M/S.Inox Air Products Ltd vs Cce, Chandigarh

(Arising out of OIA No.128-129/CE/CE/CHD/06 dt.22.2.2006 passed by the CCE(Appeals), Chandigarh)

Date of Hearing/Decision 06.10.2015

For approval & Signature:

Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Honble Mr.B.Ravichandran, Member (Technical)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? yes

M/s.Inox Air Products Ltd. Appellant

Vs.

CCE, Chandigarh Respondent

Appearance:

Present for the Appellant: Shri L.P.Asthana & Ms.Shreya,Advocates

Present for the Respondent: Shri Govind Dixit, AR

Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Honble Mr.B.Ravichandran, Member (Technical)

Final Order No.53140-53141/2015

Per: B.Ravichandran

There are two appeals filed by the appellants and both are taken up for decision as the issue involved is the same.

2. Brief facts of the case are that the appellants are engaged in the manufacture of industrial and medical gases which are liable to Central Excise duty. They are supplying specified quantity of gases on stock transfer basis to their unit at Faridabad. Revenue felt that the appellants are not discharging correct excise duty on such clearances to their Faridabad unit. Accordingly the proceedings were initiated resulting in confirmation of demand for differential duty and imposition of equal penalties. On appeal, learned Commissioner (Appeals) upheld the orders. Aggrieved by the same, the appellants are before us.

3. In the appeals, the appellant pleaded that when the value could not be determined under section 4(1)(a), the provisions of section 4 (1) (b) read with Valuation Rules will apply. They have sale to independent buyers and comparable value as stipulated in Rule 6 (b) can be applied to arrive at the correct valuation. The appellants also contested the imposition of penalties as there is no mis-declaration on their part. The entire duty paid by or payable by them is available as credit to their Faridabad unit.

4. During the course of arguments, learned Counsel for the appellants stated that neither the original authority nor the appellate authority has given any finding about what shall be the comparable value for the purpose of assessing duty in terms of Rule 6 (b) (i) of the Central Excise (Valuation) Rules, 1975. Learned Counsel pleaded that when comparable price is taken it should be for similarly placed buyers i.e. buyer of gases to repack it and further sell it. The department calculated differential duty based on the highest sale price is not legally sustainable.

5. Learned AR on the other hand reiterated the findings of the lower authorities and stated that the valuation followed for the purpose of Central Excise duty paid by the appellants, is not correct. When the gases are cleared on stock transfer basis to their Faridabad unit, valuation of such clearances are to be made in terms of section 4 (1) (b) read with Central Excise (Valuation) Rules, 1975.

6. We have heard both sides and considered the appeal papers. Perusal of the original orders and appellate orders indicate that there is no discussion or clear findings as to which comparable value has been taken for arriving at demand for differential duty. The lower authorities reproduced the provisions of section 4 (1) (a), section 4 (1) (b) and arrived at the conclusion that the value has to be fixed on comparable price of gases sold to independent buyers. Which of these independent prices is considered for valuation alongwith reason has not been elaborated. We find much force in the appellants contention that while arriving at the comparable prices it is necessary to see whether the transaction for comparable value is in proximity of time to the similar or comparable class of buyers. The appellants are selling the gases to different set of buyers while comparing the price for valuation purposes, as already stated, it is necessary to have comparable volume and proximity of time and comparable class of buyers. Revenues stand that the highest of value is a comparable price is not supported by the provisions of law. We find that while the value adopted is to be based on comparable value there is no sanction to take highest of the independent sale price for such purpose. This Tribunal in the case of Somaiya Organics (India) Ltd. -2009 (244) ELT 115 (Tri.-Del.) held that

The normal? price of the goods is the price at which the goods are ordinarily sold in the course of wholesale trade. It is a sort of representative price of the goods during a particular period. Honble Supreme Court in the case of A.K. Roy and another v. Voltas Limited-1977 (1) ELT J-177 (S.C.) in para 19 of the judgment has observed that while determining the price which is to represent the real value of the goods to be taxed, the price must be conservative in every respect. Therefore, while determining the price of the goods being cleared for captive consumption by invoking Rule 6(b)(i), on the basis of the price of comparable goods of the same assessee or other assessee, the most conservative price must be adopted, not the highest of the prices as it will loose the character of the normal price.

7. Accordingly, we hold that the price of gases sold to independent buyers of similar class should be considered for valuation of gases cleared by the appellants on stock transfer basis. The appellants claim that during the relevant period their sale to M/s.Saraswati Air Products will satisfy the criteria for comparable price in view of volume and class of buyers. We find that this claim merits consideration.

8. We find in the present case the demands were issued based on scrutinizing of periodical monthly returns filed by the appellants. On advice by departmental officers the appellants paid the differential/additional duty on 5.10.99 well before the adjudication. Certificates under Rule 57E were also issued to them for availing credit. We find in these circumstances imposition of penalties equal to duty difference demanded is not justifiable and accordingly, we set aside the same.

9. The appeals are disposed of on the above terms. The miscellaneous application for linking the appeals is also disposed of.

(pronounced in open court)

(B.Ravichandran) (Sulekha Beevi C.S) Member (Technical) Member (Judicial)

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