2017 (2) TMI 148 - AT - Central Excise

Valuation - goods cleared for export, and not exported - appellant have discharged duty on the lower price than the price declared in the AR4 - Held that - value of the goods which was meant for export was declared in AR4. The appellant have cleared the goods for export under bond and as per the terms of the bond duty confirmed is required to be recovered if the goods are not exported, therefore applying the terms of the bond the only duty which is payable on the price declared on the AR4 is recoverable. The price at which the goods were actually sold by the appellant cannot be considered as correct price for the purpose of discharging the excise duty - the adjudicating authority have applied the price of ₹ 6000 PMT however no basis of price was given. The said price is arbitrary and cannot be accepted. The appellant is required to discharge the duty on the price declared in the AR4 and not on the value as applied by the department in the adjudication order i.e. ₹ 6000 PMT - the demand is required to be re-quantified - appeal disposed off - decided partly in favor of appellant.

Issues:
- Discharge of excise duty on goods for export
- Permission for diversion of goods for home consumption
- Determination of excise duty value based on AR4 declaration
- Violation of Rule 173M and duty determination as per Section 4

Discharge of Excise Duty on Goods for Export:
The appellant cleared goods for export but due to order cancellation, the goods could not be exported. Subsequently, permission for diversion of goods for home consumption was requested and granted, but later withdrawn, leading to a show cause notice demanding excise duty valuing the goods at ?6000 per metric ton (PMT). The appellant discharged duty based on the transaction value at which the goods were sold from the port. The adjudicating authority confirmed the demand at ?6000 PMT, aggrieving the appellant.

Permission for Diversion of Goods for Home Consumption:
The appellant argued that goods were cleared under bond with AR4 without payment of duty, and the clearance value was declared in AR4. The appellant contended that duty confirmation should be based on the value declared in AR4, not on any other value. The appellant highlighted that the goods were cleared at a price lower than the AR4 value, and duty was paid at the time of sale. Citing relevant judgments, the appellant emphasized that duty should be demanded based on the AR4 value for goods cleared for export but not exported.

Determination of Excise Duty Value Based on AR4 Declaration:
The Revenue contended that the appellant violated Rule 173M by not bringing the goods to the factory after permission for diversion was withdrawn. They argued that duty should be determined as per Section 4, and the duty discharged by the appellant was incorrect. The lower authority's decision to confirm the demand was supported by the Revenue.

Violation of Rule 173M and Duty Determination as per Section 4:
After considering both sides' submissions, the tribunal found that the duty should have been discharged based on the price declared in the AR4 for goods meant for export. The tribunal emphasized that duty payable as per the bond terms is recoverable if goods are not exported. The adjudicating authority's application of ?6000 PMT without a basis was deemed arbitrary. Referring to relevant judgments, the tribunal held that duty payment should align with the AR4 declaration for goods not exported. Consequently, the demand was required to be re-quantified based on the AR4 value, and the appeal was partly allowed. The adjudicating authority was directed to re-quantify the demand accordingly.

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