2018 (12) TMI 425 - AT - Central Excise

Valuation - sale of goods through Depot - rates prevalent at the Depot - Department was of the view that the Central Excise duty is required to be paid by the appellant at the factory gate at prices prevalent at the depot from where the products were ultimately sold - demand of differential duty - Held that - The goods were not sold from the Haldia Depot, but were further transferred to other depots of the appellant and sold at different prices. As such in terms of the provisions of Section 4 of the Central Excise Act, 1944 read with Rule 7 of the Central Excise Valuation Rules, 2000, the appellant is required to discharge the duty at prices prevalent at the depot from where the goods are sold - demand upheld. Penalty - Held that - There is no malafide intention on the part of the appellant - penalty set aside. Appeal allowed in part.

Summary

Issues:
1. Liability for payment of differential central excise duty.
2. Applicability of Section 4 of the Central Excise Act, 1944 and Rule 7 of the Central Excise Valuation Rules, 2000.
3. Penalty imposition based on malafide intention.

Analysis:
1. The appeal addressed the liability for payment of differential central excise duty by the appellant. The appellant, a petroleum refinery at Haldia, cleared petroleum products at the factory gate after paying duty based on rates at their Haldia Depot. However, the products were later transferred to different depots and sold at varied prices, leading to a demand for differential duty by the department. The appellant acknowledged the liability and paid the differential duty along with interest. The Tribunal noted the payment made by the appellant and upheld the requirement for payment of differential duty as demanded by the department.

2. The Tribunal examined the applicability of Section 4 of the Central Excise Act, 1944, read with Rule 7 of the Central Excise Valuation Rules, 2000, in determining the duty payment. It was highlighted that duty should be discharged based on the prices prevailing at the depot from where the goods are sold, rather than at the factory gate where duty was initially paid. Given this, the Tribunal affirmed that the appellant was liable to pay the differential duty in accordance with the prevailing prices at the depots where the products were ultimately sold. The Tribunal emphasized that the appellant had paid the entire differential duty along with applicable interest, leading to the decision to uphold the duty payment requirement.

3. Regarding the penalty imposition, the Tribunal found no malafide intention on the part of the appellant in the circumstances of the case. Consequently, the penalty imposed by lower authorities was set aside. The Tribunal's decision to partially allow the appeal was based on the acknowledgment of liability for payment of differential duty, adherence to duty payment regulations, and the absence of malicious intent on the part of the appellant.