1997 (1) TMI 376 - AT - Central Excise

Tribunal overturns assessable value ruling, upholds genuine declared price

The Tribunal allowed the appeal, setting aside the Order-in-Original that determined the assessable value of T.V. sets produced by the appellant at Rs. ... Valuation - Demand - Limitation Issues:1. Determination of assessable value of T.V. sets produced and cleared by the appellant.2. Allegation of wilful undervaluation by misstating information in costing data to avail concessional rate of duty.3. Applicability of Section 4(1)(a) of the Central Excise Act for valuation.4. Justification of demanding duty at a higher value.5. Time bar on the show cause notice.Analysis:1. The appeal challenged the Order-in-Original determining the assessable value of T.V. sets produced by the appellant at Rs. 1981 per set, confirming a differential duty of Rs. 4,48,494.04. The Collector rejected the declared value of Rs. 1750 per set and calculated the assessable value at Rs. 1981 per set based on costing data discrepancies.2. The appellant submitted price lists and costing data seeking exemption under Notification No. 58/78 for T.V. sets with screens exceeding 36 cms, not exceeding Rs. 1750 per set. The Department alleged wilful undervaluation based on discrepancies in the costing data submitted to avail concessional duty rates.3. The Tribunal analyzed the costing data and balance sheet, concluding that despite errors in the costing data, the declared price of Rs. 1750 per set was genuine. Section 4(1)(a) of the Act mandates valuation based on the normal price in wholesale trade, where price and buyer are unrelated, indicating no justification to deviate from the declared price.4. The Collector's demand for duty at a higher value was deemed unjustified as long as the declared price was genuine, even if the appellant incurred losses, emphasizing that losses in a specific product line should not impact price acceptability under Section 4(1)(a) of the Act.5. The contention regarding the time bar on the show cause notice was analyzed, highlighting that misdeclaration of value to avail concessional duty rates did not automatically invoke the time limitation under Section 11A of the Act. The notice was considered time-barred based on the absence of specific allegations justifying the delayed action.6. Citing the Guru Nanak Refrigeration Corpn. case, the Tribunal emphasized that as long as the price was genuine, discrepancies in costing data did not warrant rejection of the declared price. The Tribunal set aside the impugned order, allowing the appeal based on the genuine declared price and absence of justifications for demanding duty at a higher value.