2005 (4) TMI 194 - AT - Central Excise

Summary

Issues: Valuation of goods cleared by an EOU to DTA; Compliance with Circulars and Board's instructions; Comparison of clearances with other units; Application of Valuation Rules; Validity of demand under Section 28 of Customs Act, 1962.

In this judgment by the Appellate Tribunal CESTAT, Mumbai, the appellant, an EOU engaged in manufacturing sheet glass, cleared trial production into D.T.A. on payment of duty. The department alleged undervaluation of clearances based on the cost of production certified by a Chartered Accountant. The differential duty demand was made under Sections 68 & 28 of the Customs Act, 1962. The Tribunal directed the Commissioner to follow Circulars of the Board while determining the value of goods cleared to DTA. However, the Commissioner relied on prices of other units, which was deemed inappropriate as the goods and manufacturing status were different. The Tribunal held that the Commissioner must adhere to Board's instructions unless there is a contrary law laid down by the Supreme Court, which was not the case here, rendering the Commissioner's order unsustainable.

Moreover, the Tribunal emphasized that the valuation comparison based on prices of different goods cleared by other units was flawed. The Tribunal highlighted that the resort to Rule 8 of the Valuation Rules, based on costing, was not an approved method under the Customs Act, 1962. As the valuation was not in line with Section 3(a) proviso or Valuation Rules, the Tribunal found no justification to deviate from the transaction value as per the appellant's invoices. Consequently, without delving into case law and the validity of the demand under Section 28 of the Customs Act, 1962, the Tribunal set aside the order and allowed the appeals, as there was no reason to dispute the values at which the goods were cleared by the appellant to the DTA. The appeals were thus disposed of accordingly.