2017 (3) TMI 1144 - AT - Central Excise

EOU unit - clearance of processed goods i.e Marble slabs in Domestic Tariff Area - undervaluation - demand - Held that - the demand has been raised mainly on the basis of DGFT circular fixing the minimum import price of the imported Marble Blocks. However, there is no evidence of any manipulation in transaction value changed by the Appellant to their buyers. The sale has been made to the independent buyers and the price is the sole consideration of sale - There is no investigation/ findings that the importer has paid the amount equal to minimum import price to the seller of the Marble blocks. The application of Rule 8 of the Valuation rules by reckoning the Minimum Import Price as the base price is not an approved method under the Customs law and the valuation arrived at by this method is not correct - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Valuation of processed Marble Slabs cleared to Domestic Tariff Area (DTA) by an Export Oriented Unit (EOU) based on Minimum Import Price circular issued by DGFT.

Analysis:

Valuation based on Minimum Import Price Circular:
The appeal was against an Order-in-Original passed by the Commissioner, Central Excise, Pune - II, proposing rejection of transaction value of Marble Slabs cleared by the EOU to DTA. The revenue relied on a DGFT circular setting the Minimum Import Price of Marble Slabs at $450, equating to ?150 per sq ft. The Appellant cleared the slabs at rates ranging from ?75 to ?110 per sq ft. The adjudicating authority confirmed the demand, stating that the circular applied to the EOU and valuation should be done as if the goods were imported. The Appellant argued that the circular was not evidence of actual international prices, and contemporaneous imports were at lower rates. The Appellant also challenged the valuation method under Rule 8 of Valuation Rules, citing exemption from duty and lack of evidence of duty evasion.

Legal Reasoning and Decision:
The Tribunal analyzed the case, emphasizing that the transaction value cannot be rejected unless special circumstances exist, as per precedent. The Tribunal found no evidence of manipulation in the transaction value, emphasizing that the sale was made to independent buyers at the agreed price. The Tribunal held that the Minimum Import Price cannot automatically determine the sale price of the slabs, rejecting the application of Rule 8 for valuation. The Tribunal highlighted the lack of proof that the importer paid the Minimum Import Price to the seller of Marble Blocks. It concluded that the demand solely based on the Minimum Import Price being higher was not valid, as there was no comparison with market prices or evidence of overpricing. Therefore, the impugned order was set aside, and the appeal was allowed.

This detailed analysis of the judgment highlights the key legal issues surrounding the valuation of processed Marble Slabs cleared by an EOU to DTA based on the Minimum Import Price circular, providing a comprehensive understanding of the legal reasoning and decision rendered by the Appellate Tribunal CESTAT Mumbai.