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2022 (5) TMI 1244 - AT - Central ExciseValuation of excisable goods - genuine factory gate price can be considered as normal price under Section 4(1)(a) of the Act or not? - is the price only in respect of any particular buyer or particular class of buyers as per proviso (i) to Section 4(1)(a) or not? - applicability of section 4(1)(a) of the Act to all buyers, has the value been correctly determined as per Section 4(1)(b) with respect to allowing all the eligible abatements from the depot price - extended period of limitation - penalty. HELD THAT -Section 4(1) of the Act as applicable during the relevant period does not levy excise duty on the price but on the value and such value shall be a deemed value. If there is a normal price as per Section 4(1)(a), it shall be the deemed value, else it shall be the value determined as per 4(1)(b). Thus, as long as there is price under section 4(1)(a), it will be the value for determining the excise duty and not any other price or transaction value. The proportion of the goods sold under 4(1)(a) to the total sales is irrelevant. For instance, even if only 1% of the goods are sold as per the value under section 4(1) (a), such price shall be deemed to be the value for all clearances by the assessee. A shrewd assessee can sell a small quantity of the goods at a relatively lower price to independent buyers at the factory gate fulfilling all the conditions required under section 4(1)(a) and the rest through other methods. Once the 4(1)(a) price is available, other sale prices do not matter. According to the Revenue the Commissioner has wrongly recorded that there is a factory gate price, while according to the assessee, there was a price under section 4(1)(a). Further, according to the Revenue, during the material time, the appellant sold goods from the factory gate only to four categories of persons viz., individuals, company employees, Jaipur and Bikaner Trading Company and Public Sector Undertakings. Of these, only seconds/rejects were sold to individuals and company employees and therefore, their price cannot be treated as normal wholesale value in the course of wholesale trade - The sale to Bikaner and Jaipur Trading Company was a negotiated contract price, who, therefore, constitutes a class of buyer by itself. This price cannot also be considered as a normal value. Similarly, Government undertakings and public sector undertakings can also be considered as a class of buyers and the price at which the goods were sold to them cannot be taken as normal price for all sales. No documents have been produced before us by the Revenue to substantiate their claim that goods were not sold to anyone except individuals, company employees, PSUs and Jaipur and Bikaner Trading Co. No evidence has been adduced by the Revenue to show either that the prices shown in the ledgers are not genuine prices or that all these buyers are of special classes of buyers. Therefore, the argument of the Revenue that there was no genuine factory gate price is not borne out by facts. There is no error in the impugned order insofar the recording that there was a genuine factory gate price is concerned. Thus there is a genuine factory gate price which can be considered as normal price under Section 4(1)(a) of the Act. Also, there is no evidence to support the claim of the Revenue that the factory gate price was only in respect of the four categories of buyers. On the contrary, the ledgers of factory gate sales for the five years produced by us show that the goods were sold to a large number of buyers including individuals. There was a genuine factory gate price under section 4(1)(a) and such price was not confined to any particular class or classes of buyers as evident from the ledgers produced by the assessee and lack of any contrary evidence on behalf of the Revenue. The mere fact that some statements were made before the officers by the employees and functionaries of the assessee will not advance the case of the Revenue when such statements are contrary to the evidence available on records. Whether the Commissioner was correct in confirming the demand after holding that there was a genuine factory gate price for the goods? - HELD THAT - As per Section 4 of the Act, as applicable during the relevant periods, value is deemed to be the normal price, i.e., the price under section 4(1)(a). The actual price at which the goods are sold in different invoices and to different buyers is irrelevant. It is also irrelevant as to what percentage of goods were sold at the factory gate price. Once the factory gate price was available under section 4(1)(a), it shall be the value. The confirmation of demand based on the prices at which the goods were sold from the depots cannot be sustained. Consequently, the imposition of penalty also cannot be sustained. Extended period of limitation - HELD THAT - There are no elements necessary to invoke extended period of limitation of five years viz., fraud, collusion, wilful misstatement or suppression of facts or violation of provisions of the Act or Rules with an intent to evade payment of duty, since the assessee filed the price declarations as per its understanding. The mere fact that the Revenue has taken a different view about the value cannot be a ground to invoke extended period of limitation. Appeal dismissed - decided against Revenue.
Issues Involved:
1. Existence of a genuine factory gate price under Section 4(1)(a) of the Central Excise Act, 1944. 2. Applicability of factory gate price to different classes of buyers. 3. Correct determination of value under Section 4(1)(b) and applicable Valuation Rules. 4. Invocation of extended period of limitation. 5. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. Detailed Analysis: 1. Existence of a Genuine Factory Gate Price under Section 4(1)(a): The central issue was whether there was a genuine factory gate price for the goods in question. The Tribunal found that the assessee had indeed sold goods from the factory gate to a large number of buyers, including dealers, actual user companies, and PSUs, as evidenced by the ledgers produced. The Tribunal noted that Section 4(1) of the Act levies excise duty on the value, not the price, and if a normal price under Section 4(1)(a) exists, it should be the deemed value for all clearances. The Revenue's argument that the factory gate price was not genuine was not supported by the evidence, and the statements of employees were contradicted by the documentary evidence. Thus, the Tribunal concluded that there was a genuine factory gate price. 2. Applicability of Factory Gate Price to Different Classes of Buyers: The Tribunal examined whether the factory gate price was limited to specific classes of buyers. The Revenue contended that the goods were sold only to individuals, company employees, PSUs, and a trading company, and thus, these prices could not be considered normal wholesale prices. However, the ledgers showed sales to a broader range of buyers. The Tribunal found no evidence to support the Revenue's claim that the factory gate price was confined to particular classes of buyers and concluded that the factory gate price was applicable to all buyers. 3. Correct Determination of Value under Section 4(1)(b) and Applicable Valuation Rules: Given the finding that a genuine factory gate price existed under Section 4(1)(a), the Tribunal determined that the value for excise duty purposes should be based on this factory gate price. Therefore, the need to determine the value under Section 4(1)(b) and the applicable Valuation Rules did not arise. The Tribunal noted that once a factory gate price under Section 4(1)(a) is available, it should be the value for all clearances, rendering other sale prices irrelevant. 4. Invocation of Extended Period of Limitation: The Tribunal found that the extended period of limitation was not correctly invoked. The assessee had filed the price declarations as per its understanding, and there was no evidence of fraud, collusion, wilful misstatement, or suppression of facts with intent to evade duty. The mere difference in the Revenue's view on the value could not justify invoking the extended period of limitation. 5. Imposition of Penalty under Rule 173Q: The Tribunal held that the imposition of penalty under Rule 173Q could not be sustained since the demand based on depot prices was not upheld. The confirmation of demand based on depot prices was incorrect, and consequently, the penalty imposed was also unsustainable. Conclusion: The Tribunal allowed the assessee's appeal and rejected the Revenue's appeal, setting aside the impugned order with consequential relief to the assessee. The Tribunal found in favor of the assessee on both merits and the ground of limitation.
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