2018 (9) TMI 163 - AT - Central Excise

Valuation - sale of goods through Depot - case of the department is that the value which was charged to the customer for sale of goods from depot shall be taken as transaction value - Held that - Since the Ld. Counsel does not press on the issue of cum duty price the demand of differential duty upheld by the Ld. Commissioner (Appeals) is upheld. Penalty u/s 11AC - benefit of reduced penalty - Held that - The board in the CBEC Circular No. 208/07/2008-CE-6 dated 22.05.2008 directed the adjudicating authority that it is necessary to give option in writing in the order in original as regard reduced penalty of 25% in terms of proviso of Section 11AC - penalty reduced to 25% under Section 11AC subject to payment of differential duty interest and 25% penalty within a period of 30 days from receipt of this order. Penalty u/r 26 on director Sh. K.K. Choudhary - Held that - The director Sh. K.K. Choudhary could not have been implicated as the issue involved is interpretation of valuation provision - Penalty set aside. Appeal allowed in part.

Summary

Issues Involved:
Valuation of goods for excise duty - Differential duty calculation - Penalty imposition under Section 11AC - Extension of 25% penalty option - Director's liability for penalty under Rule 26.

Valuation of Goods for Excise Duty:
The case involved a dispute regarding the valuation of goods for excise duty purposes. The appellant, engaged in the manufacture of computer systems, sold products through their depot at a higher price than the declared price at the time of goods clearance from the factory. The department contended that the price charged at the depot should be considered the transaction value for excise duty calculation. The adjudicating authority confirmed the demand and penalty, which was upheld by the Commissioner (Appeals). The appellant appealed to the Tribunal, eventually leading to a reduction in the demand of the differential duty and penalties by the Commissioner (Appeals).

Penalty Imposition under Section 11AC:
The appellant contested the penalty imposed under Section 11AC, arguing that the adjudicating authority did not provide the option of a reduced 25% penalty as required by law. Citing relevant judgments, the Tribunal acknowledged the necessity of extending this option in writing. Consequently, the Tribunal reduced the penalty to 25% under Section 11AC, subject to payment of the differential duty, interest, and the reduced penalty within 30 days. The Tribunal also considered the circumstances and set aside the penalty imposed on the director under Rule 26, noting that the issue primarily involved interpretation of valuation provisions.

Director's Liability for Penalty under Rule 26:
The Tribunal found that the director should not be held liable for the penalty under Rule 26, given that the issue primarily revolved around the interpretation of valuation provisions for excise duty calculation. Therefore, the penalty imposed on the director was set aside. The Tribunal partially allowed the appeal of the company and fully allowed the appeal filed by the director.

This judgment demonstrates the importance of correctly valuing goods for excise duty purposes, ensuring the proper imposition of penalties, and highlighting the necessity of providing statutory options for reduced penalties as required by law.