2018 (3) TMI 349 - AT - Central Excise

Valuation - whether the price prevailing for sale at depot immediately prior to the clearance from the factory gate was to be adopted or the price prevailing at the depot at the point of time nearest to the time of clearance from the factory gate was to be adopted for the purpose of assessment? - Circular No. 643/34/2002-CX dt. 1.7.2002 - Held that - the words used in a clarification are the nearest date when clearances of the goods were affected from the depot or other place should be taken into consideration - Similarly in the Circular dt. 30.6.2000, in the example for clearance of goods from factory on 5.7.2000 the price of sale at depot on 1.7.2000 was adopted. It is apparent that the CBEC wishes to adopt the price which is available at the time of clearance from the factory. The other interpretation sought by Revenue would perforce make all the clearances from the factory provisional and assessable price at the time of clearance from factory sale would always remain indeterminate - interpretation adopted by the appellant appears to be proper. Reliance placed in the case of EI. DU PONT INDIA PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, CHENNAI 2004 (10) TMI 481 - CESTAT, NEW DELHI , where it was held that Once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable, there is no need to determine the assessable value on the basis of price at which the goods may be sold subsequent to the time of removal of goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Dispute over the adoption of assessable value for excisable goods at the time of clearance from the factory.
- Interpretation of CBEC Circulars regarding the determination of assessable value based on sale price at the depot.
- Conflict between the price prevailing at the depot immediately prior to clearance and the price nearest to the time of factory clearance.
- Applicability of Rule 7 of the Central Excise Rules in determining the assessable value.
- Comparison of decisions by different Tribunals and reliance on CBEC Circulars for valuation rules.

Analysis:

The appeal involved a dispute regarding the determination of the assessable value of excisable goods at the time of clearance from the factory. The appellant, M/s. Ispat Industries Ltd., resorted to provisional assessment initially and later proposed to finalize the assessment by adopting the sale price of the highest aggregate quantity of identical goods sold to non-related buyers. The Revenue, however, disagreed with this approach and sought to assess based on the price prevailing at the depot nearest to the time of clearance from the factory.

The core issue revolved around the interpretation of CBEC Circulars, specifically Circular No. M.F.(D.R.) F. No. 354/81/2000-TRU, which emphasized determining the assessable value based on the normal transaction value of goods sold at the depot or other place at or about the same time of removal from the factory. The appellant argued that the Circular referred to goods "sold" and not "to be sold," supporting their contention to adopt the sale price immediately prior to factory clearance.

The Tribunal analyzed the CBEC clarification, which highlighted that the price available at the time of clearance from the factory should be adopted to avoid making all clearances provisional. The Tribunal also cited previous decisions in similar cases, such as E.I. Du Point India Pvt. Ltd., to support the appellant's interpretation. It was clarified that the term "greatest aggregate quantity" refers to the price at which the largest quantity of identical goods are sold on a particular day, irrespective of the number of buyers.

The Revenue relied on a different decision, S.C. Enviro Agro India Pvt. Ltd., where no price was available immediately prior to factory clearance, leading to the adoption of the price after clearance as the assessable value. However, the Tribunal found merit in the appellant's appeal, aligning with the interpretation of CBEC Circulars and previous Tribunal decisions. Ultimately, the appeals were allowed in favor of the appellant.

In conclusion, the judgment resolved the dispute by clarifying the interpretation of CBEC Circulars and emphasizing the importance of adopting the price available at the time of clearance from the factory to determine the assessable value of excisable goods. The decision was based on the principles outlined in the valuation rules and supported by previous Tribunal rulings, leading to the allowance of the appeals.