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2011 (12) TMI 431 - AT - Central ExciseValuation - Method of valuation - Held that - appellant cleared the goods from their factory during 23-4-2001 to 3-5-2001. There was no sale of the goods from the depot during this period. There was no sale of goods from the depot prior to 23-4-2001 also. The first sale of the goods from the depot was made on 8-5-2001 at the rate of Rs. 5,500/- per kg. The rate of Rs. 5,500/- per kg. continued from 8-5-2001 to 5-6-2001 in invoices No. 1 to 23. We find that the transaction value of such goods sold from the depot at or about the same time (during the period 23rd April 2001 to 3rd May 2001) is not available. Therefore, under Rule 7 of the Valuation Rules, the value of the goods under assessment shall be the transaction value of the goods sold from the depot at the time nearest to the time of removal and in the present case, the time nearest to the period of 23-4-2001 to 3-5-2001 is 8-5-2001. We, therefore, hold that the lower authorities have rightly ordered the assessment of the goods at Rs. 5,500/- per kg. at which the goods were sold on 8-5-2001 from the depot. We, therefore, find no infirmity in the impugned order - Decided against assessee.
Issues: Valuation of excisable goods transferred to depot for sale, interpretation of Rule 7 of Central Excise Valuation Rules, applicability of Section 4 of Central Excise Act, imposition of penalty under Central Excise Rules.
In this case, the appellant, engaged in manufacturing pesticides, transferred goods to their depot for sale. The dispute arose when the department valued the goods based on depot sale price, leading to a demand for duty. The appellant contended that Rule 7 of Valuation Rules was misinterpreted, advocating for valuation based on the greatest aggregate quantity sold. The Tribunal analyzed Section 4 of the Central Excise Act, which mandates valuation rules application when goods are not sold at the factory gate. Rule 7 specifically applies when goods are transferred to a depot for subsequent sale. The Tribunal found that since no sales occurred from the depot during the relevant period, valuation was to be based on the first sale price from the depot, in line with Rule 7. The appellant's argument for valuation based on the highest rate for the entire quantity was rejected, upholding the lower authorities' assessment at the depot sale price. The Tribunal referenced the decision in E.I. Du Pont India Pvt. Ltd., emphasizing that valuation should be based on the price at or about the same time of removal if the actual transaction value is not ascertainable. In this case, as the price at the nearest time of removal was available, the valuation was correctly done at that rate. Distinctions were drawn from other cited cases, such as Anand Duplex Ltd. and Bhuvalka Steel Industries Ltd., as they did not align with the circumstances of the present case. The Tribunal upheld the valuation method applied by the lower authorities, finding no fault in their decision. Regarding the penalty imposed under Rule 173Q of the Central Excise Rules, the Tribunal considered the issue to be related to interpretation of Valuation Rules, leading to a lenient view on the penalty. Given that this was the first clearance from the factory and the complexity of the valuation rules, the Tribunal deemed the penalty excessive and set it aside. Ultimately, the appeal was disposed of in favor of the appellant, with the valuation upheld as per Rule 7 and the penalty being revoked due to the interpretative nature of the issue.
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