2016 (12) TMI 211 - AT - Central Excise

Whether the adjudicating authority shall automatically invoke Rule 6 (b) (ii) of the Central Excise (Valuation) Rules, 1975 without ruling out the application of sub-rule (i) of the said rule? - Held that - the exercise of the Authority in the impugned order is confined to determination of value of clearance for captive consumption under Rule 6, the authority is directed to compute the value in accordance with law within a month of receipt of this order comparing the price charged to independent buyers with the value declared by the appellant in respect of clearance to the sister unit of appellant. Appellant is entitled to the reasonable opportunity of hearing and provide details to satisfy the authority - We make it clear that Rule 6 (b) (ii) shall apply only in the event Rule 6 (b) (i) is not applicable. This should be kept in mind by the authority before any decision is taken. The authority shall issue notice to the appellant within three months of receipt of this order for pleading defence, if any and considering the matter in controversy, defence, material facts and law applicable shall pass the order within three months of last date of hearing. Such time frame has been fixed keeping in view that the matter has travelled a lot from the year 1988 - appeal allowed by way of remand.

Summary

Issues:
Determining the applicability of Rule 6 (b) (ii) of the Central Excise (Valuation) Rules, 1975 without ruling out Rule 6 (b) (i).

Detailed Analysis:

The dispute in this case revolves around whether the adjudicating authority can automatically invoke Rule 6 (b) (ii) of the Central Excise (Valuation) Rules, 1975 without first ruling out the application of sub-rule (i) of the same rule. The appellant argued that if the value of goods is not determinable under Rule 6 (b) (i), then Rule 6 (b) (ii) should apply. However, the authority in question did not explicitly rule out the application of Rule 6 (b) (ii) and proceeded in an arbitrary manner, according to the appellant. The appellant also cited a previous decision of the Tribunal in support of their case. They maintained that they had submitted the price list with all relevant details, there was no suppression of facts, and the value of goods was calculated under Rule 6 (b) (i) and matched the price charged to independent buyers.

The revenue, on the other hand, contended that the authority had acted correctly in the matter. After hearing both sides and examining the records, the Tribunal directed the authority to recompute the value of clearance for captive consumption under Rule 6, ensuring compliance with the law. The authority was instructed to compare the price charged to independent buyers with the value declared by the appellant for clearance to the sister unit of the appellant. The appellant was granted a reasonable opportunity to present their case and provide necessary details to satisfy the authority.

The Tribunal clarified that Rule 6 (b) (ii) should only be applied if Rule 6 (b) (i) is deemed inapplicable. This instruction was given to guide the authority in making decisions going forward. The authority was mandated to issue a notice to the appellant within three months for presenting a defense, if any. Subsequently, after considering all aspects of the case, including the defense, material facts, and relevant laws, the authority was directed to issue a final order within three months from the last date of hearing. This timeline was set considering the prolonged duration of the case since 1988.

In conclusion, the appeal was remanded to the adjudicating authority with specific directions outlined by the Tribunal.