2018 (6) TMI 474 - AT - Central Excise

Valuation - toothpaste - MRP based valuation - tooth paste was cleared under Bond under Rule 19 of Central Excise, 2002, who in turn was exported the same - Demand was raised adopting the MRP declared for the purpose of export as MRP for domestic clearance - whether the demand raised is justified? - Held that - The SCN proposed assessment on the basis of MRP ascertained on the strength of the statement of the Director of the company. The said method was not found proper by original adjudicating authority, who devised his own method of ascertaining MRP - on perusal of the arguments given in the Order-in-Original for revising the MRP, it shows that there are lot of assumption and presumption involved and it is highly arbitrary - impugned order cannot be upheld - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand and imposition of penalties based on the assessment of Central Excise duty and assessable value of goods manufactured and cleared under Bond under Rule 19 of Central Excise, 2002.

Analysis:
The case involved appeals filed against the confirmation of demand and penalties by M/s Alps Container Pvt. Ltd. and an individual. The appellants had manufactured toothpaste under an agreement with another company, which was later accumulated due to a financial dispute. After gaining the right to dispose of the products, they sold them to the highest bidders and cleared them under Central Excise Invoices. The Revenue issued a show cause notice demanding Central Excise duty based on the Maximum Retail Price (MRP) declared for export. The original adjudicating authority confirmed the demand and imposed penalties, adopting a new method to determine the assessable value. This method involved presumptions about intermediate persons and their margins, leading to an arbitrary assessment.

Upon appeal, the Commissioner (Appeals) upheld the original adjudicating authority's order, leading the appellants to approach the Tribunal. The appellants argued that once the original adjudicating authority rejected the method proposed in the show-cause notice, it was not permissible to adopt a different method. They contended that the revised method was arbitrary, notional, and based on presumptions. The Revenue, on the other hand, supported the impugned order.

The Tribunal carefully considered the submissions and found that the original adjudicating authority's revised method for ascertaining the MRP was arbitrary and based on assumptions and presumptions. The authority had failed to provide cogent reasons and data for the new assessment method. Consequently, the Tribunal held that the impugned order confirming the original order was unsustainable, and the appeals were allowed. The judgment highlighted the importance of a proper and reasoned approach in determining assessable values for Central Excise duty, emphasizing the need to avoid arbitrary assessments based on assumptions.