2014 (2) TMI 329 - AT - Central Excise

Valuation of P & P medicines - Excise duty paid on the basis of the price at which the goods were sold by the principals till July 1995 - Price revision - Commissioner set aside demand - Held that - for calculation of assessable value, the assessee has taken the invoice of a single supplier. Therefore the assessable value has to be reworked out based on the average price of all the suppliers. We find that the original authority had observed that he could not know from the details furnished by the Cost Accountant as to the cost of transportation and overhead charges were included while arriving at the landed cost of materials from the place of procurement at Goa to Dharwad. According to the original adjudicating authority, this should have been made clear in the revised CA certificate dated 18.1.2006 in token of having verified earlier certificates - according to the Revenue the CA certificate dated 18.1.2006 revises the CA certificate issued in 1997. According to Revenue this means that even CA certificate did not have the supporting documents while issuing the certificate in 1997. Again there is no discussion so as to what was the original certificate and what is the revised certificate and on what basis this conclusion has been reached - no grounds have been made out by the Revenue to support the appeal against the impugned order whereas we find that the Commissioner (A) s order has discussed the issue and the relevant details to the extent required - Decided against Revenue.

Summary

Issues involved: Valuation of P & P medicines, Excise duty payment, Show-cause notices, Commissioner (A) decision, Revenue appeal

The judgment involves the valuation of P & P medicines manufactured by the respondent on a job work basis for three customers, focusing on excise duty payment methods. The respondent initially paid duty based on the selling price by the principals until a Supreme Court decision prompted a change in the duty payment method. The dispute spans eight show-cause notices over 33 months, with a significant amount demanded and set aside by the Commissioner (A), leading to the Revenue's appeal. The Commissioner (A) had previously remanded the case for verification, ultimately accepting the prices declared by the respondent and overturning the demand orders.

The main contention revolves around the calculation of the assessable value, specifically regarding the inclusion of transportation and overhead charges in the landed cost of materials. The original adjudicating authority raised concerns about the lack of clarity in the Cost Accountant's certificates and the need to consider prices from multiple suppliers for accurate valuation. The Commissioner (A) analyzed five invoices from different suppliers, highlighting the inclusion of freight, insurance, and taxes in the landed cost. The Commissioner (A) criticized the original authority for not verifying supporting documents and emphasized the acceptance of the Cost Accountant certificate for duty liability. The appeal memorandum's arguments lacked factual basis, with discrepancies in observations regarding the invoices and certificates. The Revenue's appeal failed to provide substantial grounds, as the Commissioner (A) thoroughly discussed the issue and relevant details, leading to the rejection of the Revenue's appeal due to insufficient justification.

In conclusion, the judgment clarifies the valuation methodology for excise duty payment on job work basis goods, emphasizing the importance of accurate assessable value calculation and proper documentation verification. The Commissioner (A)'s detailed analysis and acceptance of the Cost Accountant certificate played a crucial role in rejecting the Revenue's appeal, highlighting the significance of factual accuracy and thorough examination in excise duty disputes.