1998 (11) TMI 289 - AT - Central Excise

Summary

Issues: Valuation of goods cleared by EOU to DTA, Differential duty demand, Penalty imposition

Valuation of Goods Cleared by EOU to DTA:
The judgment revolves around the valuation of sheet glass cleared by the appellants, who are 100% Export Oriented Units (EOU), to the Domestic Tariff Area (DTA). The Commissioner of Central Excise alleged under-declaration of value by the appellants and demanded differential duty based on the cost of production provided by the appellants' Chartered Accountant. The appellants contended that they were conducting trial production and selling at a lower price for market testing purposes. They argued that the invoice price should be accepted as transaction value, citing a Board Circular and comparable prices charged by competitors. The Department argued that the Commissioner based the assessable value on the appellants' cost of production without considering the Board circular.

Differential Duty Demand:
The Commissioner initiated proceedings based on the alleged under-declaration of value by the appellants, leading to the demand for differential duty. The appellants justified the lower selling price as part of market testing for their product, emphasizing that the Department did not question the invoice price's accuracy. They also presented evidence of comparable prices by competitors. The Board's circular emphasized accepting invoice price as transaction value for assessment, highlighting the differences between imported goods and those manufactured by EOUs. The judgment emphasized the relevance of the Board's criteria for assessment, indicating a need for re-determination of the assessable value based on the circular.

Penalty Imposition:
Regarding the penalty imposed on the appellants, the judgment concluded that the penalties were not justified as the original clearances to DTA were based on documents provided by the appellants, including the cost of production. Since the differential duty demand relied on the same documents, the imposition of penalties was deemed unnecessary. The judgment remanded the appeals for re-determining the assessable value in alignment with the Board circular's methodology.