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2019 (12) TMI 114

..... the cost of the same needs to be included in the assessable value as in the form of supply of corrugated box, there is also an additional consideration flowing directly or indirectly from the buyers resulting in under valuation of Excisable goods and short levy of duty - extended period of limitation. HELD THAT:- From section 4 it can be seen that only in cases where the transaction value is sole consideration such transaction value shall be the Assessable Value for charging of Excise Duty. However, in the present case apart from the transaction value the packing material supplied Free of Cost by the customer was also used by the appellant. The value of such packing material was not included. When any Excisable product is manufactured and cleared the value of such goods shall be the total value of the goods in the form it is cleared from the factory of the Assessee. It is immaterial that whether a part of the material contained in the final product to borne the cost. In the present case undisputedly the case of the appellant i.e. Metal Container cleared were packed in the corrugated boxes. Therefore, the value of the Metal Containers duly packed in the corrugated box has to be valu .....

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..... time period of one year but despite all the details available with the department the Show Cause Notice was not issued in the normal period. In this fact the demand for the period before one year of the date of Show Cause Notice is time barred and the demand for extended period is set aside. On merit the demand is sustainable and on Limitation demand for the extended period is set aside - appeal allowed in part. - Excise Appeal No. 423 of 2012 - Final Order No. A/ 12297-12326 /2019 - 2-12-2019 - MR. RAMESH NAIR MEMBER (JUDICIAL) AND MR. RAJU MEMBER (TECHNICAL) Shri. Devan Parikh (Advocate) with Shri. Nirav Shah (Advocate) for the Appellant Shri. K.J. Kinariwala, Authorized Representative for the Respondent Excise Appeal No. 423 of 2012, Excise Appeal No. 566 of 2012, Excise Appeal No. 567 of 2012, Excise Appeal No. 568 of 2012, Excise Appeal No. 642 of 2008, Excise Appeal No. 795 of 2011, Excise Appeal No. 943 of 2011, Excise Appeal No. 1003 of 2010, Excise Appeal No. 10038 of 2017, Excise Appeal No. 10112 of 2014, Excise Appeal No. 10321 of 2017, Excise Appeal No. 10322 of 2017 Excise Appeal No. 10386 of 2013 Excise Appeal No. 10556 of 2015 Excise Appeal No. 10557 of 2015 Excise A .....

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..... her. He placed reliance on the following judgment; Graphite India Ltd. Vs. Commissioner of Central, Nashik-2017 (358) E.L.T. 263 Reliance Life Insurance Co. Ltd. Vs. Commissioner of Service Tax, Mumbai-2018 (363) E.L.T. 1050 3. He further submits that in the present case there is no discovery of new facts. The case of the department is not based upon the unit being raided or some new facts being coming on record. The case was made out on the basis of audit of the appellant s records, therefore, there is no suppression of any fact. Since all the facts were available on record and the same was pointed out during audit. He submits that the declarations were filed wherein it was specifically mentioned that corrugated cartons are supplied Free of Cost by the customers and there is no impact on the assessing value is to narrate that this value is not included in Assessable Value. 4. In any case there was sufficient material on record that the department to have included this material. At the relevant time it is also mentioned in the declaration that when such material is supplied free the unit does not charge for packing material cost. However, when the packing material is supplied by th .....

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..... usly followed his practice and on not a single occasion has any demand being raised for including the cost of cartons supplied free by their customers in the assessable value. He further submits that only after the new section 4 came into operation that the litigation was restarted. The very basis of the Show Cause Notice for the period after the introduction of New Section 4 is that the new Section 4 changed the basis of valuation as compared to old Section 4. While passing the main impugned order of the Commissioner dated 14.03.2008 clearly holds that there is distinction between Old and New Section 4 and that it is due to this that any activity of packing prior to sale(Whether or not it renders the product marketable) could be includable in the Transaction Value. A reference was also made to the Board Circular to reiterate that under new Section 4 nature of packing is irrelevant and it is immaterial whether it is ordinarily supplied. 7. Thus, the entire basis of the demand was that the new Section 4 was different from the old Section 4. In this regard he submits that even after enactment of the new Section 4 the Hon ble Supreme Court in the various judgments it was held that the .....

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..... ctioning or renders it marketable. Such view was taken in the following. i) 2005 (192) E.L.T. 620 ( Para-4) ii) 2005 (191) E.L.T. 379 ( Para-1) iii) 2009 (235) E.L.T. 737 ( Paras- 3.4, 6.1, 31 & 32) iv) 2017 (351) E.L.T. -307 ( Paras- 1 &3) 7.3 The analogy of the above judgment is that free supply of cost of carton which have no role to play any product nor render the same marketable, its value cannot be included in the value of the final product of the appellant. 8. On the other hand, Sh. K.J. Kinariwala, Learned Assistant Commissioner (Authorized Representative) appearing on behalf of the revenue reiterates the finding of the impugned order. He referred to the Central Excise Valuation Rules, 2000 and pointed out that as per the new Rule effective from July, 2000 the packing material supplied Free of Cost by the customer, the value consideration of the said packing material needs to be included in the Assessable Value. He submits that there was no Pari- materia provision of this rule in the Old rules. Therefore, As per Learned Counsel there is no change in the old Section and the new Section 4 is incorrect. As per the specific provision the lower authorities have rightly i .....

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..... n 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 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. 2[Explanation.-For the removal of doubts, it is hereby declared that the price-cum-duty of the excisable goods sold by the assessee shall be the price actually paid to him for the goods sold and the money value of the additional consideration, if any, flowing directly or indirectly from the buyer to the assessee in connection with the sale of such goods, and such price-cum-duty, excluding sales tax and other taxes, if any, actually paid, shall be deemed to include the duty payable on such goods.] 10.1 From the above section 4 it can be seen that only in cases where the transaction value is sole consideration such transaction value shall be the Assessable Value for charging of Excise Duty. However, in the present case apart from the transaction value the packing material .....

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..... i) value of materials, components, parts and similar items relatable to such goods; (ii) value of tools, dies, moulds, drawings, blue prints, technical maps and charts and similar items used in the production of such goods; (iii) value of material consumed, including packaging materials, in the production of such goods; (iv) value of engineering, development, art work, design work and plans and sketches undertaken elsewhere than in the factory of production and necessary for the production of such goods. Explanation 2. - Where an assessee receives any advance payment from the buyer against delivery of any excisable goods, no notional interest on such advance shall be added to the value unless the Central Excise Officer has evidence to the effect that the advance received has influenced the fixation of the price of the goods by way of charging a lesser price from or by offering a special discount to the buyer who has made the advance deposit. Illustration 1. - X, an assessee, sells his goods to Y against full advance payment at ₹ 100 per piece. However, X also sells such goods to Z without any advance payment at the same price of ₹ 100 per piece. No notional interest on .....

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..... gment of the Hon ble Gujarat High Court in the appellants own case. We find that the said judgment was given with reference to the old Section 4 and the judgments delivered in that reference. We agree that with reference to the old Section 4, as per the various judgments of the Hon ble Supreme Court in the case of JAUSS polymers Ltd., Hindustan Polymers Ltd. 1989 (43) E.L.T. 165(SC), the cost of packing material supplied Free of Cost by the buyer was not included in the Assessable Value. The legislature to overcome the judgment of the Hon ble Supreme Court on the issue of inclusion of cost of packing material amended the Section 4 and made new Valuation Rules of 2000 according to which no scope was left for interpretation of the issue which was existing prior to 1.07.2000. Therefore, after introduction of amended Section 4 and New Central Excise Valuation Rules, 2000 the law is very clear that in case where the packing material is supplied Free of Cost by the buyer to the assessee the cost thereof is includable in the Assessable value. 12. As regard the heavy reliance placed on the Hon ble Supreme Court Judgment which are with reference to the New amended Section 4 from 1.07.2000. .....

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..... ision of Rule 6 of the Central Excise Valuation Rules, 2000. It is also pertinent that the Central Excise Valuation Rules, 2000 have not been struck down by the Hon ble Supreme Court in the case of Grasim s judgment (supra). It is also observed from the judgment that the Hon ble Supreme Court in Para 18 referring to the Bombay Tyres International Ltd. on principle agreed that the Cost of primary packing needs to be included. This provision was not under dispute even in the old Section 4. In the present case there is no dispute that the corrugated box even though supplied by the buyer was used as primary packing. For this reason also the judgment of Hon ble Supreme Court of Grasim would not adversely affect the revenues case. As regards the judgment in the case of Innovative Tech Pack Ltd., decided by this tribunal, we find that the entire case was decided on the fact that the packing material was meant only for transportation of manufactured goods to the buyer and it is not necessary for rendering the said goods marketable. In the present case, since the box was used as a primary packing it would not be said that it is used only for transportation of the goods. Moreover in some of .....

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