2015 (4) TMI 772 - AT - Central Excise

Determination of assessable value of the halogen capsules cleared by the 100% EOU (Unit-I) to the DTA unit - Held that - In terms of the provisions of proviso to section 3(1) of Central Excise Act, 1944, while the duty payable in respect of the goods cleared by a 100% EOU into DTA is the aggregate value of duties of customs on import of like goods into India, the assessable value for this purpose is to be determined under section 14 of the Customs Act, 1962. Therefore, the assessable value of the goods cleared into DTA must be comparable with the contemporaneous import price of identical goods or similar goods into India in comparable quantity. Department was not correct in adopting the price at which the unit-I had imported 200 to 500 halogen capsules as sample as the quantum of DTA sales being made by the 100% EOU was much larger and in this regard, the import price of gold coated Halogen Capsules was not relevant as the 100% EOU (Unit-I) was not manufacturing such halogen capsules. Moreover, in terms of the information furnished by the appellant, contemporaneous import of similar goods in comparable quantity had been made at the prices which were comparable with the DTA sale price adopted by the appellant unit. However, we find that the Commissioner has not given any finding on this plea. We are, therefore, of the view that the impugned order rejecting the DTA sale price of the appellant unit is not correct and the same has to be set aside and the matter has to be remanded to the Commissioner for de novo adjudicated after considering the appellant s plea that during the period of dispute, other importers had imported similar goods in comparable quantities at the prices which were comparable with the DTA prices adopted by them and if this is so, there would be no justification for rejecting the DTA sale price on which the duty had been paid by the appellant. As regards the duty demand of ₹ 14,46,613/- against the unit-I based on the allegation of clandestine removal, this demand is based on entries in the diary recovered from the store keeper, Sh. Satyanarayan, of the DTA Unit. The grievance of the appellant is that the photocopy of this diary has not been supplied to them. In view of this, we hold that this duty demand is also not sustainable and the matter has to be remanded to the Commissioner for de novo adjudication after supplying a copy of this diary to the appellant, and taken into account their submissions in respect of the same. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Dispute over assessable value of halogen capsules cleared by 100% EOU to DTA unit.
2. Duty demand based on alleged clandestine removal by 100% EOU.
3. Adjudication of duty demands, penalties, and appeals against the Commissioner's order.

Analysis:

Issue 1:
The primary dispute revolves around the assessable value of halogen capsules cleared by a 100% EOU to its DTA unit. The Department challenged the value adopted by the appellant, citing under-valuation concerns. The Department invoked Rule 7(3) of the Customs Valuation Rules to determine the value based on the sale price of halogen bulbs manufactured by the DTA unit. The appellant argued that the adopted value was comparable to contemporaneous import prices of similar goods and should be accepted. The Tribunal found the Department's rejection of the appellant's value incorrect and remanded the matter for re-adjudication, emphasizing the need to consider import prices of similar goods in comparable quantities.

Issue 2:
Another aspect of the case involved a duty demand of Rs. 14,46,613 against the 100% EOU based on alleged clandestine removal, supported by diary entries recovered during a search. The appellant contested the demand, citing lack of access to the diary copy. The Tribunal deemed this demand unsustainable and directed the Commissioner to re-adjudicate the matter after providing the diary copy to the appellant for their submissions.

Issue 3:
The Tribunal reviewed the Commissioner's order confirming duty demands totaling Rs. 86,04,556 against the appellant, along with imposed penalties. The appellant challenged the order, highlighting discrepancies in valuation and lack of evidence supporting duty demands. The Tribunal set aside the impugned order, remanding the case for re-adjudication, considering the appellant's arguments and any additional legal points raised during the process.

In conclusion, the Tribunal's judgment addressed the disputes over assessable value, alleged clandestine removal, and overall adjudication of duty demands and penalties. The decision emphasized the need for proper valuation based on comparable import prices and fair adjudication processes, ensuring a thorough review of all legal points raised by the appellants during re-adjudication.