TaxTMI 
TaxTMI 
2018 (8) TMI 1272
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....istribution Company of AP Ltd, Tirupati (APSPDCL) for conversion of existing low tension network into high voltage distribution systems on a turnkey basis. This involved manufacture of transformers as well as their installation on a turnkey basis. The assessee had adopted valuation of transformers in terms of Section 4(1)(b) of Central Excise Act r/w Rule 8 of Central Excise Valuation Rules, 2000, based on the Chartered Accountant's Certificate issued under CAS-4. A show cause notice was issued to them on 29.10.2008 seeking to recover the differential duty of Rs. 83,01,019/- (+) Cess for the period May, 2008 to June, 2008 along with interest under Section 11AB. It is also proposed to impose a penalty under Section 11AC of the Act. The alleg....
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....ordinary course of business for a valuable consideration and therefore it cannot be held that there is no sale as defined under the Act. (b) As long as there is sale, delivery at the time and place of removal and the assessee is not related to the buyer of the goods, it shall be covered by section 4(1)(a). Once the conditions under section 4(1)(a) are satisfied, the value of the goods should be as per the contract and such goods cannot be treated as 'meant for captive consumption' and valued under Rule 8 of the Central Excise Valuation Rules. It is further alleged that the Commissioner has wrongly relied on the case of M/s Otis Elevator Company (India) Ltd 92008 (229) ELT 568 (Tri.- Bang.)] because in that case there was an indivisible con....
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....ut items. There is no individual cost of the transformer in the invoices. To buttress his case, he further submitted that they were audited by the Customs and Central Excise Department themselves and in the draft audit Para for EA-2000 dated 30.01.2008 it has been recorded as follows: "During the Audit, on perusal of Agreement copies and clearance invoices, it was observed that the assessee had manufactured and cleared Distribution Transformers to their self projects/turnkey projects undertaken for A. P. Power Distribution Company and some small quantity to independent buyers. For independent buyers, the transaction value was the assessable value. The assessee entered into various agreements for executing turnkey projects with A. P. Power ....
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....e clearance is for captive use. Goods removed for self consumption in executing works contract at customer's premises/site should be valued under Rule 8 of the Valuation Rules-2000. The Board in its Circular No.692/8/2003 dated 13.02.2003 has clarified that for calculating the cost of production for goods captively consumed the CAS-4 issued by the Institute of Cost and Works Accountants of India should be strictly followed. In respect of clearances affected to their self/turnkey projects, the assessee adopted the value for the payment of the duty as arrived based on the cost statement prepared as on 31.03.2005 and paid duty accordingly. As per Rule 8 of Valuation Rules, 2000, the value to be adopted at the time of clearance shall be 110%....
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....re manufacturing only the transformers and all other items were bought by them and used in the installation and commissioning of the transformers. This fact was admitted by the department in their own audit report. Therefore, the allegation that they had not responded to the request from the range officer to provide clarification regarding the bought out items holds no water. He further took us through one set of sample invoices and the schedule of prices and the annexure to the show cause notice calculating the differential duty to prove that the show cause notice was issued taking the entire value of the materials supplied by them including the bought out items as the cost of the transformers assuming that the transformer was sold to thei....