COMMISSIONER OF CENTRAL EXCISE Vs. I.G. PETROCHEMICALS

JUDGEMENT

(1.) THE respondents are registered as a 100% E.O.U. and engaged in the manufacture and clearance of phthalic anhydride falling under Chapter 29 of Central Excise Tariff Act, 1985. After getting permission from the Development Commissioner for clearance of the excisable goods into Domestic Tariff Area, they approached the Customs authorities at J.N.P.T. from time to time for fixation of the value of the goods to be cleared into DTA on the basis of prices of imported consignments of phthalic anhydride during the relevant period. Accordingly the appellants were paying duty on such value fixed by the Customs department in respect of DTA clearances. Show cause notices were issued asking the respondents to show cause why the local invoice value which was higher than the value fixed by the Customs department should not be considered for charging duty in respect of DTA clearances. However, the Assistant Commissioner dropped the proceedings holding that the duty has been correctly paid on the basis of value determined by Assistant Commissioner (Customs), Nhava Sheva on the basis of import prices of identical goods prevailing at the relevant time and the actual value realised in the local market is not relevant for the purpose of determination of value under Section 14 of Customs Act, 1962, when the prices at the relevant time and place of importation are available in respect of identical goods. This Order of the Assistant Commissioner was upheld by Commissioner (Appeals).

(2.) THE learned S.D.R. submits that price in this case should have been determined as per provision of Rule 3 of the revised Customs Valuation Rules i.e. on the basis of transaction value. Since, in this case the goods were being sold in the local market the invoice value in the local market should be considered as transaction price under Rule 3 and there was no need of determining the price under Rule 8. They cited CEGAT decision in the case of Morarjee Brembana Ltd. v. Commr. of C. Ex., Nagpur wherein it was held that the Assessable Value to be determined in terms of Rule 8 of Customs (Valuation) Rules, 1988 i.e. best judgment rule. For this purpose the price prevailing in the domestic market should be taken into consideration and not the price arrived at by the Assistant Commissioner (Customs) based on the value at the time of importation of identical goods.

(3.) WE have considered the submissions, we find that in case of 100% E.O.U. under Section 3 of the Central Excise Act, 1944 the excisable goods produced or manufactured in 100% E.O.U. are liable to such excise duty in an amount equal to 50% of the aggregate of duties of custom which would be leviable under Section 12 of Customs Act, 1962 on like goods imported into India. For calculating the amount of said Excise duty, the value of such excisable goods is to be determined in accordance with the provisions of the Customs Act, 1962 and the Customs Tariff Act, 1975. There is no dispute that the price is to be the price at which the like goods are imported into India. The price fetched in the domestic market cannot be considered same as the transaction price in International market. In fact the CESTAT decision cited by the S.D.R. hold against them as it very clearly says that sale price charged to customer in India cannot be considered as a price in the course of international trade as provided under Section 14 of the Customs Act, 1962. Value has to be recomputed by allowing expenses, profit, duty and taxes payable in normal course. Since in the present case import price of identical goods is available which is also certified by the Assistant Commissioner (Customs), there was no need of arriving the international price by allowing deduction from the domestic price. Even otherwise once the element of profit and taxes is deducted from the domestic price it will be nothing but import price of identical goods as a profit would be the difference between the landed price and the domestic price.