2018 (11) TMI 216 - AT - Central Excise

Valuation - goods cleared from the factory but sold through consignment agents - applicability of Rule 7 of the Central Excise Valuation (Determination of price of Excisable goods) Rules 2000 - period August 2004 to May 2005 - Held that - In terms of Rule 7 ibid we are of the view that there is no mandate for adopting the valuation as has been adopted by the Lower Authorities - Identical issue decided in the case of E. I. Du Pont India Pvt. Ltd. Vs. CCE Chennai 2004 (10) TMI 481 - CESTAT NEW DELHI where it was held that Once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable there is no need to determine the assessable value on the basis of price at which the goods may be sold subsequent to the time of removal of goods - valuation issue need not be interfered. Penalty - Held that - The penalties are upheld but quantum reduced. Appeal allowed in part.

Summary

Issues: Valuation of goods cleared from the factory but sold through consignment agents, Differential duty demand, Penalties imposed on the appellant and its Director, Adoption of valuation as per Rule 7 of Central Excise Valuation Rules, Interpretation of Rule 7, Applicability of Section 4(1)(b) of Central Excise Act, 1944.

The judgment pertains to appeals against an Order-in-Appeal regarding the valuation of goods cleared from the factory but sold through consignment agents. The appellant, engaged in the manufacture of Sponge Iron, claimed to have paid Central Excise Duty as per Rule 7 of the Central Excise Valuation Rules. However, the Revenue investigated and demanded a differential duty payment, along with penalties on the appellant and its Director. The main issue revolved around the valuation method for goods sold through consignment agents, covering the period from August 2004 to May 2005. The dispute required determining the valuation under Rule 7 of the Valuation Rules when goods are sold from the consignment agent's premises. The appellant argued that the valuation should be based on the normal transaction value at or about the same time when goods are removed from the factory, as per Rule 7. The Revenue, on the other hand, sought to determine the valuation based on the price at which the goods were sold from the consignment agent's premises, contrary to Rule 7.

The Tribunal analyzed the relevant provisions, including Rule 7 of the Valuation Rules and Section 4(1)(b) of the Central Excise Act, 1944. It noted that the valuation method adopted by the appellant at the time of clearance from the factory was in accordance with Rule 7. However, the Revenue's demand was based on the price at which goods were sold from the consignment agent's premises. Referring to a previous Tribunal decision, the Tribunal emphasized that the normal transaction value, based on the greatest aggregate quantity sold, should determine the valuation. The Tribunal highlighted that the assessable value should not be based on prices prevailing after the removal of goods. It also cited a Board Circular clarifying the computation of the "greatest aggregate quantity" for normal transaction value. Consequently, the Tribunal found no merit in the impugned order's valuation demand and corresponding penalty, setting it aside.

Regarding the penalties, the Tribunal revised them downwards, reducing the penalty under Section 11AC on the appellant and the Director. The demand related to clearance on a parallel invoice was not contested by the appellant. Therefore, that part of the demand remained unaffected. Ultimately, the appeals were partly allowed, with the impugned order on the valuation issue and penalties being set aside, based on the interpretation of Rule 7 and the normal transaction value principle.