2018 (5) TMI 1287 - AT - Central Excise

Differential duty upheld for showroom goods valuation under Rule 4

Conzerv Systems Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Bangalore- I

Conzerv Systems Pvt. Ltd. Versus Commissioner of Central Excise, Customs and Service Tax Bangalore- I - TMI Issues:1. Central excise duty valuation rules for goods cleared to own showroom.2. Applicability of CBEC circulars on valuation rules.3. Time-barred demand for differential duty.Central Excise Duty Valuation Rules for Goods Cleared to Own Showroom:The appellant, engaged in manufacturing Digital Panel Meters and Energy Meters, cleared goods to showrooms and service centers for demonstration and replacement without sale during 2002-03 to June 2006. The central excise duty was paid under Rule 8 of the Valuation Rules based on 115% of the manufacturing cost. However, the Department demanded differential duty, contending it should be based on comparable goods. The appellant argued that CBEC circular dated 01.07.2002 allowed duty payment under Rule 8, citing a Tribunal decision. The Department relied on a revised CBEC clarification from 25.04.2005, stating valuation for free samples under Rule 4. The Tribunal noted the revised circular and a Karnataka High Court decision, affirming valuation under Rule 4 for samples cleared for demonstration.Applicability of CBEC Circulars on Valuation Rules:The appellant's counsel referenced the initial CBEC circular permitting duty payment under Rule 8 for goods cleared to own showrooms. However, a revised CBEC clarification from 25.04.2005 mandated valuation under Rule 4 for free samples. The Department supported the revised stance post-2005, citing a Karnataka High Court decision affirming Rule 4 valuation for samples cleared for demonstration. The Tribunal concurred with the Department's interpretation of the circulars and the High Court decision, upholding the valuation under Rule 4 for the appellant's cleared goods.Time-Barred Demand for Differential Duty:The authorities below discussed the issue of time-bar, noting the appellant's failure to provide information on goods cleared for replacement after relocating to the present jurisdiction. The impugned order found the appellant at fault for not disclosing information on goods cleared for replacement under Rule 8 valuation. The Tribunal agreed with this finding, leading to the dismissal of the appeal. Ultimately, the Tribunal sustained the impugned order, emphasizing the appellant's lack of compliance with disclosure requirements and the correct valuation rule under Rule 4 for cleared samples.This detailed analysis of the judgment highlights the central excise duty valuation rules, the impact of CBEC circulars on valuation practices, and the time-barred demand issue, providing a comprehensive overview of the legal reasoning and outcome of the case.