2017 (4) TMI 842 - AT - Central Excise

100% EOU - valuation - clearance of goods from 100% EOU Unit to DTA - Revenue was of the view that the cost of copper and brass ingots cleared by the appellant are less than the value of the scrap prevailing in the market during the point of time - Held that - the issue is covered by the judgment and order of this Tribunal in the case of Indo Micronutrients Pvt. Ltd. 2017 (3) TMI 650 - CESTAT NEW DELHI , where it was held that a comparison cannot be made between the ingots manufactured from ore and the ingots manufactured from scrap. Both will vary in quality and value - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of goods cleared by 100% EOU to DTA and duty liability.

Analysis:
The appeal was against Order-in-Appeal No.IND-I/331/2009 concerning the valuation of goods cleared by the appellant from their 100% EOU Unit to DTA and the duty liability thereon. The appellant, engaged in manufacturing copper and brass ingots from purchased scrap, discharged duty liability on transaction value, which the Department considered low compared to London Metal Exchange rates. The Revenue argued that the cost of ingots was lower than the prevailing scrap market value. The appellant contended that the transaction value was the amount received, citing a previous Tribunal judgment in a similar case. The issue revolved around determining the appropriate value for clearances to DTA from the 100% EOU.

The Tribunal examined the previous judgment in the case of Indo Micronutrients Pvt. Ltd. and found that the redetermination of value for excise duty was based on London Metal Exchange prices, with no evidence of manipulated transactions. The Tribunal noted that comparing prices in LME to domestic market sales was not straightforward, especially considering differences in quality and value between ingots manufactured from ore and scrap. Regarding brass ingots, the Tribunal criticized the adoption of customs duty tariff value for determining domestic market prices, emphasizing that the tariff value did not necessarily reflect the importer's raw material cost. The Tribunal highlighted the importance of contemporaneous import details and evidence to support claims of undervaluation, referencing relevant Supreme Court decisions.

Based on the precedent set in the Indo Micronutrients Pvt. Ltd. case, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the transaction value adopted by the appellant could not be deemed incorrect solely based on higher LME prices or tariff values. The Tribunal concluded that the impugned order was not legally sustainable, granting the appellant consequential relief as applicable.