2024 (8) TMI 907 - AT - Central Excise

Determination of assessable value of goods at the factory gate being not sold but transferred to depots - Failure to apply Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 properly by adopting the correct sales price prevailing at the depots at or about the same time or nearest time of its clearance from the factory to depots - HELD THAT - No example/evidence has been stated in the grounds of appeal in support of the said ground to demonstrate as to how the report is incorrect. The short payment alleged in the demand notice has been mostly due to incorrect application of depot sale invoice in terms of its time of sale from depots to the time of clearance from the factory; also applying the sales invoice of a particular depot to the clearance meant for another depot from the factory, for example, when the clearances is made to Chandigarh depot from the factory instead of applying the sale price of the said depot, the sale price prevailing at Delhi depot has been applied. There are no reason to interfere with the order of the adjudicating authority as the same is based on correct verification of the data submitted during the course of adjudication; also no contrary data has been placed by the Revenue to establish that the learned Commissioner has not applied the data correctly in arriving at the assessable value of the goods as per Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The impugned order is upheld and the Revenue s appeal is dismissed.

Summary

Issues:
1. Correct application of Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 in determining assessable value of goods.
2. Allegation of short payment of duty due to incorrect computation of assessable value.
3. Adequacy of evidence and verification in the adjudication process.
4. Validity of the impugned order and grounds for appeal by the Revenue.

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore pertained to a case where the Revenue challenged an Order-in-Original passed by the Commissioner of Central Excise and Customs, LTU, Bangalore. The issue revolved around the correct determination of assessable value of goods cleared from the factory to depots for sale, leading to an alleged short payment of duty amounting to Rs.65,82,991. The Revenue contended that the adjudicating authority did not apply Rule 7 of the Central Excise Valuation Rules properly, resulting in an incorrect assessment. The Revenue argued that the Commissioner's order lacked detailed discussion on the verification report, rendering it legally flawed and sought to set it aside.

In response, the respondent, represented by a Chartered Accountant, submitted that they had provided comprehensive data on the sale prices of goods from depots, which were correctly applied to determine the assessable value. The respondent demonstrated the methodology adopted, emphasizing the importance of using prices at or nearest to the time of clearance from the factory to depots. The respondent highlighted discrepancies in the Revenue's reliance on certain invoices not relevant to specific depots and older invoices, rather than focusing on contemporaneous prices at the relevant depots as required by Rule 7.

After hearing both parties and examining the records, the Tribunal found that the Revenue's appeal was primarily based on the contention that Rule 7 was not correctly applied by the adjudicating authority. However, the Tribunal noted that the Revenue failed to provide concrete examples or evidence to support this claim. Upon reviewing the Range Superintendent's verification report and the data submitted by the respondent, the Tribunal concluded that the assessable value was determined accurately in accordance with Rule 7. The Tribunal observed that discrepancies in applying depot sale prices had been rectified during verification, leading to the dropping of the demand notice by the Commissioner.

Ultimately, the Tribunal upheld the Commissioner's order, stating that it was based on a correct assessment of the data provided during adjudication. The Tribunal found no grounds to interfere, as the Revenue did not present contradictory evidence to dispute the correctness of the assessable value calculation. Consequently, the Revenue's appeal was dismissed, affirming the validity of the impugned order.