2016 (2) TMI 62 - AT - Central Excise

Valuation - MRP based value or transaction value - whether 50 Ltrs package of Lubricating oil should be valued as per Section 4 or 4A? - Held that - The fact emerges is that the goods in question are not sold to industry and are is not used as raw material by any industry, it is admitted position that 50 Ltrs. Package is sold to the truck owners who consumed themselves. In such situation, it cannot be said that 50 Ltrs package is covered under the exemption provided under Rule 34 of Standards of Weight and Measures; therefore we are of the considered view that since the nature of the sale i.e. 50 Ltrs package is made to the ultimate customers, MRP is statutorily required to be affixed and the goods will be valued in terms of Section 4A. Goods i.e. Lubricating oil 50 Ltrs package should be valued in terms of Section 4A and not under Section 4 of the Central Excise Act, 1944. Therefore demands of differential duty confirmed by the lower authorities are upheld. As regards the penalty, we find that all the show cause notices were issued within the normal period of one year, no suppression of mis-statement exists in the present case. Moreover, issue involved in the present case is purely of interpretation of valuation provisions. In view of this undisputed fact we are of the view that penalty of equal amount is not warranted in the facts and circumstances of the case. We therefore reduce the penalty from ₹ 9,28,432/- to ₹ 2,00,000/- While confirming the demand, penalty reduced - Decided partly in favor of assessee.

Summary

Issues:
1. Valuation of 50 Ltrs package of Lubricating Oil under Section 4 or 4A of the Central Excise Act, 1944.
2. Imposition of penalty on the assessee.
3. Revenue's appeal for enhancement of penalty.

Valuation Issue:
The case involved the valuation of a 50 Ltrs package of Lubricating Oil under Section 4 or 4A of the Central Excise Act, 1944. The Tribunal observed that the package was sold through distributors to truck owners, who were the ultimate customers, indicating a retail sale. The Tribunal referred to Rule 34 of the Standards of Weights and Measures Act, which exempts MRP affixation for industrial use but not for retail sale. Since the package was sold to ultimate customers and not for industrial use, the MRP was statutorily required to be affixed, leading to valuation under Section 4A.

Penalty Imposition:
Regarding the penalty, the Tribunal noted that no suppression or misstatement existed, and the issue was a mere interpretation of valuation provisions. Consequently, the Tribunal reduced the penalty from the original amount to a lesser sum, considering the circumstances of the case and the absence of deliberate evasion. The penalty was reduced in both appeals filed by the assessee.

Revenue's Appeal for Penalty Enhancement:
The Revenue's appeal seeking enhancement of penalty was dismissed since the penalty was already reduced by the Tribunal based on the facts and circumstances of the case. The Tribunal found that the appeal did not survive due to the reduction in the penalty amount, thereby upholding the decision to reduce the penalty imposed on the assessee.

In conclusion, the Tribunal partly allowed the assessee's appeals by upholding the valuation under Section 4A for the 50 Ltrs package of Lubricating Oil and reducing the penalty imposed. The Revenue's appeal for penalty enhancement was dismissed due to the already reduced penalty amount. The Tribunal's decision was based on the statutory requirements and the interpretation of relevant legal provisions in the context of the case.