The appellant, a 100% EOU, faced allegations of undervaluation ...

Tribunal Overturns Penalties for 100% EOU, Upholds Transaction Value in DTA Sales After 17-Year Delay.

August 6, 2024

Case Laws     Central Excise     AT

The appellant, a 100% EOU, faced allegations of undervaluation of finished goods cleared into the domestic tariff area (DTA). The key issues were whether the DTA clearance value should be the transaction value at which goods were sold to domestic buyers or the value demanded by the department, and whether the abnormal delay of 17 years in adjudicating the show cause notice was justified. The Tribunal held that the department failed to produce evidence supporting the undervaluation allegation or showing that the declared transaction value was not the actual price paid by buyers. The sale was made to independent buyers on a principal-to-principal basis, and there was no allegation of price manipulation. Citing the Supreme Court's ruling in Eicher Tractors Ltd., the Tribunal stated that unless special circumstances exist, the transaction value cannot be disregarded. As per proviso to Section 3(1) of the Central Excise Act, 1944, the assessable value for DTA clearances by a 100% EOU should be determined u/s 14 of the Customs Act, 1962, comparable to contemporaneous import prices of identical or similar goods. However, the department did not provide such details. Consequently, the Tribunal set aside the impugned order rejecting the appellant's DTA sale price and the imposed penalties, allowing the appeal.

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