TaxTMI 
TaxTMI 
2019 (4) TMI 1681
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.... of Central Excise Valuation (determination of price of excisable goods) Rules, 2000. As the respondent was clearing excisable goods partly to their related units and partly to un-related buyers, it was observed that value of the products cleared to their sister units shall be determined by adopting the value nearest to the time of removal of such goods in respect of clearances made to other un-related buyers. The respondent was thus issued a show cause notice dated 05.10.2009 proposing to demand differential duty of Rs. 21,73,192/- along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed equal penalty. The appellants preferred an appeal before the Commissioner (Appeals) who vide the impugned order set aside the demand both on merits as well as on the issue of limitation. Aggrieved, the department is now before the Tribunal. 2. On behalf of the Department, Learned AR Shri AVLN Chary appeared and argued the matter. He submitted that the Commissioner (Appeals) has strongly placed reliance on the Board's Circular dated 01.07.2002 by Para No. 5 and corresponding clarifications in paras v....
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.... The Rule 8 is operational only when the goods manufactured by the assessees are not sold but are used for consumption by them. Similarly Rule 9 becomes applicable in the given case of captive consumption only when these goods are cleared except to or through a related person for captive consumption. The Rules 8 or 9 are not applicable in cases where the goods are cleared to un-related persons having simultaneous clearances to related persons for captive consumption. Therefore, the decision of the adjudicating authority resorting to Rule 4 read with residual Rule 11 is totally in line with the rule position and also in agreement with the Board's Circular dated 01.07.2002. 3. With respect to the issue of limitation, the Learned AR submitted that the respondent had suppressed the fact of clearing the goods adopting lesser value. The same would not have come to light but for the audit conducted by the department. The Commissioner (Appeals) has erred in holding that the facts were known to department pursuant to letter dated 24.09.2009 issued by Range Officer who advised them to pay the differential duty of Rs. 7,869/- based on the CAS-4 certificate furnished by them. He pointed out ....
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....ent 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 be related to buyers only." The same was also clarified vide point no. 12 of the above cited Board's Circular which is reproduced as follows: 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 ....
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....ived from the Range Officer, they paid the differential duty of Rs. 7,689/- along with interest of Rs. 2,500/- based on such calculation as directed by the Range Officer. That therefore, there is no suppression on their part as alleged in the show cause notice. They have adopted the method of valuation as per the instructions of the department. There are no ingredients for invoking the extended period of their show cause notice has been rightly set aside on the ground of limitation. He pleaded that the appeal may be dismissed. 8. Heard both sides. 9. The Commissioner (Appeals) has disposed the appeal both on the merits of the case and limitation. We will first address the issue of limitation. Period involved is from September 2004 to March 2008. The show cause notice is dated 05.10.2009. The Board vide its Circular dated 01.07.2002 had clarified the method of valuation that has to be adopted in case of captive consumption including the transfer of goods to sister unit or any other un-related buyer when used further in the manufacture of goods. This indicates that the amendment brought forth in 2000 in Central Excise Act, along with Valuation Rules had to be clarified with regar....