Retrospective valuation rule for captive consumption applies to partly sold clinker, requiring Rule 8 valuation instead of Rule 4.

A substituted valuation rule that removed the anomaly between wholly captive clearances and partly sold, partly captively consumed clearances was treated as a curative amendment and therefore applied retrospectively. On that basis, clinker used for captive grinding had to be valued under Rule 8 of the Central Excise Valuation Rules, 2000, even where part of the goods was sold to independent buyers. The contrary valuation under Rule 4 was not accepted, and the duty demand, interest, and penalty based on that approach could not be sustained.

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Issues: Whether the substituted Rule 8 of the Central Excise Valuation Rules, 2000 applied retrospectively to clinker cleared partly to independent buyers and partly to captive grinding units, so that the captively consumed quantity had to be valued under Rule 8 and not under Rule 4.

Analysis: The relevant pre-substitution Rule 8 applied where excisable goods were not sold and were used for captive consumption, whereas the substituted text, effective from 01.12.2013, expressly covered goods that were not sold in whole or in part and were used for manufacture of other articles. The substitution was held to be curative of the earlier anomaly that treated wholly captive clearances differently from partially sold and partially captively consumed goods. The meaning of "substitution" was treated as replacement of the old provision, and the contemporaneous circular was read as confirming that even partial sales did not take the captively consumed clearances outside Rule 8. The contrary view based on the earlier unamended rule was treated as inapplicable in light of the substituted provision and the legislative intent behind it.

Conclusion: The substituted Rule 8 was held applicable retrospectively, and valuation of the captively consumed clinker had to be made under Rule 8.

Final Conclusion: The duty demand, interest, and penalty could not be sustained on the department's valuation basis, and the assessee succeeded in the appeal.

Ratio Decidendi: A substituted valuation provision that replaces an earlier rule to remove an anomaly in captive-consumption valuation operates retrospectively as a curative amendment, and must govern even where part of the goods are sold and part are captively consumed.

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