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2019 (1) TMI 1645 - AT - Central ExciseValuation - parts of fire protection systems manufactured on site while undertaking turnkey projects - adoption of price on clearance to independent buyers when ascertainable at the factory gate - rule 6 of the erstwhile Central Excise (Valuation) Rules 1975 - HELD THAT - The entire dispute pertains to the period prior to 1st July 2000 and the applicability of rule 7 of Central Excise (Valuation) Rules 1975. The appeal of the appellant herein before the first appellate authority was rejected solely on the ground of coverage by the decision of the Tribunal in re Vijay Fire Protection Systems Ltd 2004 (4) TMI 146 - CESTAT MUMBAI which has been set aside after detailed consideration by the Hon ble Supreme Court in re UTC Fire and Security India Ltd. 2015 (8) TMI 494 - SUPREME COURT . In UTC Fire and Security India Ltd it has been held that The only mistake which is committed by the Commissioner is to refer to Rule 6(b) inasmuch as in the present case the goods are not consumed by the appellant/ assessee itself but used in the turnkey projects/contracts meant for the third party. Thus it was Rule 7 which should have been referred to by the Commissioner (Appeals) as none of the preceding rules would apply. To put it otherwise it is the case of best judgment assessment . The demand pertaining to the period prior to 1st July 2000 is set aside - appeal allowed - decided in favor of appellant.
Issues involved:
- Interpretation of Central Excise (Valuation) Rules, 1975 - Applicability of rule 6 for determining assessable value - Comparison of rule 4, rule 6, and rule 7 for valuation - Dispute regarding valuation of goods used in turnkey projects - Relevance of past legal precedents in determining current case Analysis: The judgment by the Appellate Tribunal CESTAT Mumbai revolves around the interpretation and application of the Central Excise (Valuation) Rules, 1975. The case involves a challenge to the demand of duty on parts of fire protection systems manufactured on-site during turnkey projects. The primary issue is the resort to rule 6 of the Valuation Rules, which prescribes the adoption of price on clearance to independent buyers as the assessable value when ascertainable at the factory gate. The first appellate authority upheld the demand based on the decision in a previous case involving Vijay Fire Protection Systems Ltd, citing that the appellant did not contest the demand post-July 2000. However, the appellant argued that the Vijay Fire Protection Systems Ltd decision is no longer valid, referencing a judgment involving UTC Fire and Security India Ltd. The UTC case clarified the application of Section 4(1)(b) of the Act, emphasizing the determination of the nearest ascertainable equivalent value under the Valuation Rules. In the UTC judgment, the Tribunal highlighted the distinction between rules 4, 6, and 7 of the Valuation Rules for determining the value of excisable goods. Rule 4 applies when goods are sold for delivery at a time nearest to the removal under assessment, while rule 6 comes into play when the value cannot be determined under rule 4. Rule 7, on the other hand, applies to cases where the value cannot be determined under previous rules, necessitating a best judgment assessment by the proper officer. The Tribunal noted that the goods in question were not sold but used in turnkey projects, indicating that rule 7 for best judgment assessment should have been applied instead of rule 6. The decision in Balajee Electro Steel Ltd was referenced by the Authorized Representative, focusing on the valuation of goods consumed captively post-2000. However, the dispute in the present case pertained to the period before July 2000, emphasizing the relevance of rule 7 for valuation. Ultimately, the Tribunal set aside the impugned order and allowed the appeal concerning the demand for the period before July 2000, aligning with the principles established in the UTC judgment. This comprehensive analysis clarifies the application of the Valuation Rules and the significance of legal precedents in resolving disputes related to the valuation of excisable goods.
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