2017 (1) TMI 543 - AT - Central Excise

Tribunal grants appeal on excise duty valuation dispute, citing legal precedents and rules

The Tribunal, led by Member (Technical) Ashok K. Arya, allowed the appeal of M/s Steel Authority of India against the Commissioner's demand for duty, ... Valuation - captive consumption - stock transfer - Determination of applicability of Rule 8 of Central Excise Valuation (Determination on Price of Excisable Goods) Rules, 2000 in respect of internally transferred goods for consumption in assessee's various project work - whether valuation need not be done under Section 4(1) (a) of the Central Excise Act, 1994 but rather under Section 4(1) (b) of the Excise Act read with Rules 8,9 ,10 and 11 of the Central Excise Valuation Rules, 2000? Held that: - the subject matter is covered by Tribunal's decisions in the appellant's own cases SAIL vs. CCE Raipur, [2016 (1) TMI 970 - CESTAT NEW DELHI], where it was held that Since the transaction value of the excisable goods is available and not all the excisable goods are captively consumed, the provisions of Rule 8 as prevailing during the relevant time will not apply to the assessee. Appeal allowed - decided in favor of appellant. Issues:Appeal against demand of duty, interest, and penalty imposed on the appellant by the Commissioner, Raipur. Valuation of finished goods for excise duty purposes under Section 4(1)(a) and Section 4(1)(b) of the Central Excise Act, 1994. Allegation of under-valuation by the Revenue in Inter Plant Transfer (IPT) and Inter Transfer Order (ITO) clearances. Applicability of Central Excise Valuation Rules, 2000 and Cost Accounting Standard-4 (CAS-4) values. Judicial precedents cited by the appellant to support their case.Analysis:The appellant, M/s Steel Authority of India, challenged the Commissioner's order confirming duty demand, interest, and penalty. The dispute revolved around the valuation of finished goods for excise duty purposes. The Revenue contended that the goods' transfer did not involve sale, requiring valuation under Section 4(1)(b) of the Excise Act and relevant Valuation Rules. The appellant's clearances under IPT and ITO were scrutinized for under-valuation, leading to a demand for a differential duty payment. The appellant initially paid &8377; 3,63,59,332/- but was later asked to pay additional amounts, including interest and penalty.The appellant argued their case through legal representation, citing Tribunal decisions and higher judicial authorities. They referenced the Tribunal's decisions in their own cases and highlighted the Supreme Court's ruling in Commissioner Central Excise Calicut vs. Steel Complex Ltd. The Tribunal's decision in SAIL vs. CCE & C. BBSR-II and the Ispat Industries Ltd. case were also presented to support their position. These precedents emphasized that the Valuation Rules did not apply when goods were partly sold ex-factory and partly consumed internally.Considering the legal precedents and arguments presented, the Tribunal, led by Member (Technical) Ashok K. Arya, found merit in the appellant's contentions. The Tribunal observed that the Valuation Rules did not apply in situations where goods were partly sold to independent buyers and partly cleared for internal consumption. As 99% of the goods were sold to independent buyers, the Valuation Rules were deemed inapplicable to the goods cleared to other units. Consequently, the Tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant.In conclusion, the Tribunal's decision, pronounced on 19.12.2016, favored the appellant, M/s Steel Authority of India, by overturning the Commissioner's order and providing relief in light of the legal principles and precedents cited during the proceedings.