2017 (2) TMI 189 - AT - Central Excise

Under-valuation - Penalty - Rule 173 C (11) of erstwhile CER, 1944 - The demand was confirmed by taking the highest price of one of the buyer and that price was applied in all the cases - Held that - On going through the sample invoices shown by the learned Counsel, we observed that every machine has different specifications and there are clear variation in all the machines supplied by the appellant. It is also observed that there is no case of the Revenue that by undervaluing the goods, the appellants have recovered some extra consideration towards the sale of the various sub-assembly of the injection moulding machine - Appeal allowed - decided in favor of the assessee.

Summary

Issues: Undervaluation of goods, differential duty computation, penalty imposition, interest demand, appeal against order-in-original.

In this case, the appellant, a manufacturer of sub-assemblies for plastic processing machines, was accused by the department of undervaluing goods and charging different prices to different buyers for the same products. The department alleged undervaluation based on the highest price of a similar machine, leading to the computation of a differential duty, penalty imposition under Rule 173Q, and interest demand under Section 11AA of the CEA, 1944. The appellant's appeal before the Commissioner (Appeals) was rejected, prompting them to appeal to the Tribunal.

The appellant's counsel argued that the machines supplied had different specifications, justifying the varying prices. Upon reviewing sample invoices, the Tribunal observed clear variations in the specifications of the machines supplied by the appellant, refuting the department's claim of uniformity in the supplied sub-assemblies. The Tribunal noted that the department failed to prove that undervaluation occurred or that all sub-assemblies were identical, leading to the conclusion that the demand was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed.

The Tribunal's decision highlighted the importance of establishing undervaluation and uniformity in goods before confirming demands based on differential pricing. The judgment emphasized the necessity for concrete evidence to support allegations of undervaluation and uniform pricing practices. Ultimately, the Tribunal's analysis focused on the lack of proof of undervaluation and uniformity, leading to the dismissal of the department's claims and the allowance of the appellant's appeal.