2021 (10) TMI 434 - AT - Central Excise

Extended period of limitation - Method of Valuation - section 4 or section 4A of Central Excise Act or not - valuation of goods on the basis of MRP less prescribed abatement or not? - demand of differential duty amount by valuing the goods under Section 4 of the Act on the ground that the goods in bulk packs of 210 Ltr and 180 Ltr. were meant for industrial sale and not retail sale - HELD THAT - When there are clear directions from the excise authorities from Chennai and Mumbai Commissionerate to value the goods under Section 4A in respect of factories located in respective jurisdictions, there cannot be any reason to hold in the instant case that the appellant s Kolkata factory, which is owned by the same legal entity, has deliberately resorted to value the goods under Section 4A as against Section 4 of the Act. Further, no evidence has been adduced to show that the appellant has wilfully resorted to value the goods under Section 4A to evade payment of demanded duty amount. Extended period of limitation - HELD THAT - A general averment has been made in the SCN that the appellant suppressed the actual assessable value to justify invocation of extended period of limitation. The impugned order cannot be sustained and the same is set aside - Since the issue decided on limitation, we refrain from making any observations in respect of the merits of the case - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Valuation of goods under Section 4A of the Central Excise Act, 1944 for MRP valuation, dispute over extended period of limitation, applicability of decision in a similar case, relevance of excise authorities' directions on valuation.

Analysis:

Issue 1: Valuation of Goods under Section 4A
The appellant, engaged in manufacturing lubricating oil and greases, valued goods under Section 4A for MRP valuation. The dispute arose when a Show Cause Notice proposed valuation under Section 4, claiming goods in bulk packs for industrial sale were not covered under Section 4A. The appellant argued goods should be valued under Section 4A based on MRP and abatement. The Tribunal noted the goods were notified under Section 4A and MRP was affixed on packages, supporting the appellant's valuation method. The Departmental Representative contended the decision in a previous case was not applicable, emphasizing the lack of product size declaration. Ultimately, the Tribunal upheld the appellant's valuation under Section 4A.

Issue 2: Dispute Over Extended Period of Limitation
The appellant disputed the Show Cause Notice by invoking the extended period of limitation. The appellant's advocate argued that other units of the appellant had been valued under Section 4A, citing a decision in favor of a sister unit at Chennai. The Tribunal considered the Chennai Commissionerate's order directing valuation under Section 4A for similar goods, indicating no deliberate evasion by the appellant. The Tribunal found no evidence of willful evasion or suppression by the appellant, leading to the dismissal of the extended period of limitation invoked by the Department.

Issue 3: Applicability of Decision in a Similar Case
The Tribunal analyzed a decision by the Chennai Commissionerate regarding valuation under Section 4A for goods intended for industrial use, similar to the appellant's case. The Chennai Commissionerate's order, guided by the Mumbai Commissionerate, supported the appellant's valuation under Section 4A. The Tribunal emphasized that clear directives from excise authorities in Chennai and Mumbai for other units of the appellant reinforced the legitimacy of the appellant's valuation method in Kolkata. The Tribunal set aside the impugned order, considering the consistency in valuation across different units.

Issue 4: Relevance of Excise Authorities' Directions on Valuation
The Tribunal highlighted the significance of excise authorities' directions on valuation, emphasizing the consistency in valuation methods across different units of the appellant. The Tribunal noted that when authorities from Chennai and Mumbai Commissionerate directed valuation under Section 4A for goods, there was no basis to question the appellant's Kolkata unit's valuation under the same section. The absence of evidence supporting willful evasion or suppression further strengthened the Tribunal's decision to set aside the impugned order.

In conclusion, the Tribunal allowed the appeal, setting aside the impugned order based on limitations and refrained from commenting on the case's merits. The decision underscored the importance of consistent valuation practices guided by excise authorities and rejected claims of willful evasion or suppression by the appellant.