2011 (12) TMI 438 - AT - Central Excise

100% EOU - Duty demand - Valuation for DTA sale - Held that - period involved in this case is prior to 1-3-2002, which is covered, vide the procedure prescribed under the Circular dated 18-5-1994. The Assessee had calculated the duty, vide the method prescribed under the aforesaid Circular, which is also not in dispute. Therefore, the demand to this extent is not sustainable. Insofar as the valuation in case of stock-transfer is concerned, the assessable value for sale to independent buyers is available, and it is not in dispute that the Assessee had paid the duty as per such assessable value - wherever freight actually paid is less than the amount collected by way of freight and transportation charges, the differential amount is not includible in the assessable value, since the duty of excise is a tax on the manufacturer and not a tax on the profits made by a dealer on transportation. Thus, the differential amount is not includible in the assessable value - Following decision of Boroda Electric Meters Ltd. v. Collector of Central Excise 1997 (7) TMI 126 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
Valuation of clearances made in DTA, valuation of stock-transfer, inclusion of additional freight in assessable value.

Valuation of clearances made in DTA:
The Assessee cleared goods to DTA and calculated duty based on Circular dated 18-5-1994, while the Department wanted duty calculated as per Circular dated 6-2-2001. The Assessee relied on Tribunal decisions supporting their method. The Tribunal agreed with the Assessee, citing precedents, and dismissed the demand, as the issue was settled prior to 1-3-2002.

Valuation of stock-transfer:
The Assessee argued that the value for stock-transfer should match that for sales to independent buyers. They cited a Larger Bench decision supporting their stance. The Tribunal held that Rule 4 of Central Excise Valuation Rules applied, not Rule 8, and dismissed the demand against the Assessee.

Inclusion of additional freight in assessable value:
The Assessee contended that the differential amount between equalized freight and actual freight paid should not be included in the assessable value. They cited a Supreme Court decision to support their argument. The Tribunal agreed with the Assessee, stating that the duty is on the manufacturer, not profits from transportation, and dismissed the demand.

The Tribunal allowed the Assessee's Appeal and dismissed the Revenue's Appeal, emphasizing that the valuation methods used by the Assessee were in line with legal precedents and the duty calculations were appropriate.