2016 (11) TMI 16 - AT - Central Excise

Valuation - CNC Gear hobbing machine - EPCG license issued by DGFT for import of a similar item at concessional rate of duty - invalidation of EPCG license and obtaining an advance intermediate license issued to the appellant which was used by them to import parts and accessories without payment of duty - demand of differential duty by way of advance license - Held that - the benefit accruing to the appellant by way of extending the benefit of concessional rate of duty for import of components is to be considered as additional consideration flowing from the buyer to the appellant. The charging of differential duty on such consideration merits no interference. - Decided against the assessee. The plea of revenue neutrality comes into play when differential duty paid by one unit is available immediately as CENVAT credit to the same unit or to another unit of the same manufacturer or its sister unit. In the present case that is not so. We find that the machines have been supplied to another customer M/s. Bajaj Auto. It may well be that the differential duty, when paid, is also available to the customer. However, on such a plea the demand itself cannot be set aside - appeal rejected - Decided against the assessee.

Summary

Issues: Valuation of CNC Gear hobbing machine supplied to a customer and applicability of Rule 6 of Valuation Rules.

In this case, the appellant, engaged in manufacturing machineries, supplied a CNC Gear hobbing machine to a customer who provided an advance intermediate license for importing components at a concessional rate of duty. The dispute arose regarding the valuation of the machine, with the original authority demanding a differential excise duty based on the benefit accrued to the appellant from using the advance license. The Commissioner (A) set aside the penalty but upheld a portion of the duty demand. The appellant challenged the order on various grounds, including that the duty concession was a statutory benefit and did not constitute additional consideration under Rule 6 of the Valuation Rules. They also argued for revenue neutrality, citing relevant case laws. The Tribunal analyzed the situation, considering the benefit from concessional import as additional consideration received from the buyer. They referred to precedents like the IFGL Refractories case and the Indoram Synthetics case to support their decision. The Tribunal rejected the plea of revenue neutrality, noting that the differential duty paid was not immediately available as CENVAT credit to the same unit or a sister unit of the manufacturer. Consequently, the impugned order was upheld, and the appeal was rejected on 27/10/2016.