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of <h1>Tribunal reduces penalty due to lack of evidence, appellants ineligible for SSI exemption</h1> The Tribunal set aside the duty demand related to undervaluation of products due to lack of evidence provided by the Revenue, reducing the penalty from ... Valuation - Enhancement of Issues: Undervaluation of products leading to duty demand and applicability of SSI exemption.Undervaluation of products leading to duty demand:The case involved the appellants, engaged in the manufacture of medicaments, who were initially independently manufacturing and selling medicines to a company at a certain price per vial. Subsequently, they entered into an agreement with the same company for manufacturing goods on a loan license basis, adopting a higher value per vial. A show cause notice was issued alleging undervaluation of products during a specific period and seeking duty amounting to Rs. 1,22,699.97. The appellants contested the duty demanded, arguing that the increase in value when they became a loan licensee should not be the basis for enhancing duty for the previous period. They highlighted that there was no evidence of any flow back of amounts from customers and that their cost of production was lower than the sale value, thus justifying the initial value. They referred to precedents to support their stance that the independent price cannot be questioned without evidence of a relationship between the buyer and the seller. The Tribunal, after considering the submissions, found that the Revenue failed to provide evidence of any flow back of amounts or that the cost of production was less than the sale value. Consequently, the Tribunal set aside this part of the demand, reducing the penalty from Rs. 1,22,699.97 to Rs. 25,000.Applicability of SSI exemption:Regarding the SSI exemption, the appellants acknowledged the duty demanded on the grounds that they were manufacturing goods under a brand name belonging to another entity, making them ineligible for the SSI exemption. They did not contest this part of the demand. The Tribunal did not delve into this aspect further in the judgment, as the appellants had agreed to the duty amount demanded based on this ground.
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