2016 (3) TMI 159 - AT - Central Excise

Valuation - Related party transaction - Applicability of provisions of Rule 4 - clearance of waste and scrap, which originates during the manufacture of final product, without payment of duty - extended period invoked - Held that - Commissioner (A) has only observed that since there was suppression, the extended period is invocable. However, there is no reference to any positive act on the part of the assessee so as to suppress or misstate the value with an intention to evade payment of duty. As per the learned advocate, they were filing all the requisite statutory returns wherein the entire facts were being disclosed by them. If that be so, then the extended period would not be available to the Revenue. However, the said contention of the learned advocate requires verification. Inasmuch as the matter stands remanded, he would examine the fact of limitation afresh after going through the appellant s submission and the various documents, etc. said to have been filed by them with the Revenue.

Summary

Issues: Valuation of goods sold to related parties, Application of Central Excise Valuation Rules, Clearance of waste and scrap without duty payment, Time bar for demand relatable to valuation

In the judgment by the Appellate Tribunal CESTAT BANGALORE, the issues revolved around the valuation of goods sold to related parties, the application of Central Excise Valuation Rules, clearance of waste and scrap without duty payment, and the time bar for demand related to valuation. The appellant, engaged in manufacturing steel tubes and CR coil sheets, faced investigations revealing that 70% of their products were sold to related parties and the remaining 30% to independent wholesale buyers at different prices. The Revenue initiated proceedings based on Rule 11 read with Rule 9 of the Valuation Rules, proposing to adopt the assessable value as the value at which goods were further sold by related persons.

The appellant contended that Rule 4 should apply when goods are partly sold through related persons and partly through independent wholesale buyers. The Commissioner (A) acknowledged this but still confirmed the demand, leading to a self-contradictory order. The Tribunal found force in the Commissioner's findings that Rule 4 should be applied but remanded the matter to the original adjudicating authority for quantification of the demand based on the factory gate sale price to individual buyers.

Regarding the clearance of waste and scrap without duty payment, the Commissioner (A) noted that duty was paid except for clandestine clearances. The appellant claimed that waste and scrap were not excisable, necessitating further examination by the lower authorities during the remand process. Additionally, the time bar for the demand related to valuation was questioned by the appellants, arguing that since all requisite statutory returns were filed disclosing facts, the extended period should not apply unless there was evidence of suppression or misstatement by the assessee. This contention required verification during the remand process.

The judgment concluded by disposing of all appeals in the aforementioned manner, emphasizing the need for the adjudicating authority to expedite proceedings due to the case's age.