under a specific sub-heading. The issue stemmed from the revelation that different buyers were offered discounts based on whether they provided their own cylinders for gas filling or used cylinders supplied by the manufacturer. A show cause notice was issued to the respondents in this regard.

The Department argued that the respondents were not entitled to apply two different measures for valuation of goods, citing relevant precedents. The Advocate for the respondents, however, relied on a Supreme Court decision to support the contention that the law on valuation applied differently pre and post-July 2000. The Tribunal, considering the concept of transaction value and relevant rules, held that valuation must consider the transaction value introduced under the Central Excise Act. It was determined that the differentiation in pricing based on cylinder ownership was impermissible post-July 2000, but permissible for cases prior to that date, aligning with the Supreme Court decision.

The Tribunal distinguished a previous case involving rental charges for cylinders, stating it was not applicable to the current scenario. Consequently, the impugned order was set aside for the period post-July 2000, directing the recalculation of duty and penalties from that date onwards. The appeal was partly allowed, with the order of the adjudicating authority being restored for the specified period. The adjudicating authority was instructed to recalculate the duty liability and penalty accordingly and inform the assessee, leading to the disposal of the appeal.