2018 (5) TMI 1106 - AT - Central Excise

Valuation - applicability of Rule 7 of Central Excise (Valuation) Rules, 2000 - appellants are selling their product partly at factory gate and partly through consignment agents by stock transferring of the goods on payment of duty - Held that - when the goods are not sold at the factory gate but removed exclusively to a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold, the rule 7 is applicable - In the instant case, it is evident that the goods were partly sold at factory gate and duty was paid. Remaining goods were transferred to the consignment agent. Therefore, Rule 7 of Central Excise (Valuation) Rules, 2000, is not applicable in the instant case - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal No. 199-200-CE/MRT-II/2007 dated 27/08/2007
- Application of Rule 7 of Central Excise (Valuation) Rules, 2000
- Goods sold partly at factory gate and partly through consignment agents
- Interpretation of relevant case laws

Analysis:

The appeal before the Appellate Tribunal CESTAT ALLAHABAD was filed by M/s Jindal Pipes Ltd. & Steel & Metal Tubes (I) Ltd. against the Order-in-Appeal passed by the Commissioner of Central Excise & Customs (Appeals), Meerut-II. The appellants are engaged in the manufacture of Steel Tubes & Pipes and sell their products partly at the factory gate and partly through consignment agents. The Commissioner (Appeals) remanded the matter back to the Original Authority to reassess the goods by following Rule 7 of Central Excise (Valuation) Rules, 2000. The appellants challenged this decision, leading to the present appeal.

During the hearing, the appellant's counsel argued that Rule 7 of Central Excise (Valuation) Rules, 2000, is not applicable in their case as it pertains to circumstances where all goods are transferred to a depot, not when goods are partly sold at the factory gate. The counsel relied on the precedent set in the case of Bharat Petroleum Corporation Ltd. Versus Commissioner of Central Excise, Chennai, and a previous decision by the Tribunal involving one of the appellants, M/s Steel & Metal Tubes (I) Ltd., to support their argument that Rule 7 does not apply when goods are sold partly at the factory gate and partly through consignment agents.

On the other hand, the Departmental Representative supported the impugned order. After considering the arguments, the Tribunal found that the precedents cited by the appellant were applicable to the current case. The Tribunal concluded that Rule 7 of Central Excise (Valuation) Rules, 2000, does not apply when goods are partly sold at the factory gate and partly transferred to consignment agents. Since the goods in question were sold in this manner, the Tribunal set aside the impugned order and allowed the appeal with any consequential relief as per the law.

In summary, the Tribunal's decision clarified the application of Rule 7 in cases where goods are sold partly at the factory gate and partly through consignment agents, aligning with established precedents and providing relief to the appellants in this specific scenario.