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2024 (8) TMI 258 - AT - Central Excise100% EOU - abnormal delay of 17 years in adjudication of the impugned SCN - whether the Appellant had resorted to undervaluation of finished goods cleared by them in DTA? - whether the value of the DTA clearances made by a 100% EOU should be the transaction value at which the goods have been sold to domestic buyers or it has to be the value at which department demanded duty? - HELD THAT - The department has not produced any evidence in support of allegation of undervaluation with any documentary evidence such as DTA invoices issued by other manufactures showing more DTA sale price than the Appellant at the relevant period in the year 2000. It is evident that the Appellant has submitted the data and details in their application for DTA sale to the Development Commissioner. Based on submitted details and scrutiny of the other records the Learned Development Commissioner had granted permission for DTA sale. It is not the case of the department that the Appellant had supplied goods in DTA in excess of the permitted value. The DTA sale was made to several independent buyers on principal to principal basis. There is not a whisper of allegation that the sale price for such DTA sale was depressed or suppressed or manipulated in any manner whatsoever. In the instant case the department could not show any evidence that the transaction value declared by the appellant was not price actually paid by the buyer. There is also no documentary evidence produced by the revenue that the value adopted for DTA sale is a manipulated one. The sale has been made to the independent buyers and the price is the sole consideration of sale. In case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI 2000 (11) TMI 139 - SUPREME COURT the Hon ble Apex Court held that unless the special circumstances exists, the Transactional value cannot be rejected. In these circumstances, the transaction value declared by the appellant cannot be dis-regarded. In terms of the provisions of proviso to Section 3(1) of Central Excise Act, 1944, while the duty payable in respect of the goods cleared by a 100% EOU into DTA is the aggregate value of duties of customs on import of like goods into India, the assessable value for this purpose is to be determined under Section 14 of the Customs Act, 1962. Therefore, the assessable value of the goods cleared into DTA must be comparable with the contemporaneous import price of identical goods or similar goods into India in comparable quantity. However in the present matter there are no details in this regard produced by the department - the impugned order rejecting the DTA sale price of the appellant unit is not correct. It is settled law that when there is no duty demand, there could be no penalty. Therefore, the penalties imposed are liable to be set aside. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Delay in adjudication of show cause notices. 2. Differential duty demand based on alleged undervaluation of DTA sales. 3. Legitimacy of transaction value for DTA sales. 4. Imposition of penalties under Section 11AC of the Central Excise Act, 1944 and Rule 173-Q of the Central Excise Rules, 1944. Issue-wise Detailed Analysis: 1. Delay in Adjudication of Show Cause Notices: The appellant contended that there was an abnormal delay of 17 years in the adjudication of the show cause notices, which is against the settled law that adjudication must be done within a reasonable time. The appellant relied on several judgments to support this argument, including Meghmani Organics Ltd. Vs. Union of India and Apollo Tyres Ltd. Vs. Union of India, which emphasize the necessity of timely adjudication. 2. Differential Duty Demand Based on Alleged Undervaluation of DTA Sales: The adjudicating authority had confirmed the differential duty demands of Rs. 46,03,738/- and Rs. 6,27,839/- on the grounds that the appellant had undervalued their finished goods cleared into DTA. The authority based this on the finding that the average price indicated in the appellant's invoices was neither the assessable value nor the transaction value. The appellant argued that the DTA sales were made to independent buyers on a principal-to-principal basis, with no financial flow back or extra consideration, and hence the transaction value should be accepted. They cited judgments such as Eicher Tractors Ltd. Vs. Commissioner to support that transaction value cannot be disregarded unless "special circumstances" exist. 3. Legitimacy of Transaction Value for DTA Sales: The appellant argued that the adjudicating authority had wrongly resorted to Rule 8 and Rule 7A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, for valuing the subject DTA sales. They contended that Rule 8(2) specifically states that no value shall be determined on the basis of arbitrary or fictitious values. Additionally, Rule 7A is generally limited to cases where the buyer and seller are related, which was not the case here. The appellant's sales were at arm's length and to independent buyers, thus the transaction value should be accepted. 4. Imposition of Penalties Under Section 11AC of the Central Excise Act, 1944 and Rule 173-Q of the Central Excise Rules, 1944: The appellant argued that since the demand itself was erroneous and unsustainable, there was no basis for the imposition of penalties. They contended that neither of the show cause notices alleged willful misstatement or suppression of facts with an intention to evade duty, which are necessary conditions for invoking Section 11AC. They also argued that penalties under Rule 173Q cannot be imposed as they were governed by provisions in Chapter V-A, being a 100% Export Oriented Unit. The appellant cited several judgments, including Prince Muliplast Pvt. Ltd. Vs. Union of India, to support their argument that penalties were wrongly imposed. Judgment: The Tribunal found that the revenue had not produced any documentary evidence to support the allegation of undervaluation. It was noted that the appellant's DTA sales were made to independent buyers on a principal-to-principal basis, with no evidence of financial flow back or extra consideration. The Tribunal held that the transaction value declared by the appellant could not be disregarded in the absence of "special circumstances" as per the judgment in Eicher Tractors Ltd. v. Commissioner. The Tribunal also noted that the assessable value for goods cleared into DTA by a 100% EOU should be determined under Section 14 of the Customs Act, 1962, and must be comparable with the contemporaneous import price of identical goods. However, no such details were produced by the department. Therefore, the Tribunal concluded that the impugned order rejecting the DTA sale price of the appellant unit was incorrect. Consequently, the penalties imposed were also set aside. The appeal was allowed with consequential relief to the appellant as per the law. Pronouncement: The judgment was pronounced in the open court on 25.07.2024.
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