NDLI: Commissioner of Central Excise & Service Tax, Rohtak Vs. Merino Panel Product Ltd.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	2000 1944 – s.4(1)(a) – Central Excise Valuation (Determination of Price of Excisable Goods) Rules Central Excise Act
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Disposed Off
Headnote	Central Excise Act, 1944 – s. 4(1)(a) – Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – rr. 9, 11 – Customs, Excise and Service Tax Appellate Tribunal set aside the show cause notice issued by the Appellant-Revenue to the Assessee-Respondent, on the ground that it had invoked an incorrect method of valuing related party transactions – Correctness of – Held: The assessable value for the related party sales can be established by referring to the normal price u/s. 4(1)(a) of the CEA, which is readily available in the present case – This is the true meaning and intention underlying the CBEC Circular of 01.07.2002 – Reference to r. 11 in Point No. 12 of the Circular simply mandates the usage of “reasonable means” keeping in mind s.4(1)(a) of the CEA and r. 9 of the CEVR – This is merely a method by which the Revenue is required to apply its mind to a case of partial sales to both independent and related parties – Point No. 12 in the Circular of 01.07.2002 is not contrary to the intent of the CEA and CEVR and the object behind it is to merely use “reasonable means” as outlined u/r. 11 of the CEVR, in conformity with s. 4(1)(a) of the CEA and r. 9 of the CEVR, so as to reach the assessable value of goods for determination of excise duty – When the normal price that is ordinarily charged in dealings where the price itself is the sole consideration of the transaction is available, as it is here, that price can be transposed onto the related party purchases as well, to arrive at the assessable value – Hence, the order of the Commissioner regarding the value of the goods sold to the Respondent’s sister concerns is in consonance with Supreme Court’s earlier judgments and the Circular dated 01.07.2002 – Demand made by the Appellant is confirmed however, the levy of interest and penalties upon the Respondent is not approved – These amounts be reduced from the total recoverable amount from the Assessee. Tax/Taxation – Held: Maintaining predictability in taxation law is of utmost importance and, for this reason, the Court should not accept an argument by the Revenue that waters down its own Circular – Revenue’s stance against its own circular can potentially lead to a chaotic situation where, with one hand, the Revenue would lay down instructions on how to interpret the relevant statutes and rules, and with the other hand, it would promptly disobey those very directions.Central Excise Act, 1944 – s. 4(1)(a), (b) – Held: Principles u/s. 4(1) of the CEA are geared toward determination of the ‘value’ of goods – Under s. 4(1)(a), the value of goods for the purposes of excise duty, is deemed to be the ‘normal price’ of the goods that are ‘ordinarily sold’ in the course of business, and where the price is the ‘sole consideration’ for the transaction – It is only when this cannot be gleaned from the set of transactions available on record that s. 4(1)(b) is resorted to.Excise Duty – Determination of excise duty on related transactions – Held: Price charged from independent parties for the sale of excisable goods can be used as a benchmark for determination of excise duty on related transactions when such a price is readily available – However, when making such calculations via transposition, the Revenue cannot act in a mechanical way – The assessment of the appropriate value of the related party transaction must be made after considering relevant material and due application of mind – The entire quasi-judicial process of issuing a show cause notice and considering the distinguishing factors placed by the Assessee must be completed before the price of sales to independent buyers is utilized as a benchmark for sales to related parties – The general principles of s.4(1) of the CEA, r/w r. 11 of the CEVR, are meant to provide a pathway for determination of the “normal price” and “value” of goods in cases where no alternative methodology is applicable – This fulfils the dual objectives of being in consonance with the Circular dated 01.07.2002 and harmonizing different provisions of the CEA and CEVR – Central Excise Act, 1944 – s. 4(1) – Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – r. 11. Central Excise Act, 1944 – s. 4(1) – Presumption under – Discussed – Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 – rr. 9, 11.
Judge	Hon'ble Mr. Justice Surya Kant
Neutral Citation	2022 INSC 1253
Petitioner	Commissioner Of Central Excise & Service Tax, Rohtak
Respondent	Merino Panel Product Ltd.
SCR	[2022] 18 S.C.R. 28
Judgement Date	2022-12-05
Case Number	6891

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Commissioner of Central Excise & Service Tax, Rohtak Vs. Merino Panel Product Ltd.

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