V.K. Agrawal, Member (T)
1. In this appeal, filed by M/s. E.I. Du Pont India Pvt. Ltd., the issue relates to the determination of assessable value of the pesticides manufactured by them.
2. Shri Balbir Singh, learned Advocate, mentioned that the Appellants clear the entire production to consignment stock agent and the goods are sold to various customers from the premises of consignment stock agent; that the assessable value of the goods has been determined on the basis of sale prices prevailing on dates subsequent to the date of removal of goods from the factory under Rule 7 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The learned Advocate submitted that in Board’s Circular F. No. 354/81/2000-TRU, dated 30-6-2000, it has been clarified that when the goods are not sold at the factory gate and they are transferred to depots or consignment agents, the assessable value shall be the value at which “the greatest aggregate quantity of goods from the depots, etc. are sold at or about the time of removal of the goods being from the factory/warehouse. If, however, the identical goods are not sold by the assessee from depot/consignment agent’s place on the date of removal from the factory/warehouse, the nearest date on which such goods were sold or would be sold shall be taken into account.” He contended that it is thus clear that the computation of the differential duty is wrong in the present matter as they have paid the duty as per the transaction value every month based on the normal transaction value and the greatest quantity sold by the consignment.
3. He has also relied upon Board’s Circular No. 643/34/2002-CX, dated 1-7-2002 wherein it has been clarified that the time period, over which the “greatest aggregate quantity” is to be computed, should be taken as the whole day and the transaction value of the “greatest aggregate quantity” would refer to the price at which the largest quantity of identical goods are sold on a particular day, irrespective of the number of buyers. He mentioned that the Circular dated 1-7-2002 further clarifies that “In case the ‘normal transaction value’ from the depot or other place is not ascertainable on the day identical goods are being removed from the factory/warehouse, the nearest day when clearances of the goods were affected from the depot or other place should be taken into consideration.” He contented that it is thus very clear from the Circular that the words “the nearest day when clearances of the goods were effected” mean that sales effected before clearance of subject goods from factory alone have to be analyzed to arrive at normal transaction value through – aggregation of greatest quantity sold; that at no circumstances should sales effected after the day on which clearance from factory was effected, be used to determine the normal transaction value; that it is also not practically possible to arrive at a future rate at which the duty is required to be paid; that if the interpretation of the Department that future price can also be taken as base is implemented, it would mean that the assessee has to foretell through some figment of imagination, the prices at which goods would be sold during subsequent periods and determine the normal transaction value and pay excise duty while clearing the goods from the factory.
4. Countering the arguments, Mrs. Krishna A. Mishra, learned SDR, submitted that the phrase “where such goods are not sold at or about the same time, at the time nearest to the time of removal” used in Rule 7 of the Central Excise Valuation Rules means that in the absence of sale at the depot, etc. on the day of removal from the factory, the transaction value of such goods already sold at the said depot or would be sold at the said depot shall be taken into account to arrive at the assessable value; that while the words “already sold” refer to the post transaction, the words “would be sold” refer to the future transaction; that as such the transaction value can be determined also on the basis of future price.
5. We have considered the submissions of both the sides. Under Section 4 of the Central Excise Act, the assessable value of the goods on each removal shall, in a case where the goods are sold for delivery at the time and place of the removal, be the transaction value. In any other case, the value shall be determined under the Central Excise Valuation Rules. As in the present matter, the goods are only sold from the consignment stock agent’s place, the assessable value has to be determined under the Valuation Rules, 2000 and admittedly the Rule applicable is Rule 7 which reads as under :-
“Rule 7. Where the excisable goods are not sold by the assessee at the time and place of removal but are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as “such other place”) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment.”
6. The “normal transaction value” as per Rule 2(b) of the Valuation Rules means “the transaction value at which the greatest aggregate quantity of goods are sold.” The Appellants have mentioned that they had discharged the duty liability as per the transaction value based on the normal transaction value and the greatest aggregate quantity sold by their consignment agent whereas the Revenue has demanded duty on the basis of prices prevailing on dates subsequent to the date of removal. It has not been denied by the Revenue that the Appellants have paid the duty on the basis of price at which the “greatest aggregate quantity” of goods are sold. The Revenue, however, wants to determine the assessable value on the basis of price at which the greatest aggregate quantity of goods are sold subsequent to the removal of goods. Once the normal transaction value of the impugned goods sold from other place at or about the same time is ascertainable, there is no need to determine the assessable value on the basis of price at which the goods may be sold subsequent to the time of removal of goods. The Board has also clarified this position vide Circular No. 643/34/2002-CX, dated 1-7-2002. A doubt was raised as the definition of normal transaction value Rule 2(b) of the Central Excise Valuation Rules does not indicate the time period over which the “greatest aggregate quantity” is to be computed. The Board has clarified as under : –
“The term “greatest aggregate quantity” has been used to define the term “normal transaction value” used in rules 7 and 9 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Seen in this context the time period should be taken as the whole day and the transaction value of the “greatest aggregate quantity” would refer to the price at which the largest quantity of identical goods are sold on a particular day, irrespective of the number of buyers. In case the “normal transaction value” from the depot or other place is not ascertainable on the day identical goods are being removed from the factory/warehouse, the nearest day when clearances of the goods were affected from the depot or other place should be taken into consideration.”
7. Accordingly we set aside the impugned Order and allow the appeal.