1. Transaction value – onus to prove under-valuation is on Customs

Facts

Assessee imported certain goods falling under Chapter heading 29 of the Customs Tariff in October, 1999 and declared the unit price of US$ 13.2 per kg. Assessee earlier imported the same goods from the same suppliers at US$ 18.7 per kg. Deputy Commissioner of Customs, re-assessed the said bill of entry based on the earlier unit price of US$ 18.7 per kg. Commissioner (Appeals) affirmed the said demand and on appeal to CESTAT, the demand was dropped on the ground that there are no contemporaneous imports. Revenue challenged the said order before the Apex Court relying upon the judgment in the case of Punjab Processors Pvt Ltd vs CC -2003 (157) ELT 625 (SC).

Held

The Apex Court held that the burden of proof to prove the under-valuation was on the Customs. Customs had not produced any evidence of contemporaneous imports at higher price. Subsequent imports of a lower value was accepted by the Customs. Therefore, transaction value was accepted and Revenue’s appeal was dismissed with costs.

[CC, Mumbai vs J.D.Orgochem Ltd — 2008 (86) RLT 287 (SC)]

2. Control samples retained in factory for laboratory test not chargeable to Central Excise duty

Facts

Assessee are manufacturers of medicament falling under Chapter 30.03 of the Schedule to the Central Excise Tariff Act, 1985. They draw samples from each batch of production and retain in the factory for attending the quality complaints from customers in future. On the said control samples assessee was not discharging duty during the period September 1997 to January 2002. Central Excise Department demanded duty on the said samples and issued the show cause notice. On adjudication of the notice, demand was confirmed which was challenged before Commissioner (Appeals) by the assessee. Commissioner (Appeals) set aside the Order-in-Original following the decision in the case of Dabur India Ltd wherein it was held that control samples retained in the factory for purpose of laboratory test are not required to be duty paid. On appeal against the said order, CESTAT upheld the said decision and held that no duty shall be charged on the samples remaining within the factory. Against this order of CESTAT, Department filed an appeal before the High Court on the following question of law.

Issue

Whether excise duty is leviable on control samples withdrawn and removed without accountal in daily stock account register by the party, considering it to be deemed removal under Rule 9 and Rule 49 of the erstwhile Central Excise Rules, 1944.

Held

High Court of Punjab and Haryana held that no duty is to be charged on control samples but the proper account of receipt and utilization of such samples in the laboratory should be maintained. It was also held that in the daily account register only those items are to be entered which are removed from the factory. Hence the Departmental appeal was dismissed as no substantial question of law arises from the order of CESTAT.

[Commissioner of Central Excise, Panchkula vs Malcom Pharmaceuticals — 2008 (225) E.L.T 428 (P & H)]

3. Precedent – Judicial discipline – Once law was declared and judgment of High Court was upheld by Supreme Court, it is duty of Union of India in every matter to which case applies, suo motu to be applied without driving party to move High Court.

Facts

Assessee’s case was covered by the decision of Arviva Industries India Ltd which was upheld by the Supreme Court.

Held

Once the law was declared and the judgment of the High Court was upheld by the Supreme Court it is the duty of the revenue authorities, in every matter which came up before them to which judgment applies, to be applied suo motu without driving the party to move the High Court.

[Vijay Kumar Goenka vs UOI — 2008 (226) ELT 41 (Bom) ]

4. Limitation – Extended time not invocable when there is conflict of views in the Board circulars issued

Facts

Assessee manufactures multi-micronutrients and Ministry of Agriculture granted registration to the products as fertilizer. Central Excise department issued notice alleging misdeclaration classifying the said product as ‘plant growth regulator’ under Chapter 3808.20. Assessee replied the notice and submitted that the samples got tested on three occasions by the department and ultimately came to the conclusion that the product appropriately fall under Chapter 3105. However, the adjudicating authority confirmed the demand. In an appeal to CESTAT by the assessee, it came to conclusion based on the three circulars issued by CBEC in which it was stated that the micronutrients with or without N,P,K stood recognized as fertilizer. Aggrieved by the said order of the CESTAT, Revenue filed appeal before the Supreme Court.

Held

It was held by the Apex Court that mere non-declaration is not sufficient to invoke larger period but some positive act of suppression is required for invoking larger period of limitation under Section 11A. It was further held that the three circulars issued by CBEC were carrying a conflict of views between the Ministry of Finance and Ministry of Agriculture hence the larger period cannot be invoked.

[CCE, Bangalore vs Karnataka Agro-chemicals — 2008 (86) RLT 899 (SC)].

5. Period of Limitation to issue a Show Cause Notice, u/s.110 of the Customs Act commences from the date of seizure and not from detention of goods

Facts

Assessee imports digital audio and music production equipment through Chennai Airport. Part of the consignment was also cleared to dealers at Mumbai for exhibitions. These goods were detained at Mumbai by the revenue and then subsequently seized. A show cause notice was issued after a lapse of six months beyond the period of 6 months from the date of detention but before the expiry of 6 months from the date of seizure. Assessee prayed for quashing the show cause notice and return of the goods.

Held

The Madras High Court, held that the “seizure” employed in Section 110(2) of the Customs Act is not same as “detention” and the relevant date for computing the period of 6 months to issue a show cause notice starts from the date of seizure.

[Promusicals vs Jt.CC, Mumbai-2008 (227) ELT 182- HC-Mad].