2003 (4) TMI 422 - AT - Central Excise

Tribunal allows use of subsequent sale prices to determine assessable value, sets aside Commissioner's valuation under Rule 6(b)(ii)

The Tribunal upheld the plea that subsequent sale prices to an independent buyer could be used to determine the assessable value of preceding clearances. ... Demand - Limitation - Ad valorem duty - Declaration - Valuation - Captive consumption of goods -Words and Phrases Issues Involved:1. Applicability of the Proviso to Sec. 11A(1) of the Central Excise Act (extended period of limitation).2. Determination of assessable value under Sec. 4(1)(a) of the Central Excise Act or Rule 6(b)(i) or 6(b)(ii) of the Central Excise Valuation Rules, 1975.Issue-wise Detailed Analysis:1. Applicability of the Proviso to Sec. 11A(1) of the Central Excise Act (extended period of limitation):The period in question is from 26-7-1996 to 7-1-1999. During this period, the substituted Rule 173C regarding the valuation of goods ad valorem was operative. The rule required the assessee to declare the goods intended to be manufactured. The Department under the substituted rule was not obligated to visit, inspect, issue notice, or conclude on the scrutiny of declarations within any specific time limit. Therefore, if the declaration was erroneous, the extended period of limitation could be invoked on allegations of willful suppression of facts. The plea of limitation was not upheld, meaning the extended period of limitation was applicable in this case.2. Determination of assessable value under Sec. 4(1)(a) of the Central Excise Act or Rule 6(b)(i) or 6(b)(ii) of the Central Excise Valuation Rules, 1975:The appellants contended that the valuation should be based on the price at which the excisable goods were ordinarily sold by the manufacturer to the buyer, as per Sec. 4(1)(a). The Department argued that the first clearance to an independent buyer was made only on 21-2-1997, and prior to this, no sale price to an independent buyer at the factory gate existed. The Commissioner found that the appellants mis-declared the value and transactions for the period from 26-7-1996 to 5-2-1997, leading to the conclusion that Rule 6(b)(ii) should be applied. However, the Tribunal found that Rule 4 of the Central Excise Valuation Rules, 1975, which allows for valuation based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of removal, was not considered by the Commissioner. The Tribunal determined that the prices to independent buyers as declared should be the basis for the clearance of goods for captive consumption by application of Rule 4. The Tribunal upheld the plea that subsequent sale prices to an independent buyer could be used to determine the assessable value of preceding clearances.Conclusion:The appeal was disposed of with the determination that the prices to independent buyers as declared would be the prices for the clearance of goods for captive consumption, applying Rule 4 of the Central Excise Valuation Rules, 1975. The Tribunal set aside the valuation determined under Rule 6(b)(ii) by the Commissioner and found that the extended period of limitation was applicable.