2009 (11) TMI 713 - AT - Central Excise

Tribunal clarifies valuation rules for DGS&D contracts, emphasizing Section 4A application

The Tribunal allowed the Appellant's appeal, holding that Section 4A valuation was applicable for supplies made under DGS&D contracts. The decision ... Valuation - whether, in respect of supplies made in terms of DGS&D contract, the valuation under Section 4A, is applicable? - Held that: - identical issue decided in the case of PURISONS ENGINEERS PVT. LTD. Versus COMMISSIONER OF C. EX., DELHI-II [2003 (12) TMI 113 - CESTAT, NEW DELHI], where it was held that since consignments in question were cleared to DOT in terms of the requirement under Standards and Measures Act and Packaged Commodities Rules they were required to be valued under Section 4A and not under Section 4 - appeal allowed - decided in favor of appellant. Issues: Valuation under Section 4A for supplies made in terms of DGS&D contractValuation under Section 4A for supplies made in terms of DGS&D contract:The case involved the Appellant, a manufacturer of fans, who supplied to Government Departments based on DGS&D rate contract. The original Authority held that the supply based on DGS&D contract had no nexus with the MRP printed on the package, and thus, valuation should be done on transaction value under Section 4. The Commissioner (Appeals) upheld this decision, confirming a demand of differential duty and imposing a penalty. The Appellant argued that a Tribunal decision in the case of Purisons Engineers (P) Ltd. v. CCE established that Section 4A valuation was inapplicable for supplies made under DGS&D contract. The Tribunal analyzed the precedents and found that the case of the Appellant was identical to Purisons Engineers, where it was held that Section 4A would be directly applicable for retail sales to different departments under DGS&D contracts. Consequently, the Tribunal allowed the Appellant's appeal and granted consequential relief in accordance with the law.This judgment clarifies the application of Section 4A valuation for supplies made under DGS&D contracts, emphasizing the distinction between transactions involving bulk sales and retail sales to different departments. It underscores the importance of understanding the nature of the transaction between the manufacturer and the government entity to determine the appropriate valuation method. The decision provides guidance based on established precedents to resolve disputes regarding valuation in such contractual arrangements, ensuring consistency and compliance with relevant provisions of the law.