2017 (3) TMI 715 - AT - Central Excise

Tribunal modifies order on Central Excise liability, clarifies valuation rules

The Tribunal modified the order, setting aside the demand for the appellant's liability for the payment of the differential duty, interest, and penalties ... Valuation - sale through Depot - inclusion of incidental expenses - whether charges which are in the nature of incidental expenses that are not in consonance with the charges, are liable to be included in assessable value for the period prior to the amendment in section 4 of CEA, 1944 or not? - Held that: - reliance was placed in the case of M/s. Andhra Pradesh Paper Mills Ltd. Versus The Commissioner of Central Excise Visakhapatnam-II Commissionerate Visakhapatnam [2013 (9) TMI 720 - CESTAT BANGALORE], where it was held that during this material period there was no definition in the provisions of the Central Excise Act for the ‘place of removal’ - there cannot be any demand on the appellant, there being absence of definition of ‘place of removal’ in the CEA, 1944 - For the period thereafter, the decision in the case of Bharat Petroleum Corporation Ltd [2010 (4) TMI 335 - CESTAT, KOLKATA] eliminates the scope for collection of duty, where it was held that Subsequent sale at a later point of time and the actual sale price at the later point of time is not relevant for determining the assessable value - demand set aside - appeal allowed - decided in favor of assessee. Issues involved:- Liability for payment of differential duty- Imposition of penalties under the Central Excise Act, 1944- Inclusion of charges collected by a third party in the assessable value- Interpretation of Valuation Rules for different periodsAnalysis:1. Liability for Payment of Differential Duty and Penalties:The Commissioner of Central Excise held the appellant liable for a differential duty amount and penalties under the Central Excise Act, 1944 for the period from February 1997 to December 2001. The appellant, a manufacturer of various yarns, was found to be selling goods at a higher price than the clearance value. The appellant challenged the duty liability of &8377; 1,91,674 and the penalties imposed. It was noted that the appellant was paying the differential duty at regular intervals upon the sale being effected. The Tribunal concurred that the appellant's practice was known to tax authorities and set aside the penalties imposed on the appellant company and the appellant-Director.2. Inclusion of Charges in Assessable Value:The dispute centered around the inclusion of charges collected by a third party, M/s Jai Clearing, in the assessable value. The Tribunal referred to previous decisions and held that charges like godown charges collected by M/s Jai Clearing from customers were not liable to be included in the assessable value for the period prior to the amendment in section 4 of the Central Excise Act, 1944. The Tribunal analyzed the different periods involved and set aside the demand of differential duty, interest, and penalty under section 11AC of the Act.3. Interpretation of Valuation Rules:The Tribunal further analyzed the applicability of Valuation Rules for different periods. For the period from 28-9-1996 to 30-6-2000, the Tribunal held that the demands raised by the Revenue authorities were liable to be set aside as the duty was discharged based on the factory gate sale price. For the subsequent periods, the Tribunal found that there was no definition of 'place of removal' in the Central Excise Act, leading to the conclusion that there cannot be any demand on the appellant. The Tribunal referred to specific cases and set aside the demand for the respective periods based on the interpretation of Valuation Rules.In conclusion, the Tribunal modified the impugned order, setting aside the demand for the differential duty, interest, and penalties imposed under the Central Excise Act, 1944. The judgment clarified the liability of the appellant, the inclusion of charges in the assessable value, and the interpretation of Valuation Rules for different periods, providing a detailed analysis and legal reasoning for each issue addressed.