2018 (1) TMI 160 - AT - Central Excise

Valuation - removal of goods for delivery to different independent buyers as well as to their own units - It was observed that the prices shown in the invoices for delivery to their own units were much less than the price charged for similar / comparable goods removed to the independent buyers - Held that - the benefit of CAS-4 valuation can and should be extended even to clearances which have occurred before the Board introduced the same vide Circular dated 13.2.2003 - In the circumstances, benefit of CAS-4 guidelines cannot be denied to the impugned clearances - for the limited purpose of recalculating the duty liability, based on the CAS-4 guidelines and Chartered Accountant s certificate submitted by the appellant vide their letter dated 10.8.2010, the matter is being remanded to the adjudicating authority. Penalty - Held that - in view of the confusion that have occurred during the entire period of this dispute and also considering the decisions / judgments cited above, we hold that the penalty cannot sustain and for which reason the penalty imposed under Rule 173Q is set aside. Appeal allowed by way of remand.

Issues:
1. Valuation of goods for payment of duty between sister units
2. Destruction of rejected goods without payment of duty
3. Availment of credit on rejected goods
4. Applicability of CAS-4 provisions retrospectively
5. Assessment of goods based on comparable values
6. Denial of CAS-4 valuation benefit
7. Imposition of penalty under Rule 173Q

Issue 1: Valuation of goods for payment of duty between sister units
The case involved the valuation of Vacuum Interrupter Tubes (VITs) and Vacuum Contactor Units (VCUs) cleared to sister units at lower prices compared to independent buyers. The Departmental officers argued for valuation based on prices for comparable goods sold to independent buyers. The Tribunal remanded the matter to the adjudicating authority for quantification of differential duty and penalty, holding the appellants liable to pay the differential duty for the tubes.

Issue 2: Destruction of rejected goods without payment of duty
The appellant was accused of destroying rejected goods without proper duty payment or following prescribed procedures, resulting in short payment of duty. The Tribunal set aside the duty demand and penalty imposed on this charge, as the charge of removal of Vacuum Interrupter Tubes without duty payment was not established.

Issue 3: Availment of credit on rejected goods
The appellant was alleged to have wrongly availed credit on rejected goods. The Tribunal did not provide specific findings on this issue in the judgment.

Issue 4: Applicability of CAS-4 provisions retrospectively
The appellant argued for the retrospective application of CAS-4 provisions, citing relevant judgments. The Tribunal acknowledged the benefit of CAS-4 valuation even for clearances before its introduction, remanding the matter to the adjudicating authority for recalculating duty liability based on CAS-4 guidelines.

Issue 5: Assessment of goods based on comparable values
The Tribunal directed that all types of Vacuum Interrupter Tubes cleared to sister units should be assessed at the value of comparable goods. The adjudicating authority was instructed to quantify the amount of differential duty and impose penalties accordingly.

Issue 6: Denial of CAS-4 valuation benefit
The respondent opposed the appeal, arguing that the Tribunal's directions were specific to assessing goods based on comparable values, not CAS-4. However, the Tribunal held that the benefit of CAS-4 guidelines should be extended, especially considering past decisions in favor of the appellant.

Issue 7: Imposition of penalty under Rule 173Q
The Tribunal set aside the penalty imposed under Rule 173Q, considering the confusion during the dispute and relevant legal precedents. The penalty was deemed unsustainable, leading to its cancellation.

In conclusion, the Tribunal's judgment addressed various issues related to valuation, duty payment, retrospective application of provisions, and penalty imposition, providing detailed directions and considerations for each aspect of the case.

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