Central excise valuation turned on transaction value, and undervaluation failed where commercial invoices were not properly considered.

Undervaluation in central excise valuation failed where the lower figure in the show-cause notice was taken from an excise invoice issued for reversal of credit, while the commercial invoice reflected a higher price with freight and sales tax charged separately. Because the adjudicating record did not consider the appellants' written submissions and commercial invoices, the correct transaction value was not established. On that basis, the duty demand and penalties were not maintainable, and the impugned order was set aside with consequential relief.

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Issues: Whether the aluminium ingots cleared by one appellant to the vendor were undervalued for central excise valuation purposes, and whether the resulting duty demand and penalties could be sustained.

Analysis: The central question was whether the price reflected in the commercial invoice or the lower figure taken from the excise invoice represented the correct transaction value for valuation. The record showed that the written submissions and commercial invoices filed by the appellants had not been considered at adjudication. On the material before it, the lower figure relied upon in the show-cause notice was based on the excise invoice issued for reversal of credit, whereas the commercial invoice showed a higher price with freight and sales tax charged separately. The allegation of undervaluation therefore did not rest on the correct valuation basis, and the demand founded on that premise could not be sustained.

Conclusion: The charge of under-valuation failed, and the duty demand and penalties were not maintainable.

Final Conclusion: The impugned order was set aside and the appeals succeeded with consequential relief.

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