2014 (9) TMI 739 - AT - Central Excise

Rectification of mistake - Scope of SCN - Valuation of goods - Held that - One of the grounds taken for this allegation was that there were additional considerations flowing from M/s. Legrand to M/s. DIPL by way of free supply of moulds, dyes, certain equipments, free supply of R&D material, provision of manpower to supervise quality control and so on. Thus the allegation that additional consideration flowed from Legrant to M/s. DIPL was clearly spelt out in the show cause notice in several paragraphs in the show cause notice. It was further alleged that in view of these considerations, DIPL was incurring a loss of ₹ 12 lakhs per year thus keeping the price below the cost of production. Thus, in the show cause notice the charge of undervaluation against the applicant-assessee and the grounds therefore were clearly spelt out. Such consideration ought to be included in the assessable value under Rule 6 of the Central Excise Valuation Rules. Mere non-mention of Rule in the show cause notice does not vitiate the show cause notice. One of the decisions relied upon for inclusion of the additional consideration in the assessable value of the goods sold by DIPL is the apex Court s decision in the case of Fiat India Ltd. 2012 (8) TMI 791 - SUPREME COURT . In the said case, the hon ble Apex Court held that if goods are sold below cost, resulting in artificial depression in prices such prices are not normal price for the purpose of levy of excise duty. It is a settled position in law that when the apex Court lays down the law, the same has to be applied with full force in similar facts obtaining in other cases. In these circumstances, the argument that this Tribunal committed an error merits rejection. The order was passed by the Tribunal on 14th November 2013 when the said circular was not in existence at all. Therefore, when the circular was not in existence, we do not understand how the order passed by the Tribunal could be faulted on the basis of the said circular. In any case, the circular was issued by the Board which is not binding on this Tribunal. Matter remanded back - Rectification denied.

Summary

Issues Involved:
Rectification of mistake application regarding valuation in transactions between two companies, invocation of Rule 6 of Central Excise Valuation Rules, demand confirmed under extended period, penalties on co-noticees, reliance on CBEC circular, scope of show cause notice, inclusion of additional considerations in assessable value, relevance of various case laws, time-barred demand, and applicability of Revenue's appeal.

Analysis:

Rectification of Mistake Application:
The applicant filed a rectification of mistake application against the Tribunal's order, arguing that the Tribunal exceeded the show cause notice's scope by determining the valuation in transactions between two companies. The applicant contended that the Tribunal's findings were incorrect as Rule 6 was not invoked in the show cause notice. The applicant also sought the dismissal of penalties on co-noticees based on a CBEC circular.

Scope of Show Cause Notice:
The Revenue argued that the Tribunal's findings align with the show cause notice's content, which clearly stated additional considerations flowing from one company to another. The Revenue emphasized that the charge of undervaluation was evident from the show cause notice, justifying the inclusion of additional considerations in the assessable value under Rule 6.

Relevance of Case Laws:
The Tribunal rejected the applicant's reliance on case laws, stating that the facts in those cases were not identical to the present matter. The Tribunal highlighted a case involving related parties where the Supreme Court directed re-examination of including additional considerations in assessable value, similar to the current scenario.

Time-Barred Demand and CBEC Circular:
The Tribunal dismissed the argument that the demand should be time-barred based on a CBEC circular issued after the Tribunal's order. The Tribunal clarified that the circular's absence during the order's pronouncement made it irrelevant for review purposes.

Applicability of Revenue's Appeal:
Regarding the applicability of the Revenue's appeal against co-noticees, the Tribunal remanded the matter to the adjudicating authority for fresh consideration. The Tribunal stated that the other appellants could raise their contentions before the adjudicating authority if desired.

Conclusion:
After considering the submissions from both sides, the Tribunal concluded that there was no merit in the rectification of mistake application. The Tribunal dismissed the application, emphasizing the alignment of its findings with the show cause notice and rejecting the arguments related to case laws, time-barred demand, and the applicability of the Revenue's appeal against co-noticees.