Judgment:
1. The appellant is a 100% Export-Oriented Unit engaged in the production and export of instant coffee. Part of the instant coffee is also sold in the domestic market. The dispute that has arisen in the present proceedings is the valuation of instant coffee sold in the domestic market for the purposes of levy of central excise duty. All through the appellant was taking the FOB value of the exported goods as the value for payment of central excise duty. The central excise authorities did not object to the same. During the years 1995-96, 1996-97, 1997-98 the FOB price was more than the domestic sale price.
As a result of adoption of the higher value, duty paid by them was more than the duty that would have been payable if domestic sale price was taken as the assessable value. However, show cause notice was issued alleging that during the period 1997 to 2002 assessable value as required to be fixed based on the domestic sale price and there was short-levy of Rs. 55 lakhs on account of adopting the lower export price as the assessable value. This demand has been confirmed by the lower authorities. The present appeals challenge those orders.
2. We have perused the records and heard both sides. There is no doubt agreed that Section 3 of the Central Excise Act, 1944 stipulates that the value of the goods sold in the domestic tariff area shall be determined as if the said goods are imported into India.
3. The appellants have been contending that in the absence of import of the same goods, the Indian export value could provide an appropriate basis (as equivalent to the likely import price) for valuation and assessment. It was on this basis that, all through, assessments based on the export value were being made. Revenue had also accepted such assessment and payment of duty. The present shifting of the stand of the Revenue is merely because the domestic price happens to be higher than the export price. Reliance is also placed on Circulars No.268/35/92-CX-8, dated 17-8-1994 and 268/85-CX. 8, dated 29-9-1994. The Circular dated 29-9-1994 has stated that "where invoice price of such goods under assessment is in the nature of a 'transaction value' (e.g., more or less, corresponding to the FOB value in the case of goods of identical nature) and in conformity with the provisions of Rule 3 of the revised Customs Valuation Rules, 1988, such invoice value can be accepted for purposes of assessment". The earlier instructions had stated that "invoice can be accepted for the purpose of assessment when it is in conformity with the transaction value under Rule 3(1) of the Customs Valuation Rules, 1988". The appellants contention is that a domestic sale price cannot be the basis for customs valuation because Rule 8 of the valuation rules specifically states that "no value shall be determined under the provisions of this rule on the basis of selling price in India of the goods produced in India." In the light of this provision, the appellants have contended that the FOB price" is the most appropriate basis and the circulars of the Board have to be understood accordingly.
4. We find merit in the submission made by the appellant. There are no imports of identical or similar goods. There is no dispute that the FOB value is a fully commercial price. Therefore that value can be taken as the likely price of import also. The Circular of the Board also advises accepting of domestic sale price, which is comparable to FOB export price for the purposes of valuation. The appellants were consistently paying duty on the FOB value. The higher duty paid by them on account of that is stated to be about Rs. 67 lakhs during the period 1995-96 to 1997-98. The present change of stand of the Revenue is merely because for the subsequent period, the domestic sale prices were higher. Such an inconsistent stand cannot be the basis for demand of duty.
5. In view of what has been stated above, the appeals are allowed with consequential relief, if any, to the appellant.