2020 (6) TMI 347 - AT - Central Excise

Valuation - goods transferred to sister concerns when there is also sale price of the same goods to independent consumers through service branches by the respondent herein - allegation that since there is a sale to independent buyers, the same value must also be adopted to the goods transferred by them to their sister concerns - HELD THAT - When there was a concept of normal price (prior to 2000), a price list would be filed by the assessee and approved by the officers which would show the normal price after appropriate calculations including deductions on account of trade discount, transportation etc. After 2000, the concept which has been introduced was that of transaction value. Therefore, if the same goods are sold by the same assessee at different prices on different dates or to different customers, each such price would be the transaction value for the purpose of determining the Central Excise duty. In this changed law, a doubt had arisen in the minds of the officers as to how deal with the cases where there is sale to independent buyers as well as sale of the same product to sister concerns by the assessee. This has been clarified by the CBEC in the aforesaid Circular categorically holding that the price at which goods are sold to independent buyers cannot be applied to determine the value for sale to related persons. The impugned order is correct and causes for no interference - Appeal dismissed - decided against Revenue.

Summary

Issues:
Dispute regarding valuation of goods transferred to sister concerns in relation to sales to independent consumers.

Analysis:
The appeal was filed by the Revenue challenging the Order-In-Original dated 09.09.2010. The issue revolved around the valuation of goods transferred to sister concerns by the respondent, who also sold the same goods to independent buyers. The Revenue alleged that the value of goods transferred should be the same as the sale price to independent buyers. The Ld. Commissioner, in the impugned order, dropped the proceedings initiated by the show cause notice. The Revenue contended that the demand should have been confirmed based on sales to independent buyers forming the basis for assessing goods transferred to sister concerns.

The respondent's counsel referred to CBEC's Circular No. 643/34/2002-CX, which clarified valuation rules for goods sold partly to related persons and partly to independent buyers. The circular specified that the transaction value for sales to unrelated buyers cannot be adopted for sales to related buyers. The counsel argued that their case aligned with this clarification, and the Commissioner correctly followed it in the impugned order. The Departmental representative, however, argued that the price of sale to independent buyers should be adopted for transfers to related persons as well.

The Tribunal analyzed Section 3 of the Central Excise Act, highlighting the shift from normal value to transaction value for valuation post-2000. The Circular addressed concerns about valuing goods sold to independent buyers and related persons differently. The Tribunal upheld the impugned order, stating that the Commissioner correctly followed the Circular. Consequently, the impugned order was deemed correct, and the Revenue's appeal was rejected.

In conclusion, the Tribunal upheld the impugned order, emphasizing the distinction in valuation for goods sold to unrelated buyers and related persons based on the Circular's guidance. The decision provided clarity on valuation rules in cases involving sales to independent buyers and transfers to related parties, ensuring consistent application of valuation principles under the Central Excise Act.