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TMI Blog2018 (1) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Act, 1944. This being so, the valuation of such sale of the sold goods for the purposes of levy of Central Excise duty will have to be within the parameters of Section 4 of the Act read with Central Excise Valuation Rules, 2000. Notwithstanding the clearances being shown as stock-transfer to Head office, this was only a routing on paper only, however in actuality the impugned servers were delivered in the same condition as they were removed, to the theatre owners. Possibly, appellant had followed such a tedious billing route for accounting reasons. Nonetheless, for discharge of Central Excise duty, the removals will in no way be recognizable as stock transfer and will necessarily take on the colour of saleattracting the manner of valuation as laid down in Rule 4 of the Valuation Rules Penalty - Held that: - From all accounts, the issue boils down to mis-interpretation of the valuation provisions by the appellant - penalty not attracted. Appeal allowed in part. - Appeal No.E/801/2010 - Final Order No.40082/2018 - Dated:- 12-1-2018 - Ms. Sulekha Beevi C. S. Member ( Judicial ) And Shri Madhu Mohan Damodhar, Member ( Technical ) Shri C. Saravanan, Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious submissions which can be broadly summarised as under :- (i) Any removal from the factory directly to the concerned client / customer itself constitutes a separate class of sale within the meaning of Section 2(h) of the Central Excise Act, 1944 and is to be independently valued and assessed. Rule 4 does not mean that the transaction value as defined in Section 4 (3) (d) of the Central Excise Act, 1944 should be the basis of valuation. (ii) Rule 4 will not apply for removal of servers from the factory for transfer of right to use. As they were not sale within the meaning of Section 2(h) of the Central Excise Act, 1944, value under Rule 8 read with Rule 11 will apply as such removal are akin to captive consumption, there being no price and ownership being retained by the Appellant. Expression value of such goods in Rule 4 does not mean only the transaction value albeit the price of the goods adopted for our regular sale merely because it may a fetch higher duty to the department. (iii) Rule 4 of the valuation Rules will apply only on the same specie or category of sale. Therefore, value adopted for regular sale cannot be the basis of value for removal of goods on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant to their customers for deferred payment and other valuation considerations like non-refundable deposit, advertisement charges from sponsors of advisement etc. Hence goods dispatched in the guise of stock transfer to customers are to be construed as sale only. Hence the demand of differential duty liability is fully justified. 4. Heard both sides and have gone through facts. 5. The impugned goods are in the nature of servers used by cinema theatres / halls where digital cinema equipments are installed, for playback of feature film / commercial advertisements in digital format. What is not disputed is that around 10% of such servers were sold directly to cinema theatres under transaction values on which there is no controversy. Dispute has emerged only in respect of servers which have been shown as stock transfer to the Head office of the appellants from where they were dispatched to the customers and in some cases, servers were shown as stock-transferred to Head office but sent directly to the customers. 6. The core issue that comes up for decision is whether the impugned clearances are to be treated as stock-transfer meriting valuation under Rule 8 of the Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eproduction : 11.5 The assessee entered into an lease Agreement with the Customer for a maximum period of 8 years after obtaining advances (both refundable and non refundable) from them. The salient features of the lease Agreement are as follow : (i) the theatre owner shall pay a Non refundable right to use fee of ₹ 1 lakh per theatre and provide/vest the assessee with the exclusive right of screening of film shorts and slides including advertisements at the theatre for a total maximum period of 8 years (in come case the lease period may vary); (ii) the assessee shall have exclusive rights for screening advertisements including slides, film shorts and advertising commercials in the theatre and this right conferred on the assessee supercedes any other rights which the theatre owner may have granted to any third party; and also take steps to forthwith terminate the contract for on-screen advertising rights the theatre owner entered with any third party prior to signing of this LOU; (iii) the theatre owner permits the assessee to exclusively screen the advertisements/commercials through the OCP/Projector, for 20 minutes per show per theatre, before start of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f levy of Central Excise duty will have to be within the parameters of Section 4 of the Act read with Central Excise Valuation Rules, 2000. 8.5 The adjudicating authority has concluded that the value of goods in question is governed by Rule 4 of the Valuation Rules namely the value of such goods sold by the assessee for delivery at any other time nearest to the time of removal of goods under assessment subject to adjustments as may appear reasonable . Hence adjudicating authority has held that in respect of the impugned stock-transferred servers, appellants should have determined the assessable value on the basis of Rule 4 ibid and adopted the value available at the nearest point of time of removals of servers on stock transfer basis. We are unable to find any infirmity with such a conclusion. It is not the case the impugned servers were not sold by appellant but were used for consumption by them or on their behalf in the production or manufacture of other articles. In such a scenario, adoption of assessable value based on 110% of cost of production would certainly have been in order. However, it is nobodys case that the servers stock-transferred to the Head office underwent fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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