2018 (3) TMI 340 - AT - Central Excise

Valuation - pressure cooker parts - Sale from depot - Department was of the view that since the goods were being sold from the depots and the appellant have not produced any evidence at the time of removal, what was the price at which the goods were being sold from the depots, they are liable to pay duty on the price mentioned in the invoices for removal from the factory without any abatement. Held that - Since in this case, the goods were being sold from the depots, it is the depot which is to be treated as the place of the removal and as per the provisions of Section 4, the duty was required to be paid at the time of removal from the factory on the value of the goods at the depots, while the duty has been paid by the appellant on price equal to MRP minus 35% at the time of removal from the factory, There is no evidence produced by the Department that at the time of removal, the goods were being sold from the depots at the full MRP price without any abatement. The appellant is required to pay duty at the value, the price on which the goods have been cleared from the depots i.e. the assessable value and the appellant had paid duty accordingly. Appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of pressure cooker parts for duty assessment

Analysis:
The appellant, a manufacturer of pressure cookers and parts thereof, faced a dispute regarding the valuation of pressure cooker parts for duty assessment during a specific period. While pressure cookers were assessed under Section 4A of the Central Excise Act, the parts were assessed under the main Section 4. The appellant cleared parts to depots for further sale, paying duty on the price equal to declared MRP less 35%. The Department contended that duty should be paid on the price mentioned in the invoices for removal from the factory without any abatement. Two show cause notices were issued for recovery of differential duty, interest, and penalties. The Joint Commissioner confirmed the duty demands and imposed penalties, which were upheld by the Commissioner (Appeals).

The appellant argued that the parts were cleared at MRP less 35% and sold at MRP less 41.33%, including various discounts and taxes. They claimed that discounts mentioned in the invoices were passed on to buyers. The Department sought to charge duty on the MRP price, which was incorrect. The Commissioner (Appeals) relied on a report without providing a copy to the appellant, leading to an adverse order. The appellant contended that duty should be based on the value at which goods were cleared from depots, as they had paid duty accordingly.

The Tribunal analyzed the case, emphasizing that duty should be paid on the value of goods cleared from depots, not the full MRP price. The Department failed to prove that goods were sold from depots at full MRP without any abatement. The Commissioner (Appeals) did not consider the average discount given or whether the total discount and taxes were less than the claimed abatement. The Tribunal concluded that duty should be paid based on the value at which goods were cleared from depots, considering discounts and taxes.

Therefore, the Tribunal held that the impugned orders had no merits and set them aside, allowing the appeals with consequential relief.