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2019 (6) TMI 321 - AT - Central ExciseValuation - parts/components of pre-engineered buildings were being cleared by them to the site as also to their other own units located at various premises - related party transaction - quantification of the demand - HELD THAT - Admittedly, the Adjudicating Authority has relied upon the two reports given by the Range Superintendent which were not provided to the appellant. Their comments were never sought on the same. Further principals as enunciated in CAS-4 are required to be applied strictly and the same refers to the cost of the goods and not to value as reflected in the invoices - We further note that the bought out items purchased by the appellant cleared as such will not attract provisions of Rule 8 of the Valuation Rules. Inasmuch as the disputed issue relates to the correct quantification which can be done only at the level of Original Adjudicating Authority, we deem it fit to set aside the impugned order and remand the matter for fresh decision. Needless to say that the reports relied upon by the Adjudicating Authority would be provided to the assessee with an opportunity to them to put forth their case. Appeal allowed by way of remand.
Issues: Valuation of parts/components for erection and installation of prefabricated buildings, application of Rule 8 of Valuation Rules, quantification of demand, reliance on reports without providing to appellant, application of CAS-4 principles, treatment of bought-out items, availability of Cenvat Credit, revenue neutrality, limitation period, remand for fresh decision.
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a dispute regarding the valuation of parts/components used in prefabricated buildings. The Revenue contended that the valuation should be done under Rule 8 of the Valuation Rules at 110% of the cost of goods, leading to a demand of approximately ?3.63 crores. The appellant argued that the valuation was incorrectly based on invoice value rather than the cost of goods. They also highlighted that certain bought-out items were not subject to Rule 8. The Adjudicating Authority relied on reports by the Range Superintendent without providing them to the appellant, leading to a confirmed duty of around ?1.78 crores. The appellant disputed the reliance on these reports and asserted their entitlement to Cenvat Credit, claiming revenue neutrality based on previous Tribunal decisions and High Court rulings. The Tribunal noted that the valuation should adhere to CAS-4 principles based on the cost of goods, not invoice value, and that bought-out items cleared 'as such' were not covered by Rule 8. Consequently, the Tribunal set aside the order and remanded the matter for fresh decision, emphasizing the need for the appellant to have an opportunity to present their case on the reports and all issues, including the limitation period and revenue neutrality plea. The judgment highlighted the importance of applying CAS-4 principles for valuation, ensuring the cost of goods is considered, and not just invoice value. It also underscored the necessity for the appellant to be provided with reports relied upon by the Adjudicating Authority and given a chance to respond. The treatment of bought-out items under Rule 8 was clarified, indicating they may not fall under the same valuation rules. The appellant's claim of revenue neutrality and entitlement to Cenvat Credit based on previous legal precedents was acknowledged, warranting a fresh decision on quantification and limitation period. The Tribunal's decision to remand the case emphasized the appellant's right to raise all relevant issues for re-quantification, maintaining fairness and due process in the adjudication process.
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