2015 (10) TMI 2071 - AT - Central Excise

Valuation - Inclusion of amount recovered by such debit notes - Determination of assessable value - Held that - Tribunal has directed that it will be appropriate for the adjudicating authority to re-examine the matter in terms of Rule 6 and give an appropriate finding and the matter was remanded for the said purpose. We find from the impugned order that it is not disputed that there was no sale of goods between the Thane unit and Ennore unit. It is also noted in the order that the goods AE-1 and AE-2 were not sold to any independent buyer. Under the circumstances, in our view, the only method to find out the value will be based upon cost of production. We find in the present case the appellant has submitted some certificates during the adjudication. However, these have not been examined by the Commissioner or by the costing expert i.e. Assistant Director (Cost) with reference to the relevant circulars of the Board available at that point of time. - Impugned order set aside - matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Value computation under Rule 6 of Central Excise Valuation Rules.
2. Suppression of facts regarding goods transfer.
3. Debit notes as additional consideration.
4. Disputed duty demand confirmation.
5. Remand order compliance.

Issue 1: Value computation under Rule 6 of Central Excise Valuation Rules
The case involved the transfer of goods between two manufacturing units under different pricing structures before and after duty imposition. The Tribunal directed the Commissioner to compute the value under Rule 6 of the Central Excise Valuation Rules. However, the appellant argued that the Commissioner failed to follow this direction and instead confirmed the demand based on suppressed facts. The appellant submitted a Chartered Accountants certificate, which the Commissioner did not consider. The Tribunal noted discrepancies in the valuation process and remanded the matter for a reevaluation based on the certificates and relevant details.

Issue 2: Suppression of facts regarding goods transfer
It was revealed that the appellant's Thane unit transferred goods to the Ennore unit without selling them to independent buyers. The prices were altered following duty imposition, raising concerns of evasion. The appellant failed to disclose crucial information during price declarations, including the internal transfer nature of the goods. The Commissioner upheld the demand, highlighting the lack of evidence supporting technical assistance claims and the arbitrary nature of debit notes.

Issue 3: Debit notes as additional consideration
The dispute centered around the validity of debit notes raised by the Thane unit to the Ennore unit. The appellant argued that these notes were related to technical assistance provided, but no concrete evidence supported this claim. The Commissioner viewed the debit notes as part of the assessable value, contributing to the demand confirmation. The AR emphasized that such internal transactions should be based on factual grounds, which were lacking in this case.

Issue 4: Disputed duty demand confirmation
The Commissioner confirmed the duty demand, interest, and penalty, leading to the appellant's appeal before the Tribunal. The AR contended that the price reduction post-duty imposition aimed at duty evasion, supported by discrepancies in price declarations and lack of technical assistance evidence. The Tribunal observed the need for a thorough reevaluation considering the cost of production and the certificates submitted by the appellant.

Issue 5: Remand order compliance
The Tribunal set aside the Commissioner's order, emphasizing a reexamination of the case based on the certificates and financial details provided by the appellant. The matter was remanded to the Commissioner for a comprehensive assessment, involving the costing expert or relevant authority to determine the value under the old Rule 6 of the Central Excise Valuation Rules. The Tribunal directed a thorough review of the investigation findings for accurate cost calculation.

In conclusion, the Tribunal disposed of the appeals by remanding the case for a detailed reassessment based on the certificates and financial data to determine the value under the Central Excise Valuation Rules, focusing on the cost of production and compliance with the remand order directives.