TaxTMI 
TaxTMI 
2010 (4) TMI 674
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....e under Chapter Heading Nos. 8482 and 8607 to Schedule to the Central Excise Tariff Act, 1985. They were also availing Cenvat credit in terms of Rule 3 of the Cenvat Credit Rules, 2001. 4. In course of verification of audit, it was revealed to the Department that the appellants had availed Cenvat credit on the inputs namely 'Grease Seal' and had subsequently removed the said inputs to their sister unit namely M/s. National Engineering Industries, Khatipura Road, Jaipur without issuing any invoice and by merely reversing the credit in RG-23A Pt. II register. As the transaction value of the said inputs was available at the dealer's premises, which was the sister unit of the appellants, a show cause notice dated 24-11-03 came to be issued to the appellants requiring the appellants to explain as to why the duty to the tune of Rs. 5,25,979/- should not be recovered from them under Section 11A of the Central Excise Act, 1944 read with Rule 3(4) of the Cenvat Credit Rules, 2002 alongwith interest chargeable under Section 11AB of the said Act on the duty short paid/not paid and as to why penalty should not be imposed under Rule 13(1) of the Cenvat Credit Rules, 2002 read with Rule ....
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....d with the impugned order. 7. Having heard the learned Advocate and learned DR and on perusal of the records, the point for consideration which arises in the matter relates to the methodology for the valuation of the goods, which were procured by the manufacturer while availing Cenvat credit in respect of the duty paid thereon, but without consuming the same in the process of manufacture of dutiable products, the same were transferred to the sister concern or the related person who in turn sell the same to a third party. 8. Rule 3 (4) of the Cenvat Credit Rules, 2002 provides that while inputs or capital goods, on which Cenvat credit has been taken, are removed as such from the factory, the manufacturer of the final products shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under sub-Rule (2) of Section 3 or Section 4 or Section 4A of the Central Excise Act, 1944, as the case may be, and such removal shall be made under the cover of an invoice referred to in Rule 7. 9. A plain reading of the said rule, therefore, would rev....
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....sions of Rule 8 of the valuation rules would have to be invoked. However, this would require determination of the 'cost of production or manufacture', which would not be possible since the said inputs/capital goods have been received by the assessee from outside and have not been produced or manufactured in his factory. Recourse will, therefore, have to be taken to the residuary Rule 11 of the valuation rules and the value determined using reasonable means consistent with the principles and general provisions of the valuation rules and sub-section (1) of Section 4 of the Act. In that case it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT credit was taken by the assessee in the first place. In respect of capital goods adequate depreciation may be given as per the rates fixed in letter F. No. 495/16/93-Cus.-VI, dated 26-5-93, issued on the Customs side." 11. The Larger Bench of the Tribunal in Eicher Tractors referring to the said answer by the Board under said Circular has observed that "It is seen that the Board vide its Circular dated 25-4-05 has categorically said that clarifications given in this Circular superseded the earlier C....
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....om by the smaller benches and in case of any difference of opinion, it is necessary for the smaller bench to justify the dissent while formulating the question for reference to a Larger Bench and direct the Registry to place the matter before the President for Constitution of Larger Bench. The decision in CCE, Ahmedabad v. Ramesh Food Products (supra) in fact clearly supports the contention in that regard. 14. In the case in hand, however, we have neither an occasion to differ from view taken by the Larger Bench in the Eicher Tractors case nor an occasion to express any difference of opinion in respect of the said ruling. The point which arises in the matter in hand is that whether the matter in hand is covered by the said decision or not. 15. As already pointed out above, the undisputed facts in the case in hand are that the products namely Grease Seal procured by the appellants while availing the Cenvat credit in respect of the duty paid thereon, were not consumed in the process of manufacture of the final dutiable product, and instead, without issuing invoices but merely by reversing the amount of credit, the same were removed in favour of their sister concern wh....