Refer to Rule 7 of Central Excise Valuation Rules (Notification No. 45/2000-NT dated 30.06.2000, which provides as below :
“ Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as “such other place”) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment”.
Submission : Central Excise Duty is to be paid at the time of Removal of goods from factory and on the Value Prevalent at the Depot.
Dear Hardeep,
The principal of nearest point of time would be applicable to determine the value at depots.
Sales from Depot: Meaning of Nearest Point of Time
The nearest time in terms of Rule 7 of Excise Valuation Rules, could be the time subsequent to the time and date of clearance/removal of the goods under assessment from the factory to depots when the transaction value at or about the same time is not available Commissioner of Central Excise, Kolkata-IV Vs. Kesoram Rayon [2015 (4) TMI 162 – CESTAT KOLKATA] Kesoram Rayon (“the Respondent”) was, inter alia, engaged in the manufacture of Viscose Rayon Filament Yarn (“impugned goods”) falling under chapter sub-heading numbers 5403.32 of Central Excise Tariff Act, 1985. During the period from July 1, 2000 to May 31, 2004 & January 2005 to January 2006 (“impugned period”), the Respondent manufactured and cleared the impugned goods from their factory to various depots resorting to provisional assessment, from where the impugned goods were sold to the customers. The Department contended that the assessable value of impugned goods determined under Section 4 of the Excise Act read with Rule 7 of the Excise Valuation Rules, is incorrect. Hence, fourteen periodical SCNs were issued alleging short payment of total duty amounting to ₹ 2,56,22,503/- during the impugned period, on finalization of provisional assessment. The Ld. Commissioner on adjudication dropped the Demand Notices and directed the jurisdictional Adjudicating Authority to finalize provisional assessment for the impugned period by accepting the selling price after the date and time of removal of the goods under assessment from the factory to the depots (“Impugned Order”). Being aggrieved, the Revenue preferred an appeal before the Hon’ble CESTAT, Kolkata. The Revenue before the Hon’ble Tribunal submitted the nearest time of sale of goods from the depots for the purpose of Rule 7 of Excise Valuation Rules should be prior to the date and time of removal/clearance of the goods from the factory to depots. Therefore, the Impugned Order is bad. While the Respondent, interalia, submitted through an example that while clearing the goods from factory to the depot, on July 1, 2002 if the Respondent have adopted the price at which such goods were sold from depot on July 1, 2002 or if there was no sale on that day, the sale price as on June 30, 2002, no objection had been raised. But if the sale price as on July 5, 2002 was adopted, as there was no sale nearest to that date, the sale price was rejected observing that it was after the date of removal of the goods from the factory. The Respondent further placed reliance in case of S.C. Enviro Agro India Pvt. Ltd. Vs. CCE, Thane-II [2013 (298) ELT 257 (Tri.-Mumbai)] (“S.C. Enviro Case”)= 2011 (12) TMI 431 - CESTAT MUMBAI. The Hon’ble CESTAT, Kolkata relying on the decision of the Hon’ble Tribunal, Mumbai in S.C. Enviro Case, allowed the appeal in favour of the Respondent and held that the nearest time, in terms of Rule 7 of Excise Valuation Rules, could be the time subsequent to the time and date of clearance/ removal of the goods under assessment from the factory to depots when the transaction value of such goods sold from the depot at or about the same time is not available.
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Regards
YAGAY & SUN
(Management, Business & Indirect Tax Consultants)
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