The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) remanded the discrepancy in differential duty calculation to the original adjudicating authority, directing a recalculation based on CBIC guidelines.
Bloom Dekor Limited, the respondent, manufactures laminated sheets and flush doors. The company clears goods to its depots and consignment agents located in Delhi, Nagpur, Bangalore, Calcutta, Chennai, Jaipur, and Mumbai for sales.
After reaching these depots or agents, the goods were sold at higher prices compared to the prices recorded at the factory gate. The duty was calculated based on factory prices but the department stated that the method used by the appellant for calculating duty did not align with Rule 7 of the Central Excise Valuation Rules, 2000.
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The department calculated differential duty based on the difference between the value at the factory gate during transfer to depots/agents and the final sale value from depots/agents. A Show cause notices were issued for non-compliance.
Aggrieved, the respondent appealed before the Commissioner (Appeals) who remanded the matter back to the original adjudicating authority for recalculation stating that the calculation method adopted by the department was inconsistent with Rule 7 and the CBIC Circular.
The Commissioner (Appeals) directed that differential duty should be calculated based on normal transaction value at or near the time of removal as per the guidelines. Aggrieved, the revenue department challenged the Commissioner (Appeals)’s order before the CESTAT.
The department’s counsel argued that the method used by the department was upheld in previous cases involving the same company and the appellant failed to provide relevant invoices or evidence during earlier proceedings.
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The two-member bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) acknowledged the department’s argument that similar cases involving Bloom Dekor Limited had been decided in the past but in that case, the company (respondent) only challenged whether the valuation rules applied.
The tribunal explained in this case, the company (respondent) specifically challenged the methodology of calculation under Rule 7 of the Central Excise Valuation Rules, 2000, and the applicability of the CBIC Circular.
So, the tribunal rejected the department’s arguments stating consistency with earlier decisions. The tribunal found no infinity in the Commissioner (Appeals) order and upheld the decision to remand the matter for recalculation in the method prescribed in CBIC guidelines and rule 7 of the Central Excise Valuation Rules, 2000.
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