TaxTMI 
TaxTMI 
2017 (10) TMI 209
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.... at which they were selling to the unrelated parties and the assessable value arrived at by the cost construction method through debit note. He argued that by raising on demand note they were recovering additional consideration, over and above the invoice value and therefore, the same was to be included in the assessable value. 2.1 Ld. AR further argued that Rule 8, 9 & 10 (a) of the Central Excise Valuation Rules, are not applicable to the instant case as the appellants are selling goods to their subsidiary and the sale price or the transaction value is available. Ld. AR argued that clearances are made only to the subsidiary units, Rule 8, 9 & 10 of Central Excise Valuation Rules, 2000 may be applicable. But the if the goods are partly sold to independent units and partly sold to subsidiary units, then the said rule cannot be applied. He argued that original adjudicating authority has wrongly dropped the demand, by wrongly interpreting the circular of CBEC. In his written submission, he made the following averments: "In this case if the goods are interconnected undertaking who are subsidiary units of assesee than the general principle of Rule 10 (a) of Central Excise Valuati....
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....emi-finished goods to their sister concern M/s.Sterlite Telelink, Silvassa and other units of the assesee. With effect from 01/07/2000, as per the provisions of the Transaction value, the goods should be cleared 115% of the landed cost of the product. The total amount of duty payable on such clearances amounting to Rs. 8,04,303/- (as per annex.VIII) needs to be paid". 3.1 He argued that consequently they paid the duty and started assessments on the basis of Rule 8 of Central Excise Valuation Rules, as suggested by the Revenue in the said audit. He further argued that vide show-cause notice dated 14/10/2003, the appellants were asked to assess the goods on the basis of Rule 8 of the Central Excise Valuation Rules, wherever the transaction value with their sister unit was less than the value arrived at in terms of Rule 8 of the Central Excise Valuation Rules. Taking support of above documents Ld. Counsel argued that the Revenue itself wanted them to assess the goods by relying on Rule 8 of the Central Excise Valuation Rules. He further relied on the Circular No.354/81/2000-TRU dated 30/06/2000 wherein in para 21, following has been clarified: "As a measure of simplification, it....
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....ntire demand is barred by limitation, as the Revenue was clearly aware of the manner of assessment. He pointed out that it was at the behest of the Revenue that the manner of assessment that they adopted was followed. 4. Ld. AR in the rejoinder argued that the circular is issued by the Revenue and the audit cannot take precedence over the law of the land. The Commissioner has dropped the demand solely on merits and not dealt with the issue of limitation. The Commissioner has relied on the CBEC Circular No.643/34/2002-CX dated 01/07/2002, the Commissioner has observed as follows: "9. After the introduction of new Section 4 and the Valuations Rules w.e.f 01/07/2000 various references were made to Board for difficulties faced in valuation. The Board issued instructions vide Circular No.643/34/2002-CX dated 01/07/2002 which are clarificatory in nature. It clarifies about applicability of Rule-11 and since Rule 11 is on statute since 01/07/2000, this circular is applicable to all disputes pertaining to period from 01/07/2000 onwards. Regarding goods sold partly to related person and partly to independent buyers the Board has issued following clarification: "There is no sp....
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.... into the aspect of limitation." 4.1 The issue regarding the manner of assessment when part of the goods are sold to independent buyers and part are consumed or captively sold to related persons has been dealt with the Larger Bench of the Tribunal in the case of Ispat Industries Ltd., 2007 (209) ELT 185 (Tri-LB): "7. We also agree with the submission of the assessee that even if both the rules, i.e. Rule 4 and Rule 8, were applicable, it would only be logical to read and apply the various rules in the Central Excise Valuation Rules in a sequential manner. Though the Central Excise Valuation Rules, 2000 do not specifically prescribe such sequential application of various rules, the same, in our view, is the only reasonable way to read these rules. Any other interpretation would only lead to confusion and chaos. Since the applicability of Rule 4 is not really in dispute, there was no 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 n....