2015 (11) TMI 324 - SC - Central Excise

Valuation of goods - Under valuation - whether the value of the software was to be included while arriving at the transaction value of the cellular phones and for the purpose of payment of duty - Held that - When these proceedings were pending, certain other information came to the notice of the Department on the basis of which further Show Cause Notices were issued by different Commissionerates. - One of the pieces of evidence which came to the notice of the Department was that as far as foreign exporter is concerned, it wanted to sell the goods, viz., cellular phones and software as one package with single invoice but the splitting thereof was done at the instance of the assessees. It was also found by the Department that Tata and Reliance had imported cellular phones and software as one item at one price and paid the duty accordingly. Suffice is to state that on the basis of these evidences, the CESTAT has decided the cases in favour of the Department and it is for this reason that two appeals by the assessees are preferred. - evidence which has surfaced later on and relied upon by the Department in other Show Cause Notices shall be considered as common evidence in all these cases. - Impugned order is set aside - Matter remanded back to larger bench of the tribunal.

Summary

Issues:
1. Under valuation of cellular telephones imported by assessees.
2. Inclusion of value of software in the transaction value of cellular phones for duty payment.
3. Dispute regarding classification of goods.
4. Decision of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in favor of assessees.
5. Evidence of foreign exporter wanting to sell phones and software as one package.
6. Splitting of invoice by assessees.
7. Import of phones and software as one item by other companies.
8. Proposal to send matters back to CESTAT for decision by a larger bench.
9. Direction for consideration of common evidence in all cases.
10. Setting aside of CESTAT decisions and remitting the matter back for fresh consideration by a larger bench.

The Supreme Court heard three appeals involving under valuation of cellular telephones imported by assessees and the inclusion of software value for duty payment. The assessees sought to clear goods under Custom Tariff Heading 8525.20.17, classifying them as non-integral to phones. The Department disagreed and issued Show Cause Notices. The issue was remitted to CESTAT, which ruled in favor of assessees. However, new evidence led to further Show Cause Notices and CESTAT decisions favoring the Department. The Court agreed to send the matters back to CESTAT for a decision by a larger bench, directing consideration of common evidence in all cases. The CESTAT decisions were set aside, and the matters were remitted for fresh consideration within a year.