2005 (6) TMI 387 - AT - Central Excise

Tribunal overturns duty demand on soda ash due to price dispute, citing impurities as valid reason

The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) order demanding a higher duty on soda ash due to selling price discrepancy. The ... Valuation Issues:Challenge to Commissioner (Appeals) order regarding differential duty on soda ash based on selling price discrepancy.Analysis:In this case, the appellants, who are manufacturers of soda ash, were issued a show cause notice demanding differential duty on the grounds of selling the goods at a lower rate than the normal price. The original authority confirmed the demand, which was also upheld by the Commissioner (Appeals). The Commissioner held that the assessable value under Section 4 of the Central Excise Act should be the price at which the goods are ordinarily sold in the course of wholesale trade. The appellants failed to produce an agreement with the buyers to whom the goods were sold at the lower price, leading to the confirmation of the demand. The Chemical Examiner confirmed that the soda ash was fit for normal use, further supporting the decision to charge duty at the normal selling price.The appellants, however, argued that there was a contract between them and the buyers who accepted to purchase the defective soda ash at the lower rate. They provided evidence in the form of confirmation letters from buyers and correspondence exchanged, indicating an offer and acceptance of the lower price. The presence of extraneous material in the soda ash was confirmed by the Chemical Examiner's report, justifying the lower selling price due to the quality discrepancy. Despite the same ISI specifications, the presence of black particles in the disputed goods affected the quality and justified the lower selling price. The appellants had informed the department about the quality issue and provided evidence of the lower price agreement with buyers, including despatch documents.The Tribunal found merit in the appeal, acknowledging that the presence of black particles in the goods justified the lower selling price of Rs. 7500/- PMT. The quality difference due to impurities supported the appellants' decision to sell at a reduced rate. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief. The judgment was dictated and pronounced in open court on 3-6-2005.