2015 (10) TMI 1977 - AT - Central Excise

CESTAT AHMEDABAD: Ruling on Central Excise Valuation Rules dispute favors appellants

The Appellate Tribunal CESTAT AHMEDABAD ruled in favor of the appellants in a dispute concerning the valuation of goods cleared between related units ... Valuation - Determination of duty payable - Held that:- issue is no more res-integra, in view of the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd. vs. Commissioner of Central Excise, Raigad [2007 (2) TMI 5 - CESTAT, MUMBAI], which was followed by this Bench in the case of Jay Corporation vs. Commissioner of Central Excise & Service Tax, Daman [2014 (4) TMI 1080 - CESTAT AHMEDABAD]. - Rule 8 of valuation Rules provides the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods. In the present case, the appellants sold the goods partly and therefore, Rule 8 as it stood during the relevant period would not be applicable. We have noticed that the Rule 8 of the valuation was amended, by Notification No. 14/2015-CE (NT) Dated 22.11.2013. - Impugned order is set aside - Decided in favour of assessee. Issues:Dispute regarding valuation of goods cleared between related units under Central Excise Valuation Rules, 2000.Analysis:The judgment by the Appellate Tribunal CESTAT AHMEDABAD involved a dispute related to the valuation of goods cleared between different units under the Central Excise Valuation Rules, 2000. The appellants were engaged in the manufacture of MS Ingots and TMT bars through their various units, with the specific issue revolving around Unit-1 and Unit-2 supplying goods to Unit-3 for further manufacturing. The Revenue contended that Unit-1 and Unit-2 were related to Unit-3, making them liable to pay duty at one hundred and ten per cent under Rule 8 of the Valuation Rules. The period of dispute spanned from December 2008 to June 2013.Upon hearing both sides and examining the records, the Tribunal found that the issue at hand had already been settled by a prior decision of the Larger Bench in the case of Ispat Industries Ltd. vs. Commissioner of Central Excise, Raigad. This decision was subsequently followed by the Tribunal in the case of Jay Corporation vs. Commissioner of Central Excise & Service Tax, Daman. The Tribunal noted that the clearance of goods to a sister concern falls under Section 4(i)(b) of the Central Excise Act, as it is not considered a sale. The correct valuation under this provision required following the Central Excise Valuation Rules, 2000.Rule 8 of the Valuation Rules stipulates that if excisable goods are not sold but used for consumption in production, the value shall be one hundred and ten per cent of the cost of production. However, since the appellants had sold the goods partially, Rule 8 was not applicable during the relevant period. It was also observed that Rule 8 had been amended by Notification No. 14/2015-CE (NT) dated 22.11.2013. Consequently, the impugned orders were set aside, and the appeals filed by the appellants were allowed with consequential relief. The applications for early hearing were disposed of accordingly.