TaxTMI 
TaxTMI 
2014 (12) TMI 651
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.... factory gate to independent buyers and also cleared the similar finished goods to their interrelated unit/sister concern at Baddi. It was alleged that appellants have wrongly assessed the value of goods cleared to their interrelated/sister units under Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (hereinafter referred to as 'the Valuation Rules') which they were required to assess under Rule 4 of the Valuation Rules and hence short paid duty of Rs. 2,47,926/-. 2.1 The appellants were issued show cause notice for recovery of differential duty along with interest under Sections 11A and 11AA (11AB up to 7-4-2011) of the Central Excise Act, 1944 (for brevity 'the Act') and proposing penal action under Rule 25 of the Central Excise Rules, 2002 (for brevity 'the Rules'). 2.2 The adjudicating authority confirmed the demand along with interest under Sections 11A and 11AB of the Act and imposed penalty of Rs. 10,000/- under Rule 25(1)(a) of the Rules. 3. Being aggrieved with the impugned order, the appellants have filed the present appeal along with stay application on the following grounds made in their appeal and ad....
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....ich had been upheld by the Hon'ble Supreme Court and reported as 2003 (158) E.L.T. A182 (S.C.) and the second one is reported as 2005 (182) E.L.T. 196 (Tri.-Bang.) which has also been upheld by the Hon'ble Supreme Court and reported as 2006 (193) E.L.T. A-197 (S.C.); that whereas the first case had been decided in favour of the department and the second had been remanded, but it did not mean that the Hon'ble Court had decided the precise question by way of reasoned and well discussed order, as not precise question had been decided; (v) that without prejudice to the above grounds, it is also to be mentioned that Rule 4 of Valuation Rules under which price is sought to be determined has no application as that applies where goods are sold under specified situation and removal of goods to own unit does not involve sale but is merely a transfer and hence Rule 4 has no application at all; (vi) that the circulars are binding on the departmental authorities and they cannot choose to follow decision of the Tribunal wherein the circulars have not properly been considered; (vii) that the appellants were selling their goods to independent buyers on credit basis ranging ....
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.... No. 643/34/2002, dated 1-7-2002. The appellants have referred to Para 21 the said Circular dated 30-6-2000 pertaining to the valuation of goods for captive consumption, which they claimed was in consonance with the provisions of Rule 8 of the Valuation Rules. Rule 8 of the Valuation Rules is reproduced 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 percent of the cost of production or manufacture of such goods." 6.1 Perusal of the above rule makes it amply clear that it is applicable in cases where goods are not sold but used for captive consumption by the assessee or are captively consumed on his behalf. In the instant case, the goods in respect of which the valuation is disputed, have neither been captively consumed by the appellants, nor had been consumed captively on their behalf. I find that the appellants have tried to lay stress on the point that the goods had been consumed in another unit of the same company, hence the goods had been captively consumed. The contention of the appellants is not tenable ....
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....riate to the facts of the instant case and the same is reproduced below : 12. How will valuation be done when goods are sold partly to related persons and partly to independent buyers? There is no specific rule covering such a contingency. Transaction value in respect of sales to unrelated buyers cannot be adopted for sales to related buyers since as per Section 4(1) transaction value is to be determined for each removal. For sales to unrelated buyers valuation will be done as per Section 4(1)(a) and for sale of the same goods to related buyers recourse will have to be taken to the residuary Rule 11 read with Rule 9 (or 10). Rule 9 cannot be applied in such cases directly since it covers only those cases where all the sales are to related buyers only. 6.3 In view of the above clarification of the Board, the contention of appellants that they have assessed the value of the goods cleared to the related persons under Rule 8 of the Valuation Rules as per the above referred Circulars do not hold good and the same is not acceptable. In the present case, the appellants had cleared part of the goods to unrelated buyers and part of the goods to a related person. It is clear....
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....its of the appellant are treated as "related persons" (inter-connected undertaking), Rule 10 read with Rule 8 cannot be invoked as these are substantial sales to independent buyers and Tribunal in case of CCE, Pune v. Arofine Polymers Limited (supra), relying upon its earlier judgments in cases of CCE v. Rocket Engineering Corporation Pvt. Ltd. (Order No. A/668-669/C-III/SMB/WZB/2006, dated 4-5-06), Pepsico India Holdings Pvt. Ltd. v. CCE, Mumbai (Supra) and CCE v. Kanam Foam Industries (supra) has held that when goods are being sold by a manufacturer to independent as well as related buyers, Rule 9 is inapplicable and in such a case, resort will have to be made to Section 4(1)(a) - that is the price at which the goods are sold to other independent buyers at the same time and place. In this case, since there are substantial sales to independent buyers and the price at with the goods are sold to Panipat and Bhatinda units is even more than the price to independent buyers, in view of the above-mentioned judgments of the Tribunal, there is no justification for rejecting the sale price in respect of clearances to Panipat and Bhatinda units and taking recourse to Rule 8 read with Rule 9....