In a recent judgement,the Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) allowed the adjustment of excise duty to Steel Authority of India Ltd (SAIL), Alloy Steel Plant as they paid the Higher Duty than demanded.
The Appellant is a Public Sector Undertaking under the Ministry of Steel, Government of India and is engaged in the activity of manufacturing excisable goods falling under chapters 72, 73 and 86 of the Central Excise Tariff Act. During the relevant period, the Appellant supplied billets, rounds, HT Bars, blooms, etc., to its independent customers as well as cleared the same to its job workers for job work.
The clearances made to the Appellant’s job-workers were made upon payment of excise duty on the value determined as per Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (the Valuation Rules), viz. independent sale price of such goods.
The department alleged that Rule 8 of the Valuation Rules was applicable on such clearances, and the Appellant was liable to pay the differential excise duty in terms of Rule 8 of the Valuation Rules,
The adjudicating authority confirmed the demand. To ascertain whether the same goods which were sent by the Appellant to the job workers were also sold to independent parties, the verification report of the jurisdictional Assistant Commissioner was sought. The jurisdictional Assistant Commissioner undertook the fact-finding activity of ‘whether an identical category of goods stock transfer is sold to the independent buyers and if so at what value’.As per the report, the appellant appeared to have paid excess duty than was due and in others, short payment.
Since there was no sale transaction between the Appellant and job-workers,transaction value was not available, and the valuation needed to be adopted in terms of the Valuation Rules. The Appellant valued the goods at the comparable values at which the said goods were sold to the independent parties in terms of Rule 4, while adjusting in certain cases to account for the grades of material, at times.
It was found that the methodology explained by the Appellant for the valuation of goods as per Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 by adjusting the grade of the finished goods cleared to the job workers, appears to be correct. Thus, in the first instance, duty was correctly paid by the Appellant.
A two-member bench comprising Shri P K Choudhary,(Judicial) and Shri K Anpazhakan,(Technical) observed that “demand raised vide the impugned order is not sustainable as during the relevant period the Appellant had paid the correct duty arrived at in terms of Rule 4 of the Valuation Rules. Moreover, the Appellant has paid much higher duty than what is demanded in the impugned order and such factual circumstances, adjustment of excise duty must have been allowed instead of raising any further demand.”
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