THE COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, CALICUT versus M/S. CERA BOARDS AND DOORS, KANNUR KERALA & ORS.

Citation: [2020] 11 S.C.R. 471 · Decided: 19-08-2020 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Disposed off

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Judgment (excerpt)

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THE COMMISSIONER OF CENTRAL EXCISE,
CUSTOMS AND SERVICE TAX, CALICUT
v.
M/S. CERA BOARDS AND DOORS,
KANNUR KERALA & ORS.
(Civil Appeal Nos. 7240-7248 of 2009)
AUGUST 19, 2020
[S. A. BOBDE, CJI, A. S. BOPANNA AND
V. RAMASUBRAMANIAN, JJ.]
Central Excise Act, 1944 – s.4 amended in 2000 – Charging
of excise duty – Method of valuation of excisable goods – In present
cases arising out of similar facts, assesses allegedly undervalued
the goods manufactured and cleared by them – Evaded the excise
duty actually payable – Period of assessment pre & post 2000
Amendment – Adjudicating authorities inter alia held that there was
undervaluation and evasion of excise duty – Customs, Excise and
Service Tax Appellate Tribunal (CESTAT) though upheld said finding
but remanded the matters back for re-quantification of duty – Held:
Finding w.r.t undervaluation and evasion of excise duty recorded
by CESTAT in all the cases has not been challenged by the assesses
and hence has attained finality – Further, before amendment, clause
(a) of sub-section (1) of s.4 laid emphasis on normal price for an
ordinary sale in the course of wholesale trade, after amendment it
speaks about transaction value – Thus, after amendment, if a sale
is covered by s.4(1)(a), the value of excisable goods shall be the
transaction value defined in s.4(3)(d) – Clause (b) of sub-section
(1), both before and after the amendment, leaves it to the delegated
legislation to prescribe the method of valuation, for cases not covered
by clause (a) – After the amendment, the Central Government issued
a new set of rules- 2000 Valuation Rules in supersession of 1975
Valuation Rules – Valuation as per the Rules is permissible only in
cases covered by s.4(1)(b) and not by s.4(1)(a) – Impugned orders
of CESTAT confirmed – Principles enumerated for adjudicating
authorities to keep in mind while re-adjudicating the matters –
Finance Act, 2000 – Central Excise Valuation (Determination of
Price of Excisable Goods) Rules, 2000 – Central Excise (Valuation)
[2020] 11 S.C.R. 471
471
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SUPREME COURT REPORTS
[2020] 11 S.C.R.
Rules, 1975 – Central Excise Rules, 1944 – Central Excise Rules,
2002.
Disposing of the appeals, the Court
HELD: 1.1 Common Issues arising in these appeals
It may be seen from the facts involved in these batches of
cases that there is a common thread that runs along the fabric of
these cases. This common thread is that the assessees in these
cases allegedly undervalued the goods, sold them for a much
higher price than what was reflected in the invoices and thereby
they evaded the excise duty actually payable. Though the
assessees uniformly denied the said allegation, the CESTAT has
recorded a categorical finding in all the cases that there was
undervaluation and evasion of excise duty. The said finding has
not been challenged by the assessees and hence it has attained
finality. Therefore, what arises for adjudication is only the manner
of determining the value of the goods removed by the assessees
for sale to or through dealers. In other words, the entire dispute
now revolves around the question of valuation of excisable goods,
for the purposes of charging of duty. But for finding an answer to
the said question, it is necessary to take note of the period of
assessment. In some of these cases, the period of assessment
was both prior to and after 01.07.2000 and in other cases, the
period was after 01.07.2000. According to the respondents, the
method of determination of value before 01.07.2000 was different
from the method of valuation after 01.07.2000, since Section 4 of
the Central Excise Act, 1944 was amended with effect from
01.07.2000 under Act 10 of 2000. The amended Section 4 also
underwent some changes in the years 2003 and 2012. The Court
is not concerned with the changes brought forth in 2012.
[Paras 77, 78][500-C-G]
1.2 In simple terms, 2 different methods of valuation were
prescribed in Section 4 as it stood prior to 01.07.2000:
(i) one covered by clause (a) of sub-section (1) of Section
4, where the emphasis was on normal price, the
determination of which co-related to ordinary sale in
the course of wholesale trade (satisfying certain
conditions), and
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(ii) another covered by clause (b) of sub-section (1) of
Section 4, which related to cases where there were no
sales, and cases where normal price could not be
ascertained for any other reason. [Para 80][507-C-D]
1.3 The prescriptions contained in clause (a) o

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