Custom, Excise & Service Tax Tribunal
S.C. Enviro Agro India Pvt. Ltd vs Commissioner Of Central Excise, ... on 2 December, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/94/04 (Arising out of Order-in-Appeal No. PD/98/Th-II/2003 dated 30.9.2003 passed by Commissioner of Central Excise (Appeals), Mumbai-IV) For approval and signature: Honble Mr. S.S. Kang, Vice President and Honble Mr. Sahab Singh, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== S.C. Enviro Agro India Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Thane-II Respondent Appearance: Shri Manish Panda, Advocate, for appellant Shri V.K. Agarwal, Additional Commissioner (AR), for respondent CORAM: Honble Mr. S.S. Kang, Vice President and Honble Mr. Sahab Singh, Member (Technical) Date of Hearing: 23.11.2011 Date of Decision: 2.12.2011 ORDER NO Per: Sahab Singh
This is an appeal filed by M/s. S.C. Enviro Agro India Pvt. Ltd., Thane, against order-in-appeal No. PD/98/Th-II/2003 dated 30.9.2003.
2. The facts of the case are that the appellant is engaged in the manufacture of pesticides falling under Chapter 38 of the Central Excise Tariff. They filed a price list in respect of transfer of the pesticides D-ALLETHRIN to their depot situated at Parwanoo, Dist. Solan, Himachal Pradesh, for sale and declared the assessable value of Rs.4,000/- per kg. The assessee had transferred a total of 18,000 kgs. of the said product during the period 23.4.2001 to 3.5.2001. On going through the invoices issued by the assessee from their depot at Parwanoo, it was observed that the first sale of the pesticides in question to an independent buyer was made from the depot at the transaction value of Rs.5,500/- per kg. on 8.5.2001 vide invoice No.01 and it was also found that all the sales of such goods from the Parwanoo depot were made at the transaction value of Rs.5,500/- per kg. during the period 8.5.2001 to 4.6.2001 vide depot invoices No.01 dated 8.5.2001 irrespective of the quantity of the goods sold to a buyer at a time. The department took a view that since the excisable goods are not sold by the assessee for delivery at the time and place of removal, the value of the goods is required to be determined under the Central Excise (Determination of Price of Excisable Goods) Rules, 2000, and Rule 7 of the said Rules is specifically applicable to the situation of the present case. Accordingly a show cause notice was issued to the appellant on 23.4.2002 demanding duty of Rs.43,20,000/- on those goods on the basis of depot sale price of Rs.5,500/- per kg. for the clearances made by the appellant from their factory during the period 23.4.2001 to 3.5.2001. The show cause notice was contested by the appellant. The notice was adjudicated by the Deputy Commissioner vide order-in-original dated 14.10.2002 and the same was challenged by the appellant before the Commissioner (Appeals) who vide the impugned order has rejected the appeal. Hence this appeal.
3. The learned counsel appearing for the appellant submits that the learned Commissioner (Appeals) has misconstrued or misinterpreted the provisions of Rule 7 of the Valuation Rules inasmuch as for calculating the greatest aggregate quantity, the time period to be taken is one whole day and hence the aggregate value for the entire period from May to November 2001 cannot be based on the price of the single day. He further submitted that Rule 7 of the Valuation Rules must be read along with the definition of expression of the normal transaction value, which provides that normal transaction value means that transaction value at which the greatest aggregate quantity of the goods are sold. He further pointed out that out of 18,000 kgs. of the goods, only 3020 kgs. were sold at Rs.5,500/- per kg. whereas 7000 kgs. have been sold at the rate of Rs.4,000/- and it was not proper for the lower authorities to accept the value of Rs.5,500/- per kg. for the entire quantity. He further contended that Rule 7 does not provided for applying the highest rate of the said goods sold from the said depot for the total quantity sold at different times. He also submitted that the Commissioner (Appeals) has not appreciated the fact that the appellant has already paid excise duty on actual transaction value at which the said goods have been sold. On imposition of the penalty, he submitted that the assessments of the appellant were provisional in nature and the imposition of penalty of Rs.15,00,000/- on the appellant is not justified. He, therefore, requested that the order-in-appeal needs to be set aside.
4. The learned counsel relied upon the following decisions:-
(i) E.I. Du Pont India Pvt. Ltd. vs. CCE, Chennai 2005 (181) ELT 27 (Tri.-Del.);
(ii) Anand Duplex Ltd. vs. CCE, Meerut 2005 (181) ELT 211 (Tri.-Del);
(iii) Bhuvalka Steel Industries Ltd. vs. CCE, Bangalore-I 2007 (213) ELT 149 (Tri.-Bang.).
5. The learned Additional Commissioner (AR) appearing for the Revenue defended the order-in-appeal and reiterated the findings of the lower authorities and requested that the order-in-appeal needs to be upheld.
6. After hearing both sides, we find that the question involved in the appeal is how valuation of the goods is to be done when the goods are not sold at the factory gate but are transferred by the assessee to their depot. We find that valuation of the goods is governed by Section 4 of the Central Excise Act, which reads as under:-
Section 4. - Valuation of excisable goods for purposes of charging of duty of excise. -
(1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall -
(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value;
(b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. In the present case, Section 4(1)(a) is ruled out as there is no sale at the factory gate and the value, therefore, is required to be determined under the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Rule 7 of the Valuation Rules reads as under:-
Rule 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment. Since the goods are not sold at the factory gate but transferred to the depot from where sale to the independent buyer is made, Rule 7 is clearly applicable to the present case.
7. We find that the appellant cleared the goods from their factory during 23.4.2001 to 3.5.2001. There was no sale of the goods from the depot during this period. There was no sale of goods from the depot prior to 23.4.2001 also. The first sale of the goods from the depot was made on 8.5.2001 at the rate of Rs.5,500/- per kg. The rate of Rs.5,500/- per kg. continued from 8.5.2001 to 5.6.2001 in invoices No.1 to 23. We find that the transaction value of such goods sold from the depot at or about the same time (during the period 23rd April 2001 to 3rd May 2001) is not available. Therefore, under Rule 7 of the Valuation Rules, the value of the goods under assessment shall be the transaction value of the goods sold from the depot at the time nearest to the time of removal and in the present case, the time nearest to the period of 23.4.2001 to 3.5.2001 is 8.5.2001. We, therefore, hold that the lower authorities have rightly ordered the assessment of the goods at Rs.5,500/- per kg. at which the goods were sold on 8.5.2001 from the depot. We, therefore, find no infirmity in the impugned order.
8. The learned counsel relied upon the decision of the Tribunal in E.I. Du Pont India Pvt. Ltd. (supra). In para 6 of the decision, it was held that once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable, there is no need to determine the assessable value on the basis of the price at which the goods may be sold subsequent to the time or removal of the goods. We find that in the present case, the price at or about the same time is not available. Therefore, assessment is to be done on the basis of the price available at the time nearest to the time of removal. The facts of the cited case are distinguishable in the present case.
9. The other two decisions cited by the learned counsel, namely Anand Duplex Ltd. and Bhuvalka Steel Industries Ltd. (supra), are also not applicable to the present case, as the first one is a remand order covering the period from May 1999 without stating the last clearance from the factory, in the absence of which it is difficult to say whether the Valuation Rules, 2000 was applicable or not to the cited case. In the second case, the issue related to deduction on account of transportation charges which is not the issue before us in the present case.
10. As regards the penalty imposed under Rule 173Q of the Central Excise Rules for contravention of Rules 173F and 173G read with Rule 9(2) of the Central Excise Rules, we find that since the issue relates to interpretation of the Valuation Rules and there were first clearances from the factory, penalty imposed on the appellant is too harsh and we accordingly set aside the same.
11. The appeal is disposed of in the above terms.
(Pronounced in Court on 2.12.2011) (S.S. Kang) Vice President (Sahab Singh) Member (Technical) tvu 1 2