2026-VIL-345-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Valuation of excisable goods (medicament) - Department relied on sample invoices to allege that the appellant had adopted a much lower value for payment of duty than the declared MRP. It was also alleged that the average sale price of the appellant's products during certain periods was much higher than the declared sale price, resulting in probable escapement of duty - Whether the Department can adopt the average sale price of one period to demand differential duty for an earlier or subsequent period - HELD - The valuation of excisable goods under the Central Excise Act, 1944 is governed by Section 4, which provides that the assessable value shall be the transaction value, i.e. the price actually paid or payable for the goods sold. Any subsequent reduction in price, for commercial reasons, cannot be a concern for the Department regarding the original duty paid at the time of clearance. Therefore, a lower average sale price in a subsequent period, by itself, is not proof of duty evasion. The law does not permit retrospective imputation of value based on comparative analysis alone. The valuation must be grounded in documented agreements, invoices and contemporaneous evidence relevant to each removal – Further, allegation of undervaluation and clandestine removal is a serious allegation which needs to be substantiated through tangible, direct, affirmative and incontrovertible evidence. In the present case, the Department has relied solely on sample invoices without bringing any other evidence to prove its contentions. The verification conducted by the Department also did not reveal any evidence of clandestine removal or dual pricing by the appellant. Therefore, the allegation of undervaluation and clandestine removal is not sustainable - The demand of central excise duty, interest and penalties confirmed in the impugned order is set aside. The denial of SSI exemption to the appellant is also not legally sustainable – The appeal is allowed
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