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2008 (11) TMI 159 - AT - CustomsWhether the invoice price of the goods sold by a 100% EOU into the DTA to related person is the transaction value or whether the duty is payable on the sales price of the goods sold by related person to the customers - hold that the assessable value is to be worked out as per Rule 7 of the Customs Valuation Rules after making the permissible deductions - regarding demand of short payment from EOU, there is no time limit for demanding duty - demand can be raised as per provisions of B-17 bond executed by them
Issues Involved:
1. Whether the invoice price of the flowmeters sold by the Production Centre (PC) to the Sales Centre (SC) is the transaction value for excise duty purposes. 2. Whether the assessable value should be determined under Rule 7 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. 3. Whether the demand raised via Show Cause Notice dated 14-12-2005 is time-barred. 4. Whether the PC is entitled to exemption under Notification No. 108/95-C.E., dated 28-8-1995. Detailed Analysis: 1. Transaction Value for Excise Duty: The Commissioner rejected the price at which the goods were sold by the PC to the SC and held that the prices charged by the SC to its customers should be the value on which duty is required to be paid. The PC and SC are related entities, and the Commissioner determined that the relationship influenced the transaction value. The Commissioner applied Rule 5 of the Customs Valuation Rules, which was contested by the PC, arguing that the SC's selling price included additional services and costs not applicable to the PC's transaction value. 2. Assessable Value Determination: The Tribunal found that Rule 5 was misapplied by the Commissioner, as it pertains to the transaction value of identical goods sold for export to India, which was not applicable in this case. Instead, the Tribunal held that the assessable value should be determined under Rule 7 of the Customs Valuation Rules, which involves the deductive value method. This method considers the unit price at which the goods are sold to unrelated persons in India, with permissible deductions for general expenses, insurance, transportation costs, and taxes. 3. Time-Barred Demand: The PC argued that the demand was time-barred since the relationship between the PC and SC was known to the Department since 2002. However, the Tribunal found that the PC had not supplied the necessary documents in time, leading to suppression of information. Consequently, the extended period for raising the demand was rightly invoked, making the demand within the permissible time limit. 4. Exemption under Notification No. 108/95-C.E.: The Tribunal held that the exemption under Notification No. 108/95-C.E. was not available to the PC, a 100% EOU, as the notification did not specifically mention applicability to EOUs. Therefore, the differential duty of Rs. 90,612/- together with interest was recoverable from the PC, and a mandatory penalty of the same amount was imposed. Conclusion: The Tribunal remanded the case to the Commissioner to reassess the assessable value based on Rule 7 of the Customs Valuation Rules, allowing permissible deductions. The penalties imposed on the PC and SC were set aside, with the issue of penalties kept open pending reassessment. The Tribunal also set aside the related Orders-in-Appeal and remanded them for de novo decision in light of the observations made. The judgment emphasized the need for proper valuation methods and adherence to procedural requirements in determining excise duty liabilities.
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