2023 (10) TMI 421 - AT - Central Excise

Tribunal confirms factory gate price for Excise Duty valuation, dismissing extended demand and penalties

The Tribunal allowed the Appeal, confirming the use of the genuine factory gate price for Excise Duty valuation. It dismissed the extended period demand ... Valuation - adoption of independent third party factory gate price for making the payment of Excise Duty when the goods are cleared to their depots - HELD THAT:- The identical issue was before this Tribunal in respect of the same Appellant, wherein the demand was issued for the period April 1991 to September 1995. There is nothing to suggest that the practice adopted by them during April 1991 to September 1995 was different from the practice adopted by them during the present period of dispute i.e., April 1994 to September 1996. Even the Revenue has not come out with any counter argument on this count. The procedure adopted by the Appellant right through April 1991 to September 1996 remained the same for the value adopted by them for clearances to their depots which is based on the factory gate sales done by them for which they have produced the documentary evidence before the Lower Authorities. The procedure for the discounts being given at depots remained same as per the earlier period. The earlier Final Order of this Bench dated 09.05.2022 [2022 (5) TMI 1244 - CESTAT HYDERABAD] has already gone into considerable depth and has allowed the Appeal filed by the present Appellant and dismissed the Appeal filed by the Revenue. There is nothing on record to show that this Final Order of this Bench was taken up further by the Revenue before the Hon’ble Supreme Court nor is there anything to suggest that this Order has been stayed by the Apex Court - thus, conclusion arrived at by this Bench vide Final Order dated 09.05.2022 is squarely applicable. Appeal allowed. Issues Involved:1. Whether the Appellant is correct in adopting the independent third party factory gate price for making the payment of Excise Duty when the goods are cleared to their depots.2. Whether the extended period of limitation was correctly invoked.3. Whether the penalty was correctly imposed under Rule 173Q.Summary:Issue 1: Adoption of Factory Gate Price for Excise DutyThe Appellant cleared various products to their depots and sold them to independent third parties from April 1994 to September 1996. Proceedings were initiated on the grounds that the valuation for clearances to depots was not as per statutory provisions. In the first round of litigation, the Tribunal remanded the matter to determine if a genuine factory gate price existed. The Adjudicating Authority, after proper verification, dropped the demand proposals. However, the Commissioner (Appeals) set aside this decision, remanding the matter again. The Tribunal noted that the Appellant had produced all records to show a genuine factory gate sale price, but the Commissioner (Appeals) failed to address this. The Tribunal had previously ruled that if a genuine factory gate sale price is available, it should be applied for valuation. The Tribunal concluded that there was indeed a genuine factory gate price, which should be considered as the normal price under Section 4(1)(a) of the Act.Issue 2: Extended Period of LimitationThe Tribunal found that the issue of valuation was no longer res integra, as the Appellant's earlier proceedings for a similar period had been decided in their favor. The earlier proceedings involved a demand issued by invoking the extended period provisions, which was found unsustainable. In the present case, the demand was issued only for the normal period, making the extended period of limitation irrelevant.Issue 3: Imposition of Penalty under Rule 173QThe Tribunal held that once the factory gate price was available under Section 4(1)(a), it would be the value for determining excise duty, and other sale prices did not matter. The confirmation of demand based on depot prices could not be sustained, and consequently, the imposition of penalty under Rule 173Q was also unsustainable.Conclusion:The Tribunal allowed the Appeal with consequential relief, affirming that the genuine factory gate price should be used for valuation and dismissing the extended period demand and penalty imposition. The earlier decision of the Tribunal was applied to all five products involved in the present case.