2018 (8) TMI 1660 - AT - Central Excise

Valuation - clearance of goods Air Handling Unit, Fan Coil Unit and Packaged Split Air Conditioners to another unit - It appeared that the appellant had sold the said goods for a higher value through the branch for which they have not discharged the central excise duty - Held that - It is seen that at the time of removal of the goods from the factory, the appellant knew the value at which the goods were to be sold by their branches would be higher than that mentioned in the invoices. The very same product which has been cleared from the factory is sold from the branch office at a higher price - The allegations in the show cause notice as well as the basis for which the differential duty demand is very much clear from the show cause notice as well as the order passed by the adjudicating authority - demand upheld - appeal dismissed - decided against appellant.

Issues Involved: Valuation under Central Excise Valuation Rules, 2000; Allegations of underpayment of central excise duty; Application of Rule 7 vs. Rule 9; Discrepancy in valuation between factory and branch sales.

Valuation under Central Excise Valuation Rules, 2000:
The case involved a dispute regarding the valuation of goods under the Central Excise Valuation Rules, 2000. The appellant argued that the valuation should have been done under Rule 7, while the Commissioner (Appeals) applied Rule 9. The appellant contended that the demand confirmed lacked a proper basis due to this discrepancy. However, the Tribunal held that the mention of a wrong section or rule does not invalidate the demand if the basis for the duty is clear from the show cause notice and adjudication order. The Tribunal upheld the decision of the Commissioner (Appeals) on this issue.

Allegations of underpayment of central excise duty:
The appellant was alleged to have underpaid central excise duty on goods sold to their branches at a higher value than the assessable value adopted at the time of removal from the factory. The show cause notice was issued for demanding the duty along with interest and penalties. The original authority and the Commissioner (Appeals) confirmed the demand, interest, and penalties. The Tribunal, after hearing submissions from both sides, found that the appellant knew the goods would be sold at a higher price by their branches and upheld the decision of the Commissioner (Appeals) to demand the duty, interest, and penalties.

Application of Rule 7 vs. Rule 9:
The appellant raised a contention that the Commissioner (Appeals) applied Rule 9 in the discussions, while the show cause notice and the adjudication order adopted valuation under Rule 7 of the Central Excise Valuation Rules, 2000. The appellant argued that the demand could not be sustained due to this discrepancy. However, the Tribunal held that the mention of a different rule did not affect the demand if the basis for the duty was clear. The Tribunal found no infirmity in the order passed by the Commissioner (Appeals) on this issue and dismissed the appellant's appeal.

Discrepancy in valuation between factory and branch sales:
The case involved a situation where goods were sold by the appellant to their branches at a higher value than the assessable value adopted at the time of removal from the factory. The appellant contended that additional works were done by the branches, such as ducting, piping, and electrical works, and bills were raised for these activities. The department raised a demand on the air handling unit, including the value of other parts fitted to it. The Tribunal, after considering the submissions, upheld the demand confirmed by the Commissioner (Appeals) and dismissed the appellant's appeal, stating that the sale of the same product at a higher price from the branch office was clear and justified the duty demand.

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