CX - Valuation -S.4 of CEA, 1944 - Price prevailing for sale at depot immediately 'prior' to clearance from factory gate was to be adopted: CESTAT
By TIOL News Service
MUMBAI, MAY 21, 2018: THE appellants manufacture excisable goods and are having a depot from where the goods are sold after clearance from the factory. For the purpose of assessment of goods at the time to clearance from factory, the appellant resorted to provisional assessment. Subsequently the appellant filed proposal for finalization of assessment and adopted the sale price of the highest aggregate quantity of the identical goods, for sale to a non-related buyer, on a date prior to the date of removal from the factory, as the assessable value.
The Revenue, however, did not agree.
The dispute, therefore,is whether the price prevailing for sale at depot immediately "prior" to the clearance from the factory gate was to be adopted or, as alleged by the Revenue, the price prevailing at the depot at the point of time "nearest" to the time of clearance from the factory gate was to be adopted for the purpose of assessment.
The assessee is before the CESTAT and relies on the clarification given at point 19 in the CBEC Circular No. M.F.(D.R.) F. No. 354/81/2000-TRU, dated 30.6.2000. They also rely on the Tribunal decision in Bhuvalka Steel Industries - 2007-TIOL-2403-CESTAT-BANG in support.
The AR while supporting the impugned order(s) relied on Circular No. 643/34/2002-CX dt. 1.7.2002 to assert that the price nearest to the time of clearance from factory is to be adopted. Reliance is also placed on the decision in S.C. Enviro Agro India Pvt. Ltd. - 2012-TIOL-196-CESTAT-MUM.
Point No.1 of the Board Circular dated 01.07.2002 reads -
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SI No.
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Point of doubt
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Clarification
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1.
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What is the scope of the term greatest aggregate quantity used in Rule 2(b) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The definition does not indicate the time period over which the quantity is to be computed. Further, it is not clear whether it refers to the largest quantity sold to any particular assessee during the period or to the goods sold to the largest number of buyers.
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The term greatest aggregate quantity has been used to define the term normal transaction value used in Rules 7 and 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Seen in this context the time period should be taken as the whole day and the transaction value of the greatest aggregate quantity would refer to the price at which the largest quantity of identical goods are sold on a particular day, irrespective of the number of buyers. In case the normal transaction value from the depot or other place is not ascertainable on the day identical goods are being removed from the factory/warehouse, the nearest day when clearances of the goods were affected from the depot or other place should be taken into consideration .
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The Bench referred to the above extract, distinguished the case law cited by the AR and observed -
+ From the above, it is apparent that the words used in a clarification are "the nearest date when clearances of the goods were affected from the depot or other place should be taken into consideration".
+ Similarly in the Circular dt. 30.6.2000, in the example for clearance of goods from factory on 5.7.2000 the price of sale at depot on 1.7.2000 was adopted. From the above it is apparent that the CBEC wishes to adopt the price which is available at the time of clearance from the factory.
+ The other interpretation sought by Revenue would perforce make all the clearances from the factory provisional and assessable price at the time of clearance from factory sale would always remain indeterminate. In these circumstances, interpretation adopted by the appellant appears to be proper.
The appeals were allowed.
(See 2018-TIOL-1576-CESTAT-MUM)
