2017 (9) TMI 1722 - AT - Central Excise

Method of Valuation - appellant had supplied paint and also has undertaken the painting contract - to be valued under the provisions of Rule 8 of Central Excise Valuation Rules or following Rule 11 of the Valuation rules? - Held that - Identical issue decided in the case of M/S COROMANDEL PAINTS LTD. VERSUS CCE & CC, VISAKHAPATNAM 2016 (6) TMI 1018 - CESTAT HYDERABAD , where it was held that since the application of paint contains labour costs, the assessable value is to be determined under Rule 11 only after deduction of the value of labour component from the total value for supply and apply. Penalty - Held that - The period involved in these appeals in question is prior to the date when the order was passed by the Tribunal and appellant would have had a bonafide belief in continuing to discharge of central excise duty based upon understanding of Rule 8 of Central Excise Valuation Rules - penalty set aside. Appeal allowed in part.

Summary

Issues:
Central excise duty valuation rules - Rule 8 vs. Rule 11 application for paint supply and painting contract during 1.4.2008 to 31.3.2011.

Analysis:
The judgment by the Appellate Tribunal CESTAT Hyderabad involved three appeals against orders-in-appeal No. 16-18/2012 dated 27/04/2012. The primary issue in all these appeals was the valuation of central excise duty for the supply of paint and painting contracts between 1.4.2008 to 31.3.2011. The appellant had discharged central excise duty based on Rule 8 of Central Excise Valuation Rules, while the department contended that the valuation should be done as per Rule 11 of the Valuation rules.

The Tribunal noted that a similar issue concerning the same appellant for an earlier period had been decided by the Bench in Final Order No. A/30473-30474/2016 dated 18th May 2016. In that order, the demands were confirmed along with interest, but the penalties were set aside. The appellant requested a similar decision in the current appeals. Upon reviewing the previous order, the Tribunal found no reason to deviate from the earlier decision and upheld the demands with interest. However, considering that the penalties were imposed for a period before the previous order, the Tribunal set aside the penalties in all three appeals. The Tribunal concluded that the appellant had a genuine belief in complying with Rule 8 of the Central Excise Valuation Rules, leading to the penalties being waived.

In summary, the Tribunal upheld the demands with interest but set aside the penalties imposed in the appeals, citing the appellant's good faith in following Rule 8 of the Central Excise Valuation Rules.