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2018 (10) TMI 1321 - AT - Central ExciseValuation - related party transaction - application of Rule 8 and Proviso to Rule 9 of Central Excise Valuation Rules, 2000 - Revenue has raised the demand by loading 10% on the transaction value - Held that - The department has not worked out that what is the actual cost of the manufacture, on the contrary the appellant have submitted a Chartered Accountant Certificate wherein the cost data was certified which shows that the value as per cost certificate is less than the value charged by the appellant to their customer. They have further obtained a certificate from Cost Accountant which has endorsed the certification of the Chartered Accountant regarding cost of manufacture plus 10% notional profit. When the appellant produced the Cost Accountant Certificate that will suffice - also there is no statutory provision in Valuation Rules that regarding cost of production, Cost Accountant Certificate has to be produced. In the present case, the department has not made any effort to bring on record that the cost of the product produced by the appellant is incorrect. Therefore, in absence of any evidence from the Revenue, the value adopted by the appellant cannot be disputed. Appeal allowed - decided in favor of appellant.
Issues: Valuation of goods supplied to related person under Central Excise Act, 1944; Applicability of Rule 8 and Proviso to Rule 9 of Central Excise Valuation Rules, 2000; Under-valuation claim; Time-barred demand; Reliance on Tribunal judgments.
In this judgment by the Appellate Tribunal CESTAT AHMEDABAD, the issue revolved around the valuation of goods supplied by the appellant to their sister concern, deemed related under Section 4 of the Central Excise Act, 1944. The department contended that valuation should be based on Rule 8 and Proviso to Rule 9 of Central Excise Valuation Rules, 2000, which required determining the value as the cost of manufacture of the final product plus 10% notional profit. The department raised a demand by adding 10% to the transaction value, which was upheld by the Commissioner. The appellant, represented by Sh. D.K. Trivedi, argued that the Chartered Accountant Certificate showed that the value based on cost of manufacture plus 10% profit was lower than the value charged to the customer, indicating no under-valuation. Additionally, they obtained a certification from a Cost Accountant supporting the Chartered Accountant's findings. The appellant claimed the demand was time-barred due to a revenue-neutral situation where duty paid was taken as Cenvat Credit by the customer. They cited Tribunal judgments in support of their position. On the other hand, Sh. T.K. Sikdar, representing the Revenue, reiterated the findings of the impugned order, supporting the department's valuation approach. After hearing both sides and examining the records, the Tribunal found that the Revenue had raised the demand without determining the actual cost of manufacture. The appellant provided a Chartered Accountant Certificate and a subsequent Cost Accountant Certificate endorsing the cost data, which the department rejected on procedural grounds. The Tribunal noted that there was no requirement in the Valuation Rules for a Cost Accountant Certificate and emphasized that correctness of the cost of production should be the focus. Since the Revenue failed to provide evidence of incorrect cost data, the Tribunal concluded that the appellant's valuation was acceptable. Consequently, the demand for differential duty was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.
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