2024 (7) TMI 1397 - AT - Central Excise

Valuation of clearances - undervaluation of goods sold from their depot and consignment agents - period from 2006-07 to 2010-11 - applicability of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - recovery alongwith interest and penalties - HELD THAT - The appellant has transferred their goods to their depot at Delhi and six consignment agents located at various places from where the goods were sold to unrelated buyers. The appellant were following Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and discharged duty at the time of clearance from their factory. As per Rule 7 of the Rules, Central Excise Duty was paid at the factory gate at a price prevailing at the depot / consignment agents end at the same time or the time nearest to the time of removal of goods from their factory. The appellant has adopted the method of payment of duty as mentioned above in Rule 7 of the Central Excise Valuation Rules, for the clearances effected to their depot and consignment agents. Once duty has been paid at the time of clearance from their factory as provided under Rule 7, the appellant is not liable to pay any differential duty based on subsequent sale of the same goods from the depot or consignment agents, at a higher price to independent buyers - the ld. adjudicating authority has given a finding stating that the appellant has adopted Rule 7 of the Central Excise Valuation Rules and there is no evidence available on record to establish that the goods were sold at a different price from the depot or consignment agents end at the same time. Interest - HELD THAT - There is no other evidence available on record to establish that the appellant has not adopted the price prevalent at the depot / consignment agents at the same time or at the nearest time when they paid the duty at the time of clearance from their factory. Accordingly, it is held that the appellant has rightly paid duty as per Rule 7 of the Central Excise Valuation Rules, 2000 and there is no liability to pay any differential duty on account of difference in the value of clearance of the same goods from the depot / consignment agents subsequently to independent buyers - the appellant is liable to the differential duty only to the extent of Rs.23,052/- confirmed in the impugned order along with interest. Penalty - HELD THAT - The issue involved in this case related to valuation of clearances effected through the depot and consignment agents of the appellant. There is no suppression of fact with intention to evade payment of tax established in this case and hence, no penalty is imposable on account of confirmation of the above said demand. Appeal disposed off.

Issues involved:
Valuation of clearances through depot and consignment agents, application of Rule 7 of the Central Excise Valuation Rules, non-inclusion of insurance charges in assessable value, liability for payment of Central Excise Duty, adjustment of excess receipt and short payment, applicability of penalties.

Analysis:

1. Valuation of clearances through depot and consignment agents:
The appellant, engaged in manufacturing Aluminium extruded shapes, transferred goods to depot and consignment agents for sale to unrelated buyers. The Central Excise Duty was paid at the factory gate based on Rule 7 of the Central Excise Valuation Rules. The adjudicating authority confirmed a demand for Central Excise Duty on sales from consignment agents, alleging undervaluation. However, the authority did not consider cases where goods were sold at lower prices, leading to an appeal by the appellant.

2. Application of Rule 7 of the Central Excise Valuation Rules:
The appellant argued that duty payment under Rule 7 should be considered provisional, allowing adjustment of excess receipt and short payment. The appellate authority rejected this contention, leading to the appellant's further appeal. The appellant maintained that they paid the differential duty for discrepancies in prices of goods sold through consignment agents, following the prescribed procedure.

3. Non-inclusion of insurance charges in assessable value:
The adjudicating authority confirmed a demand for Central Excise Duty due to non-inclusion of insurance charges in the assessable value for sales from depots/consignment agents. The appellant acknowledged the error and agreed to pay the differential amount. The Tribunal upheld this demand, holding the appellant liable for payment along with interest.

4. Liability for payment of Central Excise Duty:
The Tribunal observed that the appellant correctly paid duty as per Rule 7, with no evidence to suggest otherwise. The appellant was deemed liable only for the confirmed differential duty amount, dismissing the need for additional payments based on subsequent sales from depot/agents at different prices.

5. Adjustment of excess receipt and short payment:
The appellant's argument for adjusting excess receipt and short payment under Rule 7 was not accepted by the appellate authority, leading to the appeal. The Tribunal held that the appellant's duty payment method aligned with Rule 7 requirements, absolving them of further liabilities beyond the confirmed amount.

6. Applicability of penalties:
The Tribunal found no evidence of intentional tax evasion or suppression of facts by the appellant, thereby ruling out the imposition of penalties. The order set aside penalties imposed on the appellant, considering the absence of deliberate wrongdoing.

In conclusion, the Tribunal upheld the demand for non-inclusion of insurance charges in the assessable value, set aside the remaining demand, and revoked the penalties. The appellant was held liable only for the confirmed differential duty amount, in accordance with Rule 7 of the Central Excise Valuation Rules.

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