1997 (6) TMI 336 - AT - Central Excise

Tribunal overturns duty demand based on genuine lower selling price, reflecting market conditions

The Tribunal allowed the appeal, setting aside the duty demand on the higher approved price of caustic soda. The appellant's selling at a lower price ... Demand - Modification of price list - Goods sold at a price lesser than the price approved earlier Issues:1. Whether the appellant is liable to pay duty on the higher price shown in the approved price list.2. Whether failure to conform to Rule 173-C of the Central Excise Rules would result in liability to pay differential duty.3. Whether the reduced price at which goods were sold during the disputed period was genuine.4. Whether the demand for differential duty was justified.Analysis:1. The appellant, engaged in the manufacture of caustic soda, filed price lists in November 1985, with the approved price being Rs. 5080/- PMT. However, during the disputed period, the caustic soda was sold at a lower price of Rs. 4680/- PMT. A show cause notice was issued alleging duty evasion due to selling at lower prices without filing revised price lists. The appellant contended that a revised price list was submitted on 10-12-85 but not approved, and hence, no duty should be payable on the earlier higher price. The Assistant Collector confirmed the duty demand, which was upheld by the Collector (Appeals), leading to the appeal.2. The key issue revolved around Rule 173-C of the Central Excise Rules, which mandates manufacturers to file revised price lists when proposing a price reduction. Failure to comply may lead to penalty imposition. The question was whether this failure automatically results in liability to pay differential duty on the previously approved higher price. The rule requires an inquiry before approving any modification in price lists to ensure correct valuation for assessment under Section 4 of the Act. As long as the goods were genuinely sold at a lower price during the disputed period, without questioning the genuineness of the price, the liability to pay duty on a higher approved price does not arise.3. It was established that the appellant sold goods at a lower price to independent buyers during the disputed period, while a higher price was set for a contract with another entity. The department did not dispute the lower contractual price or challenge the genuineness of the disputed price. This indicated that the demand for differential duty was unwarranted, as the actual selling price during the period in question was genuine and reflective of market conditions.4. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, highlighting that the demand for differential duty was not justified given the genuine nature of the reduced selling price during the disputed period and the lack of challenge to its authenticity by the department.