2018 (8) TMI 1166 - AT - Central Excise

100% EOU - CVD equal to basic excise duty payable - Under-Valuation - Ladies Knitted Brassier - Department took the view that as the values so adopted was much less than the ultimate sale price charged by distribution centre to their wholesale buyers, therefore there has been short payment to the tune of ₹ 44,36,674/- for the period April 2008 to December 2008 - N/N. 23/2003-CE dt. 31.03.2003. Exemption from CVD equal to basic excise duty payable - Held that - The matter has been well settled by the Hon ble Apex Court in SRF Ltd. Vs CC (Import and General), New Delhi 2015 (4) TMI 561 - SUPREME COURT where the Hon ble Supreme Court followed the principle laid down in Thermax Pvt. Ltd. 1992 (8) TMI 156 - SUPREME COURT OF INDIA namely for the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon - the respondents herein would very well be eligible for Nil CVD in view of Notification No.30/2004- CE. Valuation of goods - scope of SCN - Held that - Since the SCN has not invoked Rule 7 of the Customs Valuation Rules, the confirmation of the alleged differential duty value on the basis of deductive value i.e. Rule 7 of the said Rules would be travelling beyond the scope of the said SCN. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Valuation of goods for excise duty calculation.
2. Applicability of duty exemptions to Export Oriented Units (EOUs).
3. Interpretation of Notification No.30/2004-CE.
4. Invocation of Rule 7 of Customs Valuation Rules in the Show Cause Notice (SCN).

Valuation of Goods for Excise Duty Calculation:
The case involved a dispute regarding the valuation of goods for excise duty calculation. The original authority had restricted the demand for excise duty to a certain amount after allowing deductions for various expenses like "General Overhead," "Margin," transport, insurance, packing, BCD, and CVD. The Commissioner (Appeals) upheld the decision, emphasizing that the deductions were correctly allowed. The Tribunal concurred with the Commissioner's findings, stating that the confirmation of differential duty value based on Rule 7 of the Customs Valuation Rules, without invoking Rule 7 in the SCN, exceeded the scope of the notice.

Applicability of Duty Exemptions to Export Oriented Units (EOUs):
The central issue revolved around the applicability of duty exemptions to Export Oriented Units (EOUs) under Notification No.30/2004-CE. The department contended that the duty exemption granted to EOUs was incorrect. However, the Commissioner (Appeals) supported the assessee's argument, ruling that no CVD was required to be paid by the goods in question under the said notification. The Tribunal upheld the Commissioner's decision, citing precedents and the specific provisions of Notification No.30/2004-CE.

Interpretation of Notification No.30/2004-CE:
The Tribunal relied on legal precedents, including a Supreme Court judgment and previous CESTAT decisions, to interpret the provisions of Notification No.30/2004-CE. The Tribunal emphasized that the respondents were eligible for Nil CVD as per the notification, aligning with the principles established in relevant case laws. The Tribunal's decision was based on a consistent application of legal principles and statutory notifications.

Invocation of Rule 7 of Customs Valuation Rules in the Show Cause Notice (SCN):
A crucial aspect of the case was the invocation of Rule 7 of the Customs Valuation Rules in the Show Cause Notice (SCN). The Tribunal noted that since the SCN did not invoke Rule 7, confirming the alleged differential duty value based on deductive value under Rule 7 would exceed the scope of the notice. This procedural issue was pivotal in determining the validity of the demand for excise duty and penalties. The Tribunal's analysis underscored the importance of adherence to procedural requirements in tax assessments.

In conclusion, the Tribunal dismissed the departmental appeal, finding no merit in the grounds raised by the department. The judgment highlighted the significance of correct valuation methods, proper application of duty exemptions to EOUs, consistent interpretation of statutory notifications, and adherence to procedural rules in tax assessments. The decision provided clarity on the issues raised and affirmed the rulings of the lower authorities based on legal principles and precedents.