2017 (3) TMI 1437 - AT - Central Excise

Clandestine removal - industrial valves - Held that - The only challenge of the appellant is for re-computation of the duty liability, considering the value arrived at by the department as cum-duty-price. On careful consideration of the findings recorded by the first appellate authority, we find that first appellate authority has not considered the law settled by the Apex Court on this point, wherein the Apex Court has settled that the benefit of cum-duty-price needs to be extended to the appellant even in the case of clandestine removal - while upholding the charge of clandestine removal, we remand the back to the adjudicating authority to reconsider the computation of duty liability considering the value of clandestine removal as cum-duty-price - appeal allowed by way of remand.

Summary

Issues involved:
Demand of duty liability for clandestine removal of goods, computation of duty liability based on cum-duty-price, consideration of settled law by the Apex Court, penalties imposed, interest liability.

Analysis:
The case involves appeals against an Order in Appeal regarding the demand of duty liability for goods clandestinely removed by the main appellant, a manufacturer of industrial valves. The lower authorities found that the main appellant had cleared finished goods without payment of duty during the financial year 2004-05. The adjudicating authority confirmed the demands raised, re-computed duty liability for subsequent years, and imposed penalties on both appellants. The first appellate authority upheld the adjudicating authority's order.

The main issue raised by the appellant was the re-computation of duty liability based on the value arrived at as cum-duty-price. The appellant argued that if duty liability is re-computed in this manner, it would reduce. The Tribunal noted that the main appellant did not contest the charge of clandestine removal but challenged the computation of duty liability. The Tribunal found that the first appellate authority did not consider the settled law by the Apex Court, which states that the benefit of cum-duty-price should be extended to the appellant even in cases of clandestine removal, citing the case of Hindustan Sugar Mills - 1978 (4) SCC 271.

The Tribunal disagreed with the reliance placed by the first appellate authority on a different case and remanded the matter back to the adjudicating authority to reconsider the computation of duty liability considering the value of clandestine removal as cum-duty-price. The Tribunal directed that if duty liability is recomputed, subsequent benefits such as eligibility to avail SSI exemption notification should be extended to the main appellant. Regarding penalties imposed, the adjudicating authority was instructed to impose statutory penalties based on the re-computed duty liability, with interest liability also arising.

In conclusion, the appeals were disposed of with the directions provided by the Tribunal, emphasizing the need to reconsider the computation of duty liability based on the settled law regarding cum-duty-price and extending consequent benefits to the main appellant.