2018 (10) TMI 960 - AT - Central Excise

MRP Based valuation - appellant was affixing MRP on the cartons on the goods sold by them but it was paying duty under Section 4 of the Central Excise Act, 1944 - extended period of limitation - Held that - The assessable value has been arrived as per formula i.e. Price List 35% value addition, whereas, in terms of Section 4(A) of the Act, the assesseable value is to be arrived by adding 35% to the cost of the product. As MRP was not available during the course of investigation, therefore, the matter needs examination at the end of the adjudicating authority to arrive the correct assessable value. Extended period of limitation - Held that - As Revenue has not challenged the impugned order, therefore, the extended period of limitation is not invokable. Appeal allowed by way of remand.

Summary

Issues:
Appeal against duty payment under Section 4(A) of the Central Excise Act, 1944; Correct assessable value calculation under Section 4(A) of the Act; Applicability of extended period of limitation.

Analysis:
The appellant contested the demand for duty under Section 4(A) of the Central Excise Act, 1944, stating that they were already paying duty under Section 4 but were now required to pay more or less based on cost calculations. The appellant argued that the assessable value under Section 4(A) should be determined by adding 35% to the cost of goods, not by using the selling price as cost. They claimed that the duty demand was unsustainable due to the incorrect basis of arriving at the assessable value. The appellant also challenged the invocability of the extended period of limitation, citing the dropping of penalty by the Commissioner (A) as a reason for the demand not being sustainable under the extended period.

The respondent, on the other hand, supported the impugned order and contended that even if the appellant's arguments were accepted, the appellant would still be liable to pay differential duty under Section 4(A) of the Act.

The Tribunal observed that the sole basis of the demand was under Section 4(A) of the Act, where the assessable value should be calculated by adding 35% to the cost of the product. Since the MRP was unavailable during the investigation, the correct assessable value needed to be determined by the adjudicating authority by considering the cost of goods plus 35%, not the price list. Therefore, the Tribunal set aside the impugned order and remanded the matter for recalculating the assessable value based on the correct formula.

Additionally, the Tribunal noted that since the Revenue did not challenge the impugned order, the extended period of limitation could not be invoked. Consequently, the appeal was disposed of by way of remand, directing the adjudicating authority to reevaluate the assessable value in accordance with Section 4(A) of the Act.