2014 (10) TMI 633 - AT - Central Excise

Waiver of pre deposit - manufacture of Lubricating Oils of different grades - Valuation of goods - Held that - According to Section 4(1)(a) of the Central Excise Act, 1944, value shall, in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of goods are not related and the price is the sole consideration for the sale, be the transaction value. It is thus evident from the above that the value is to be determined with reference to the value prevailing for delivery at the time and place of removal. In any other case, the value be determined in such manners, as may be prescribed. Central Excise Valuation (Determination of Price of Excisable Goods), Rules, 2000 has been framed for this purpose. Value as per Valuation Rules is defined to mean, the value referred to Section 4 of the Act. Accordingly, we are of the opinion that even for the purpose of Rule 8 of the Valuation Rules, cost of manufactured goods is to be taken for calculating the value as the said cost at the time and place of removal of the goods. As such, the assessee ought to have taken the cost of production prevailing during the relevant period of removal of the said goods to their sister units. According to Rule 7 of the Central Excise Rules, 2002, where the assessee is unable to determine the value of excisable goods, they may request the jurisdictional Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excises, as the case may be, in writing/giving reasons for payment of duty on provisional basis. However, in the case, the assessee has not done so, in spite of their inability to determine the correct value. Rule 7 also provides that in case of excess payment, the assessee is entitled to a refund, consequent to an order of final assessment. No financial hardship is pleaded - Partial stay granted.

Summary

Issues: Application for waiver of pre-deposit of duty and penalty under Rule 27 of Central Excise Rules, 2002.

Analysis:
1. The applicant, engaged in manufacturing Lubricating Oils, sought waiver of pre-deposit of duty and penalty imposed under Rule 27. They determined the value of goods based on Cost Construction Method and paid duty accordingly. The Department contended that data for the relevant period should have been used instead of earlier data. The applicant argued that resorting to provisional assessment was not necessary as the issue was revenue-neutral due to CENVAT Credit availability for sister units.

2. The Revenue supported the Adjudicating Commissioner's findings. The Tribunal examined Section 4(1)(a) of the Central Excise Act, emphasizing value determination based on the prevailing cost at the time and place of removal. The Tribunal noted that the cost of production for goods transferred to sister units should have been based on the relevant period. Rule 7 of Central Excise Rules allows for provisional assessment upon inability to determine correct value, but the applicant did not follow this procedure.

3. The Tribunal found no merit in the applicant's arguments, directing them to make a pre-deposit of 25% of the duty within eight weeks. Failure to comply would lead to dismissal of the Appeal. The balance dues would be waived upon deposit, and recovery stayed during the Appeal's pendency. The decision was pronounced in court.