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TMI Blog2021 (3) TMI 730X X X X Extracts X X X X X X X X Extracts X X X X ..... partment by issuing Show Cause Notice (SCN) dated 05.05.2017 wherein it was alleged that the appellant has undervalued their final products inasmuch as the assessable value adopted for payment of duty is lower than the actual cost of manufacture of said products and therefore, the valuation cannot be made in terms of Section 4(1)(a) of the Central Excise Act, 1944 (the Act), but under Section 4(1)(b) of the said Act, read with Rule 8 and Rule 11 of the Central Excise Valuation Rules, 2000 and therefore, the appellant was required to assess the value by taking into consideration the cost of manufacture plus 10%. In the said SCN, the decision of the Apex Court in the case of Fiat India Ltd [2012 (283) ELT 161 (SC)] was relied to hold the aforesaid proposition for determining valuation for payment of Central Excise duty. The learned Pr. Commissioner while adjudicating the matter, confirmed the said demand as proposed in the SCN alongwith interest and equivalent penalty. 3. Sri Kartik Kurmy and Sri Rajesh Sharma, learned Advocates, appeared for the appellant and Sri S. S. Chattopadhyay, learned Authorized Representative appeared for the respondent Revenue. 4. The learned Advocate fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the said decision in the case of Guru Nanak Refrigeration has been duly considered by the Hon'ble Supreme Court in Fiat India's case, and has not be held to be per incuriam and therefore, the ratio of said decision in Guru Nanak Refrigeration is still applicable. 4.4 He also submitted that the allegations of earning profit from commodity trading to counter loss from manufacturing business have been made in the impugned order whereas no such allegation was ever made in the SCN and therefore, to that extent, the impugned order has travelled beyond the allegations in the SCN. He relied upon several case decisions to support his contentions in this regard. 4.5 The learned Advocate has also made detailed written submissions and also contested the demand on the grounds of limitation as well as the imposition of penalty in the absence of element of fraud or willful suppression. He submitted that the SCN dated 05.05.2017 issued for the period 2012-13 to 2015-16 is wholly barred by limitation since the extended period of limitation is not available to the Department. 5. The learned Authorized Representative for the respondent Revenue reiterated the findings made by the learned Pr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to switch over its business or where a manufacturer has goods which could not be sold within a reasonable time. The Hon'ble Court has further held that these examples are not exhaustive. Therefore, mere sale of goods below the manufacturing cost and profit cannot be taken as the sole basis for rejecting the transaction value. Verification of payment of duty The 3. second issue is regarding the procedure to be adopted by the field officers to identify cases where the ratio of the judgment would apply. It may be noted that, under the self-assessment procedure, there is a legal obligation on the assessee to correctly assess and pay the duty in terms of the Central Excise Act, 1944 read with the Valuation Rules, 2000. Verification of this aspect may be conducted by the Central Excise officer during the audit of units. Aspects such as the percentage of loss at which sale has taken place, the period for which such loss making price has prevailed, reasons for sale at such loss making price, whether such sales are contrary to the standard and accepted business practices, and whether such sale is leading to erosion of capital of the company, may be looked into. In addition, due care m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Fiat India has been mechanically relied to raise the impugned demand, which is basically a reiteration of the proposal in SCN. We also note, as submitted by the learned Advocate for the appellant, that the loss in their case has been around 10% but that cannot be made the sole criterion to disregard the valuation adopted by the appellant under Section 4(1)(a), as also clarified in para 2 of the aforesaid Circular. In view of the same, the decision in the case of Fiat India (Supra) is clearly distinguishable and has no application to the facts of the present case. 7.3 We further find that the appellant's case is squarely covered by the ratio laid down by the Apex Court in the case of Guru Nanak Refrigeration (Supra) wherein also, in identical facts and circumstances, the Department proposed to reject the transaction value for the reason that cost of manufacture was found to be higher than the price at which goods were eventually sold. The Apex Court taking note of the fact that when there was no additional consideration and the goods were cleared to independent buyers, upheld the valuation adopted by the assessee under Section 4(1)(a). The relevant portion of the decision is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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