2019 (7) TMI 558 - AT - Central Excise

Valuation - transaction value - place of manufacture versus place of removal - inclusion of cost of services rendered by the appellant at the quick matching centre as well as the packing surcharge recovered from customers on clearance from the quick matching centre, in assessable value - printing ink manufactured at their various factories are brought to the quick matching centre (QMC) at Lower Parel, Mumbai on stock transfer and, after manually inter-mixing of concentrates and additives to cater to the customized requirements of printers, are dispatched to the customers. HELD THAT - The provisions of section 4(3)(c) and 4(3)(d), which are definitions, are not a substitute authority for imposing duties or computing assessable value for determination of liability. They are intended to be superimposed on the corresponding words in section 4(1) of Central Excise Act, 1994 for ascertaining conformity of the transaction with scope for accepting the transaction value before resort to one or the other of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. In the absence of invoking of such provision, in the show cause notice or reference to in the orders of the authorities below, we are unable to consider the submission made by Learned Authorised Representative - the differential duty liability and interest thereon have been duly discharged. Penalty - HELD THAT - In the light of the faultlines that have surfaced, the inability of the competent authorities to isolate the breach that would lead to invoking of the alternative value, the discharge of duty liability before the issue of show cause notice and the absence, in the show cause notice, of any reference to, or evidence of, the ingredients that justify the invoking of the penal provisions in section 11AC of Central Excise Act, 1944, the imposition of penalty is without authority of law. Appeal allowed in part.

Summary

Issues Involved:
- Duty liability under section 11AB of Central Excise Act, 1944
- Imposition of penalty under section 11AC of Central Excise Act, 1944

Analysis:

Issue 1: Duty Liability under Section 11AB of Central Excise Act, 1944
The case involved an appeal against an order confirming duty liability, interest, and penalty imposed by the Commissioner of Central Excise. The appellant, a printing ink manufacturer, transferred products to a quick matching center for customization before dispatching to customers. The central excise authorities argued that the assessable value for duty computation should include costs incurred at the quick matching center and packing surcharge recovered from customers. A show cause notice was issued, alleging duty evasion based on value addition and packing surcharge recovery. The Tribunal noted the arguments presented by both parties but found discrepancies in the authorities' narrative and lack of specific allegations in the show cause notice. The Tribunal emphasized the need for a prescribed process by a competent authority to determine duty differentials accurately. Ultimately, the duty liability and interest were discharged, but the Tribunal highlighted procedural flaws in the authorities' approach.

Issue 2: Imposition of Penalty under Section 11AC of Central Excise Act, 1944
The Tribunal scrutinized the imposition of penalties upheld in the impugned order. Due to identified fault lines in the case, including the failure to isolate breaches leading to alternative value invocation, the discharge of duty liability before the show cause notice, and the absence of justifying elements in the notice for invoking penal provisions, the Tribunal concluded that the penalty imposition lacked legal authority. Consequently, the Tribunal set aside the penalty order and allowed the appeal on this aspect.

In conclusion, the Tribunal's judgment addressed the duty liability issue, highlighting procedural discrepancies, and the imposition of penalties, emphasizing the absence of legal justification. The decision set aside the penalty order, underscoring the importance of adherence to legal procedures and evidence in excise duty matters.