TaxTMI 
TaxTMI 
2015 (11) TMI 1171
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....d. It is not in dispute that the said notifications applied in the facts of the instant case. 2. A show cause notice dated 23.9.2005 was issued by the Department stating that ordinarily Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 would apply and that the tea being captively consumed and not sold should be valued at 115% of the cost of production or manufacture of such goods. However, the show cause notice then goes on to say that as the said tea is transferred only to two sister concerns and no sale is involved, the assessable value of instant tea removed to the respondent's own units would be determined on the basis of the export price of similar goods and not 115% of the cost of production. 3. The order in original dated 31.5.2006 passed by the Additional Commissioner upheld the show cause notice and confirmed the duty amount, interest, and penalty as follows:- "ORDER (1) I confirm the duty amount of Rs. 42,86,079/- (Rupees Forty two lakhs, eighty six thousand and seventy nine only) (Centvat: Rs. 42,62,545/- and Education Cess Rs. 23,534/-) under Section 11A (1) of the Central Excise Act, 1944. (2....
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....Rules but also the notifications aforementioned. It is her case that the show cause notice itself was flawed in that the basis of the said notice is that since no sale had taken place on the facts of the present case, the FOB value of export of similar goods has to be taken into account. She laid great stress on the fact that in the notification dated 1.3.1997 the language used is not "sold" but "allowed to be sold" and that if this were kept in mind it is clear that the very basis of the show cause notice being incorrect would lead to incorrect orders that were passed by the original and first appellate authority. 8. Having heard learned counsel for the parties we think it is necessary to first extract the relevant statutory provisions and the notifications insofar as they have a bearing on the facts of the present case. 9. Section 3(1) proviso as it stood at the relevant time is extracted hereinbelow:- "SECTION 3. Duties specified in First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 to be levied. Provided that the duties of excise which shall be levied and collected on any excisable goods which are produced or manufactured, - ....
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..../97-CE dated 01-Mar-1997 Exemption to finished products, rejects and waste or scrap produced in a 100% EOU or FTZ In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the finished products, rejects and waste or scrap specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and produced or manufactured, in a hundred per cent export-oriented undertaking or a free trade zone wholly from the raw materials produced or manufactured in India, and allowed to be sold in India under and in accordance with the provisions of paragraphs 102 and 114 of the Export and Import Policy 1 April 1992 - 31 March 1997, from so much of the duty of excise leviable thereon under section 3 of the Central Excise Act, 1944 (1 of 1944), as is in excess of an amount equal to the duty of excise leviable under the said section 3 of the Central Excise Act, on like goods, produced or manufactured in India other than in a hundred per cent export-oriented undertaking or a free trade zone, if sold in India." 13. To simil....
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....ine what would be the amount equal to the duty of excise leviable on like goods. This being so, it is clear that learned counsel for the assessee is right in her contention that the basis of the show cause notice is itself flawed. The show cause notice in the present case, as has been noticed above, refers to Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, but then goes on to state that: "It is settled law that the value shall be determined keeping in view the following factors: a. sale price of goods under assessment b. sale price of other consignments of identical/ similar goods c. export price of identical/similar goods d. nature of sale transactions etc." The "settled law" spoken of would refer to a CBEC circular No.268/85-CX.8 dated 29.9.1994 which deals with valuation of goods manufactured by units working under the 100% EOU scheme. The said circular refers to Rule 8 of the Customs Valuation Rules and not the Central Excise Valuation Rules. The four factors laid down in the said circular have relevance only qua goods that are cleared in the DTA and how their valuation is to be arri....