2018 (6) TMI 322 - AT - Central Excise

Valuation - Revenue found that the valuation of the goods has not been determined in conformity with the guidelines and the provisions of the CAS 4 standards issued by the Institute of the Costs & Work Accountants of India - demand of differential duty - Revenue Neutrality - Held that - It is absolutely clear that it was only after the enquiry by the revenue that the correct basis of valuation of goods came to the light. Had it not been the enquiry of the revenue, the actual assessable value of the goods would have remained unnoticed - In the present case when the Appellant were very well aware of the fact that they are liable to pay duty, they should have voluntarily come forward to pay duty. There is no instance which can point out that the Appellant were not aware of duty to be paid and the method of valuation of goods. However having aware of the same and then too non payment of duty cannot lead to dropping of demands on ground of revenue neutrality. The demands cannot be set aside on grounds of revenue neutrality or time bar. Further there is no reason to waive the penalty as it is not the case of non payment of duty due to lack of knowledge on the part of Appellant - appeal dismissed - decided against appellant.

Issues: Valuation of goods for excise duty, compliance with CAS-4 standards, differential duty payment, revenue neutrality, time bar for demand, imposition of penalty.

Valuation of Goods for Excise Duty:
The case involved the Appellant clearing crank cases by paying duty to their own factory for use in manufacturing finished products. The Appellant determined the assessable value of the crank cases based on Central Excise Valuation Rules. However, the revenue found discrepancies in the valuation not complying with CAS-4 standards and CBEC instructions. The Appellant submitted revised cost certificates after an audit, leading to the discovery that duty was paid on a lesser assessable value. The revenue issued notices demanding differential duty, alleging deliberate misdeclaration of values to evade duty.

Compliance with CAS-4 Standards:
The Appellant's valuation method was scrutinized for not adhering to CAS-4 standards, which led to the revenue discovering the underpayment of duty. Despite submitting revised cost certificates, discrepancies in material costs and other factors were found between different certificates for the same financial year, indicating incorrect valuation methods used by the Appellant.

Differential Duty Payment and Revenue Neutrality:
The Appellant argued that the duty paid on crank cases was offset by credits available to their sister concern, claiming revenue neutrality. They cited previous Tribunal orders where demands were dropped. However, the Tribunal emphasized that each case's revenue neutrality must be assessed independently, and in this case, the duty liability remained with the Appellant due to non-compliance with valuation rules and deliberate misdeclaration.

Time Bar for Demand and Imposition of Penalty:
The Appellant contended that the demand was time-barred as the revenue was aware of the cost determination method since 2003. They also argued against penalty imposition due to alleged revenue neutrality and time limitation. The Tribunal rejected these arguments, stating that the correct valuation came to light only after revenue's inquiry in 2006, and the Appellant's awareness of duty liability and valuation rules negated claims of lack of knowledge. The Tribunal upheld the demands, rejecting appeals and penalties, as the Appellant failed to demonstrate justifiable reasons for interference.

In conclusion, the Tribunal upheld the revenue's demands for payment of differential duty, dismissing the Appellant's claims of revenue neutrality, time bar, and penalty waiver due to non-compliance with valuation rules and deliberate misdeclaration of assessable values.

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