2011 (7) TMI 967 - AT - Central Excise

Under valuation of the goods cleared during the relevant period by the assessee - The appellants contested the show-cause notice on merits claiming specifically that the amount which is received back from the consignment agents may be more in a few consignment, but in some consignments, it could be less - It can be seen from the above reproduced Section that when there is a normal price of the goods which are already sold by the appellants to a buyer in the course of wholesale trade, it would become a normal price - In the absence of specific provisions to consider the consignment agent s place as place of removal, during this period the price charged at consignment agents place cannot be considered as a price from the place of removal for adding into assessable value - Held that the appellant has been taking consistent stand before the lower authorities that there is no evidence that the price shown for clearance from factory gate was vitiated As regards the demand for the period from 28-9-1996 to 28th February, 1997, it is undisputed that the provisions of amended Section 4(4)(b) were applicable and the premises of the consignment agents was also considered as place of removal - Held that the appellants should have discharged duty liability on the clearances to consignment agent based upon the price charged by and at consignment agents premises at or about the same time. - Appeal is disposed of

Summary

Issues:
- Allegation of undervaluation of consignments of jute products cleared to consignment agents in two different periods.

Analysis:
1. The case involved a dispute regarding the valuation of goods cleared by the appellants to consignment agents during a specific period. The appellants, engaged in manufacturing jute products, were accused of undervaluing consignments, leading to a demand for differential duty based on the amounts received back from consignment agents.

2. The appellants contested the show-cause notice, arguing that the amounts received back varied and did not consistently exceed the value of goods cleared. They maintained that the factory gate price was the appropriate basis for valuation, citing Section 4 of the Central Excise Rules. However, the adjudicating authority upheld the demand, imposing penalties and interest.

3. The appellants, represented by their advocate, submitted that the demand could be divided into two periods: March 1994 to September 1996 and September 1996 to February 1997. They highlighted that the factory gate price was undisputed for clearances to independent buyers and consignment agents during the first period.

4. The advocate argued that during the second period, amendments to Section 4 indicated consignment agents' premises as the place of removal. The appellants had already paid a specific amount for this period but contended that the lower authorities had incorrectly determined the duty liability.

5. The Revenue, represented by the Departmental Representative, maintained that the appellants benefited from excess amounts received from consignment agents, constituting additional consideration beyond the normal price. They referenced tribunal decisions to support their stance.

6. Upon reviewing the submissions and records, the Tribunal analyzed the case for each period separately. For the first period, they found no provision to consider consignment agents' premises as the place of removal, thus rejecting the demand. However, for the second period, where the law explicitly included consignment agents' premises, the Tribunal upheld the duty liability based on the price charged by consignment agents.

7. The Tribunal remanded the matter to the adjudicating authority for quantifying the correct duty amount for the second period based on consignment agents' prices. They also allowed the appellants to produce evidence for calculation and directed the adjustment of any amounts already paid. The Tribunal disposed of the appeal accordingly.