TaxTMI 
TaxTMI 
2013 (8) TMI 682
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....Excise registration and are discharging Central Excise duty on the cement cleared by them. The Revenue authorities felt that the clearances effected by the appellant to their own Ready Mix Concrete units (hereinafter referred to as RMC) and to their other units, the appellant had under-valued the clearances by resorting to valuation under Rule 8 read with Rule 9 of Valuation Rules, 2000. After investigation and recording of various statements, the authorities issued the Show Cause Notice demanding differential Central Excise duty along with interest and imposition of penalty. Subsequent to such Show Cause Notice issued by DGCEI, various Show Cause Notices were issued by the Additional Commissioner and Commissioner for the demand of differential duty. The adjudicating authority, in Appeal No.E/626/ 2011, has disposed the following Show Cause Notices. S.No. SCN F.No. & Date Amount of differential Central Excise Duty Period Issuing Authority 1 DGCEI/AZU/36-69/2009, dt.9.11.09 Rs.3,84,21,710/- March 2008 to May 2009 Additional Director General, DGCEI, AZU. 2 V/1....
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....ory for captive consumption as per the provisions of Section 4 of Central Excise Act, 1944 and arrived at the value based upon the cost of production of the cement manufactured, on the premise that there is no sale between their own units. It is his submission that the appellants were of the view that the value of excisable goods in this case, which is captively consumed, is not a sale and hence Rule 8 was applied. It is his submission that the appellant's belief was also strengthened by Board's circular No.354/81/2000-Tru, dt.30.06.2000, wherein the same is clarified. He would also submit that CBE&C vide circular dt.01.07.2000 at Sr.No.5 specifically stated that the goods which are captively consumed could be valued as per Rule 8 of the Valuation Rules and hence there was no error on their part. (ii) It is his submission that Section 4 of Central Excise Act, 1944 as it stood from 01.07.2000 read with Valuation Rules, 2000 contemplates determination of value for each removal of goods which would indicate that the transaction value should be arrived at in respect of finished goods which are sold. It is his submission that by Circular dt.30.06.2000, CBE&C has clarified the relevan....
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....decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd is also not applicable in the present case as therein the Larger Bench was answering a question as to whether the assessable value in respect of goods which are transferred to another plant of the same assessee, is required to be determined as per Rule 4 of Central Excise Valuation Rules, 2000 or as per Rule 8 of said Rules in a case where same goods are sold to independent buyers. It is his submission that the Larger Bench's view is not sustainable as the transaction value concept was not considered by the Larger Bench, the Indian Cost and Works Association of India has propounded CAS-4 certificate for the valuation of goods for captive consumption, based on cost construction method and none of the rules of circular issued by Board mentioned that Rule 8 is to be restrictively applied only to those situations where there is exclusive captive consumption. It is his submission that if view of the Larger Bench is to be followed, the intention behind introduction of transaction value and specific rule to deal with the valuation of captively consumed goods shall be rendered otiose. (v) It is his submi....
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....bmission that in view of the above, penalty is also not imposable and interest is also not demandable. 6. Ld. DR., on the other hand, would submit that there is no dispute that the appellant has valued the product cleared by him for captive consumption under the provisions of Rule 8 of Valuation Rules, 2000. It is his submission that very same final product i.e. cement is cleared by the appellant in the same form i.e. in bulk form to independent buyers also. It is his submission that the judgment of Larger Bench is squarely on the issue and there cannot be any doubt that the appellant is liable to discharge the differential duty. He would also submit that the claim made by the appellant regarding the demand of duty on the clearances made from NMCU is also baseless as the adjudicating authority has specifically stated that the demand is in respect of differential duty on the cement cleared from the appellant's factory. It is his submission that the extended period was correctly invoked as the appellant has changed the basis for valuation from 01.03.2008 without informing the same to the Department. 7. We have considered the submissions made at length by both sides and perused ....
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....ing the issue from the point of Rule 8 of the Valuation Rules and had recorded the following. 5. We have considered the rival submissions and are of the view that the assessee is correct in contending that provisions of Rule 8 would apply only in a case where its entire production of a particular commodity is captively consumed. This is evident on a plain reading of Rule 8 of the valuation rules, which reads as under Where 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 shall be one hundred and ten per cent of the cost of production or manufacture of such goods (emphasis supplied). If the intention was not to restrict the applicability of Rule 8 to cases where the entire production was being captively consumed, the Rule would have simply stated where excisable goods are consumed by an assessee himself or on his behalf in the manufacture of other articles instead of preceding the above expression with the words where the excisable goods are not sold. This view is also supported by the judgment of the jurisdictional High Court in the case of Indian Drug Manufa....
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....o need to look further and regardless of the applicability or otherwise of Rule 8, the assessable value should have been determined in terms of Rule 4 of the Valuation Rules. 8. The conclusion that we are drawing in the present case would lead to determination of a value which, in our view, will not only be reasonable but also consistent with the provisions of Section 4 of the Central Excise Act. We would, at this stage, draw support from the judgment of the Supreme Court in the assessee's own case, as reported in 2006 (202) E.L.T. 561, wherein the Court applied The Gunapradhan Principle in interpreting the Customs Valuation Rules. We have kept in mind the following observations of the Court in coming to our above conclusion: 26. In our opinion if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act. 27.................. 36. In our opinion, the Gunapradhan principle is fully applicable to the interpretation of Rule 9(2). Rule 9(2) is subservient to Section 14. We must, therefore, in....
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....ns to the lower authorities from March 2008 onwards. The lower authorities have not raised any query on this issue. The appellants had every reason to believe that the board's circular would be applicable to them and hence sought to value of the goods based upon the cost of production and as per provisions of Rule 8 of Central Excise Valuation Rules. Accordingly, we hold that the demand of duty prior to the period of one year from the date of issuance of Show Cause Notice dt. 09.11.2009 is hit by limitation and that portion of demand is liable to be set aside and we do so. All other show cause notices being within limitation, our findings on merits would apply. 13. As regards the claim made by the appellant that the differential duty has been demanded from them by CCE, Bhavnagar as an adjudicating authority for the clearances made by them from NMCU, MCU and RMC units, seems to have merit. The appellants have claimed before the authorities that the bulk cement cleared by them to their NMCU units was repacked by the NMCU unit after taking the CENVAT Credit and has discharged the duty liability on the cement which has been packed and cleared by NMCU unit on the premise that such re....