2015 (10) TMI 2137 - AT - Central Excise

Tribunal clarifies Central Excise duty valuation criteria, distinguishes wholesale from retail sales

M/s Spice Systems Ltd. Versus Commissioner of Central Excise, Meerut

The Tribunal held that Central Excise duty valuation should be based on depot prices at the time of clearance, not retail sale prices, emphasizing the ... Demand of differential duty - Whether or not the appellants are liable for differential duty on account of not following the provisions of Section 4 (1) (a) in respect of goods cleared by them - Held that:- Provisions as they existed during the relevant period for the purpose of valuation clearly state that the value shall be deemed to be normal price during the course of wholesale trade. The presumption made by the lower authority that depots are meant for wholesale trade and hence depot prices will be taken as normal price is neither factually nor legally tenable. The appellant strongly contended that the sale of one or two products at a time to the ultimate customer is nothing but retail sale and cannot be taken for Central Excise assessment purposes. - No infirmity in impugned order - Decided in favour of assessee. Issues involved:Central Excise duty valuation based on factory gate sales versus depot sales.Analysis:The appellant, engaged in manufacturing various machines subject to Central Excise duty, faced demands from the Revenue based on the differential value of goods sold from factory gate and depot. The Revenue argued that the value for assessment should be the price charged from buyers at the depot, even though factory gate sales also occurred. The appellant contended that duty for stock transferred goods should be based on depot prices at the time of removal, not the actual sale price. They referenced Circular No. 251/85/96-CX. dated 14/10/1996 and argued against assessing goods based on retail sale prices. The appellant also claimed suitable deductions should be allowed if retail prices were considered.The appellant highlighted Section 4 (1) (a) provisions, stating that excise duty valuation should be based on the normal price in wholesale trade. They argued against adopting retail sale prices from depots as the normal price for Central Excise valuation. The lower authorities' assertion that depots were for wholesale trade, not retail sale, was challenged by the appellant.After considering submissions, the Tribunal found that the appellant had normal wholesale prices at the factory gate and should pay duty based on depot prices at the time of clearance. The Tribunal disagreed with the lower authority's presumption that depot prices should be considered the normal price. They emphasized that the sale of one or two products to ultimate customers constituted retail sale, not wholesale trade for Central Excise assessment purposes. The Tribunal cited previous judgments supporting duty payment based on depot prices at the time of removal. Consequently, the Tribunal set aside the lower authorities' orders and allowed the appeals with any consequential relief.In conclusion, the judgment clarified the valuation basis for Central Excise duty, emphasizing the distinction between wholesale and retail sales in determining the normal price for assessment. The Tribunal's decision provided relief to the appellant, highlighting the legal and factual inconsistencies in the lower authorities' orders regarding the valuation of goods sold from factory gate and depot.