The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld recovery of interest and ruled that Lead Acid Batteries supplied to individual customers is to be valued under Section 4A of the Central Excise Act, 1944.
Based on the intelligence that the appellant, Gold Star Battery Pvt Ltd, was clearing their manufactured goods Viz. Lead Acid Batteries by assessing them under Section 4 of the Central Excise Act, 1944 instead of Section 4A of the Central Excise Act, 1944 despite the fact that the said goods were used as components in the automobile industry and were required to be subjected to MRP/RSP based assessment, the officers of Preventive Wing, visited the factory premises of the appellant and searched the factory premises in presence of panch witnesses.
After the investigation was completed, the appellant was issued the show cause notice wherein it was contended that the lead acid batteries cleared to the dealers are required to be assessed under Section 4 A of the Central Excise Act, 1944. Accordingly, demand of differential duty between the value under Section 4 and value under Section 4 A of the Central Excise Act, 1944 was proposed.
Paresh Sheth, Counsel appearing on behalf of the appellant submitted that the appellant has been valuing their Lead Acid Batteries supplied to individual customers under Section 4 A of the Central Excise Act, 1944 whereas in case of supplies made to the dealer, they value the batteries under Section 4 of the Central Excise Act, 1944 for the reason that the batteries supplied by the appellant to dealers are not ready to use as at the dealer stage the batteries are required to be charged by adding acid into batteries.
The Counsel further contended that this activity amounts to manufacture according to which adoption of any treatment on the goods to render the product marketable to the consumer is activity amounts to manufacture of goods. Therefore, the batteries cleared by the appellant was subjected to other manufacture, hence, the valuation was correctly denied under Section 4 of the Central Excise Act, 1944 and not under Section 4A of the Central Excise Act, 1944.
A Two-Member Bench of the Tribunal comprising observed that “there is no difference in the nature of the clearance made to individual customer wherein the valuation was admittedly done by the appellant under Section 4 A and the nature of clearance made to the dealers. Therefore, the clearance made to dealers is also to be valued under Section 4 A of Central Excise Act, 1944.”
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