2024 (8) TMI 315 - AT - Central Excise

Fixation of special value addition rate for the Financial Year 2010-11 - area-based exemption under N/N. 32/99-CE dated 08.07.1999 as amended by N/N. 17/2008-CE dated 27.03.2008 and N/N. 31/2008-CE dated 10.06.2008 availed - whether fixation of special rate can be rejected merely because the sale value is arrived at from the audited financial statements of the Company by apportioning the same to respective units on the basis of their stock transfer ratio or not? HELD THAT - This issue is no longer res integra as this Tribunal has decided the same issue in the case of M/S HINDUSTAN UNILEVER LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX DIBRUGARH 2023 (10) TMI 991 - CESTAT KOLKATA - in the decision cited the methodology for arriving at the sale value from the audited financial statements of the company by apportioning the same to the respective units on the basis of stock transfer ratio has been accepted and special rate has been fixed accordingly. Therefore by relying on the above decision it is held that the impugned orders rejecting the special rate are legally not tenable and accordingly the same is set aside. The impugned order set aside - appeal allowed.

Summary

Issues:
- Appeal against rejection of special rate fixation for Financial Year 2010-11 based on methodology for sale value calculation.
- Applicability of area-based exemption under Notification No. 32/99-CE dated 08.07.1999.
- Rejection of special rate applications by the Commissioner based on sale value calculation methodology.
- Comparison with precedent case of Hindustan Unilever Ltd. v. Commissioner of Central Excise & Service Tax, Dibrugarh.

Analysis:
1. Special Rate Fixation for Financial Year 2010-11:
- The appellant filed two appeals against the rejection of special rate fixation for the Financial Year 2010-11. The appellant, engaged in manufacturing repellents and cleaning preparations, applied for special rates based on actual value addition higher than specified percentages. The Commissioner rejected the applications, citing methodology discrepancies in determining sale value by apportioning total company value.

2. Applicability of Area-Based Exemption:
- The Appellant availed area-based exemption under Notification No. 32/99-CE dated 08.07.1999, as amended by subsequent notifications. This exemption was relevant to the issue of special rate fixation for the Financial Year 2010-11.

3. Rejection of Special Rate Applications:
- The Commissioner rejected the special rate applications for the Financial Year 2010-11, as the appellant calculated sale value by apportioning total company value based on central excise duty paid by each unit. This methodology was not accepted, leading to the rejection of the special rate applications.

4. Comparison with Precedent Case:
- The appellant cited a precedent case, Hindustan Unilever Ltd. v. Commissioner of Central Excise & Service Tax, Dibrugarh, where a similar methodology for sale value calculation was accepted by the Tribunal. The appellant argued that the rejection of special rate fixation based on the sale value calculation methodology was legally untenable.

5. Decision:
- The Tribunal observed the methodology adopted by the appellant for special rate fixation in the Financial Year 2010-11 and compared it with the precedent case. Relying on the precedent decision, the Tribunal set aside the impugned orders rejecting the special rate applications and allowed the appeals filed by the appellant. The judgment emphasized the legality of the methodology used for sale value calculation in determining special rates.

This detailed analysis covers the issues raised in the legal judgment regarding the rejection of special rate fixation for the Financial Year 2010-11 and the applicability of area-based exemption, along with a comparison with a relevant precedent case to support the decision.