2011 (3) TMI 1212 - AT - Central Excise

Assessable value - whether the price at which excisable goods are sold by the appellants in course of wholesale trade to unrelated buyers could be applied for determining the assessable value of finished goods cleared by them for captive consumption in their own factory at Akurdi? - Held that - When the undervaluation is alleged by the department it is their responsibility to prove the case. In this case the department could have examined on their own whether the goods cleared by the assessee to their sister unit at Akurdi and also the goods cleared to dealers were identical or comparable or not. The department could also have ascertained from the Akurdi unit whether the goods supplied by the Waluj unit underwent any further process at the other end as claimed by the assessee.The department has not made any efforts whatsoever to ascertain and verify the facts and rebut the contentions made by the assessee. Thus the allegations made by the department remain unsubstantiated. No infirmity in the conclusion drawn by the lower appellate authority that the goods were not comparable and hence Rule 6 (b) (ii) of the Central Excise Valuation Rules 1975 would apply in the instant case and accordingly the appeal filed by the department rejected.

Summary

Issues:
Determining assessable value for goods cleared for captive consumption based on wholesale trade price.

Analysis:
The departmental appeal was filed against the order-in-appeal regarding the assessable value of finished goods cleared for captive consumption. The main issue was whether the wholesale trade price of goods sold to unrelated buyers could be applied to determine the assessable value of goods cleared for captive consumption. The assessee had two manufacturing units and was clearing semi-finished goods to their Akurdi plant for further processing. The department alleged duty short payment based on higher prices of goods sold to distributors compared to captive consumption prices. The Deputy Commissioner upheld the duty demand and imposed a penalty.

The matter was appealed before the Commissioner (Appeals) who found faults in the Deputy Commissioner's order. The Commissioner noted the lack of effort by the adjudicating authority to differentiate between fully finished and semi-finished goods. It was concluded that the goods cleared for captive consumption underwent further processing at the Akurdi unit, making them incomparable to finished goods sold to dealers. The assessable value was determined under a different rule, and the duty demand was set aside with consequential relief granted to the assessee.

The department appealed this decision, arguing that the goods cleared to the Akurdi unit were not semi-finished. However, the Tribunal found that the department failed to prove their case of undervaluation. The department did not verify if the goods were comparable or if further processing occurred at the Akurdi unit. As a result, the allegations made by the department were unsubstantiated. The Tribunal upheld the lower appellate authority's decision, applying a different valuation rule and rejecting the department's appeal.