COMMISSIONER OF CENTRAL EXCISE versus M/S NESTLE INDIA LIMITED

COMMISSIONER OF CENTRAL EXCISE versus M/S NESTLE INDIA LIMITED

Since the exemption notifications are applicable and excise duty payable in India has to be determined under those notifications, in absence of actual sale, valuation must be according to Rule 8, i.e., 115% of the cost of production. The approach of basing duty on FOB export value is contrary to the language and object of the notifications. The Tribunal's decision applying Rule 8 is correct; the Department's show cause notice based on export value is flawed.

Parties
Appellant: Commissioner of Central Excise; Respondent: M/s Nestle India Limited
Jurisdiction
India
Judgment Date
24 November 2015
Procedural Posture
Civil Appeal / Supreme Court Appeal From CESTAT
Outcome
Appeal dismissed.
Legal Topics
Central Excise, Export Oriented Unit (eou), Excise Valuation, Exemption Notification, Captive Consumption
Tax Law Central Excise Export Oriented Unit (eou) Excise Valuation Exemption Notification Captive Consumption

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Parties

Commissioner of Central Excise

Appellant

M/s Nestle India Limited

Respondent

Procedural Posture

Civil Appeal / Supreme Court Appeal From CESTAT

Legal Issues

  1. 1 Whether valuation for excise duty on goods cleared by a 100% EOU to sister units for captive consumption should be based on FOB export value of similar goods or cost of production as per Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, in terms of exemption notifications.

Ratio Decidendi

Since the exemption notifications are applicable and excise duty payable in India has to be determined under those notifications, in absence of actual sale, valuation must be according to Rule 8, i.e., 115% of the cost of production. The approach of basing duty on FOB export value is contrary to the language and object of the notifications. The Tribunal's decision applying Rule 8 is correct; the Department's show cause notice based on export value is flawed.

Court Disposition

Appeal dismissed.

Orders

  • Order of the Tribunal set aside the order of the Commissioner (Appeals) and restored correct valuation method as per Rule 8; no interference by Supreme Court.