2019 (4) TMI 1199 - AT - Central Excise

Valuation of goods sold at the depots - Finalization of provisional assessment - adoption of transaction value to finalise the provisional assessment of goods sold at the depots instead of ascertainment under rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - clearance of goods on stock transfer basis - HELD THAT - The scheme of valuation provides for assessment of duty on the transaction value which conforms to the parameters laid down in section 4 (1) of Central Excise Act, 1944. Such assessment may be final or could be deferred for final assessment through recourse to rule 7 of Central Excise Rules, 2002. In either situation, the transaction value is to be adopted unless at the time of clearance and assessment, under rule 5 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2002 there is lack of conformity to the word picture depicted in section 4(1)(a) of Central Excise Act, 1944. Therefore, it is only when the assessee opts for final assessment in the first instance despite doubt about rate of duty or valuation at the place of removal that recourse may be had to Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2002. Any other interpretation would render the provisions of rule 7 of Central Excise Rules, 2002 to be inoperable and superfluous. It is seen from the records that the order of the competent authority for provisional assessment, under rule 7 of Central Excise Rules, 2002, requires that the assessment be finalised at the end of every quarter. The said rule prescribes an outer time limit of six months for such finalisation which may be extended by the competent authority. Should be goods remain unsold beyond such statutory limit, the absence of a transaction value from the depot would bring the impugned goods within the ambit of section 4 (1)(b) of Central Excise Act, 1944 and rule 7 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2002. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Provisional Assessment and Finalization
2. Adoption of Transaction Value
3. Applicability of Rule 7 of Central Excise Valuation Rules, 2000
4. Discounts and their Impact on Assessable Value
5. Place of Removal and its Definition
6. Continuation of Provisional Status for Unsold Goods

Issue-wise Detailed Analysis:

1. Provisional Assessment and Finalization:
M/s Asahi India Glass Pvt Ltd cleared goods on a 'stock transfer' basis from their factory to their depot before selling to customers. They opted for 'provisional assessment' due to the inability to ascertain the assessable value at the time of clearance. The finalization of assessments for specific periods was challenged by the department but upheld by the Commissioner of Central Excise (Appeals), who allowed the assessment of unsold goods to remain provisional.

2. Adoption of Transaction Value:
The Revenue challenged the adoption of transaction value for finalizing the 'provisional assessment' of goods sold at the depots, arguing that it should be ascertained under Rule 7 of the Central Excise Valuation Rules, 2000. The appellate authority dismissed this challenge, asserting that there was no need to resort to the Valuation Rules for finalizing assessments based on actual transaction value.

3. Applicability of Rule 7 of Central Excise Valuation Rules, 2000:
The Revenue contended that the first appellate authority erred in not applying Rule 7 for the valuation of goods sold from the depot. However, the Tribunal held that if the intent was to use Rule 7, there would be no need for provisional assessment. The Tribunal emphasized that provisional assessment implies the non-availability of immediate confirmation for assessment but not the non-ascertainability of value.

4. Discounts and their Impact on Assessable Value:
The Revenue argued against allowing various discounts (bulk purchase, trade discount, and prompt payment) offered at the time of sale after clearance from the factory. The Tribunal noted that the Supreme Court in Purolator India Ltd and other cases had ruled that discounts known at the time of removal are eligible for abatement to arrive at the assessable value. Thus, there was no flaw in the lower authorities' findings regarding goods sold from the depot.

5. Place of Removal and its Definition:
The Tribunal clarified that the 'place of removal' is not the depot in the impugned clearances. Even if it were, the definition of 'time of removal' would render it irrelevant. The Tribunal emphasized that the 'place of removal' is relevant for accepting transaction value but not for ascertaining duties.

6. Continuation of Provisional Status for Unsold Goods:
The impugned order directed that unsold goods at the time of finalization of provisional assessment should retain their provisional status until sold. The Tribunal modified this, stating that if goods remain unsold beyond the statutory limit, they would fall under Section 4 (1)(b) of the Central Excise Act, 1944, and Rule 7 of the Valuation Rules.

Conclusion:
The Tribunal dismissed the Revenue's appeal and disposed of the cross-objection, affirming that the provisional assessment and adoption of transaction value were correctly handled by the lower authorities. The Tribunal also modified the order regarding the continuation of provisional status for unsold goods, aligning it with statutory requirements.

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