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Vandana Global Limited Vs. C.C.E., Raipur - (Customs, Excise and Service Tax Appellate Tribunal) (15 Nov 2018)

Transaction value is a normal price at which such goods are ordinarily sold by Assessee to a buyer where buyer is not related persons and price is sole consideration



The Appellants are engaged in manufacture of sponge iron, ingots, billets and silicon manganese. They are availing the credit of Cenvat duty paid on inputs, capital goods and Service Tax paid on input services in terms of Cenvat Credit Rules, 2004 (CCR). During course of scrutiny, Department noticed that, the Appellants were transferring the manufactured Silico-manganese to their Depot for further sales to their customers. However, they were paying duty at the time of removal. The Department alleged that, the Appellants were not discharging their duty liability on finished goods so cleared through Depot as per the provisions of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2007. The demands e were proposed vide the show cause notices. The said demands have been confirmed.

The Appellants were transferring the Silicon Manganese so manufactured by them to their Depot for further sales to their customers but were paying duty at the time of removal. The question for adjudication therefore is as to whether the Appellants have paid the duty at the time of removal from the factory with intention to resort to under valuation of excisable goods and with intent to evade the payment of respected cenvat duty for the respective period in dispute.

Section 4(c) of CEA defines place of removal. The bare perusal of provisions makes it clear that, the place of removal is not merely confined to the factory/the place of manufacture but also includes a warehouse and even a Depot provided no duty at the time of shifting was paid and that the goods are sold after their clearance from the factory but from the place from where such goods are removed.

It is apparent and admitted fact that, before removing goods from the Appellants factory in Raipur to their Depot in Nagpur, the Appellants have paid the Excise Duty. In the given scenario the definition of transaction value acquires importance for the adjudication. Section 4 (d) of CEA defines transaction value.

The value is a normal price that is the price at which such goods are ordinarily sold by the assessee to a buyer where the buyer is not the related persons and the price is the sole consideration as it was held by Apex Court in the case of Tata Iron and Steel Co. Ltd. v. Collector of Central Excise.

Rule 7 is invokable only in the case where the goods are not sold by the manufacturer/assessee from the factory, which basically is the place of removal. It is in that case only that the transaction value has to be considered as the value at which the manufactured product is sold from the Depot to its buyer. That too, at or about the same time. The Silicon Manganese is simultaneously sold from the factory/place of manufacture itself that too the major portion of the manufacture and it is only the part produced which has been shifted to Depot for further sale to the buyers. The question of invoking Rule 7 of Valuation Rules, 2000 is absolutely irrelevant and also illegal.

Department has wrongly invoked Rule 7 of Valuation Rules. The transaction value in the present case is the value at which the Silicon Manganese has been sold by the Appellant at its factory gate, while transferring the unsold portion thereon to the Depot. Apparently and admittedly, the excise duty has been paid by the Appellant at the said value. The question of alleged short payment does not arise. The orders under challenge are therefore, set aside. The appeals are allowed.


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