TaxTMI 
TaxTMI 
2019 (5) TMI 212
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....ise Valuation (Determination of Price of Excisable Goods) Rules 2000 (CEVR). It appeared to the Department that the valuation so adopted by the appellant is not correct and that they should have adopted assessable value in terms of the provisions of Rule 11 of the Central Excise Valuation Rules, 2000 read with Rule 4, consistent with provisions of Section 4 of Central Excise Act, 1944. 2.2 It also appeared to the Department that Rule 8 would not be applicable to the appellant in respect of goods cleared to sister concerns and also self-consumed. In terms of Rule 8 the goods are required to be consumed in the production or manufacture of other articles; that instead the goods which have been transferred to the sister concerns and also self-consumed, have been utilized only in various expansion projects. Hence, in terms of Rule 11 read with Rule 4 ibid, the value of similar goods sold and delivered to independent buyers would require to be adopted for the purpose of valuation. 2.3 Accordingly, a SCN dated 19.08.2010 was issued to the appellant inter alia proposing as under:- i) that valuation of inter-unit transfers should be on the basis of Rule 11 read with Rule 4 of the R....
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.... facilities and capacities are fully covered by the provisions of Rule 8. v) This being so, Rule 4 cannot be made applicable for valuation of the clearances made for captive consumption and stock transfer to other sister units. When Rule 4 is not applicable directly, it cannot be applied indirectly by applying Rule11 of the Central Excise Valuation Rules. vi) Ld. Advocate takes us to the provisions of Board's Circulars dated 30.06.2000, 01.07.2002 and 25.11.2013 and draws our attention to paragraph 21 of the Board's Circular dated 30.06.2000, paragraph 5 of the Board's Circular dated 01.07.2002 and paragraphs 1 and 2 of the Board's Circular dated 25.11.2013 to support his contentions. vii) He placed reliance on the ratio of the case law in M/s. Eicher Motors Limited Vs. CCE, Indore - 2008 (228) E.L.T. 43 (Tri.-LB), wherein the Larger Bench of the Tribunal inter alia held that Rule 8 is generally applicable to non-sale transactions. He also draws our attention to paragraph 26 where the Larger Bench has held that the words "using reasonable means consistent with the principles and general provisions of these rules occurring in Rule 11 clearly indicate the r....
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.... x) Further, even in the SCN dated 19.08.2010, there is no allegation of suppression or mis-statement or fraud while invoking the extended period of limitation. Ld. Advocate drew my attention to paragraph 10 of the SCN to support his contention. Further, pointed out that the allegation of wilful suppression is made only in paragraph 12 of the SCN, wherein while invoking penal provisions. xi) In any case, all the clearances involved are Revenue neutral since whatever duty would be paid on such clearances, would always have been taken as CENVAT credit by the concerned sister concern. 4. On the other hand, Ld. AR Shri K. Veerabhadra Reddy, ADC (AR), made oral and written submissions, which can be broadly summarized as under:- i) Rule 8 will only be applicable in respect of goods which are cleared for captive consumption or cleared to related persons for further production or manufacture of other articles. ii) In the present case, the goods that have been cleared for captive use or stock transfer to sister units were not utilized for further manufacture but only for construction activity in their expansion projects. Hence, Rule 8 Valuation cannot ....
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....n M/s. Ispat Industries Ltd. Vs. C.C.E., Raigad - 2007 (209) ELT 185 (Tri. - LB), to point out that the Larger Bench of the Tribunal inter alia held that transfer of part of production to another plant of the same assessee and balance production sold to independent buyers has occurred, the value is to be determined under Rule 4 and not under Rule 8. 5. In response, Ld. Advocate submitted that the contention of the Ld. AR with respect to ER-1 returns is outside the scope of the SCN. 6. Heard both sides and have gone through the facts of the case. 7.1 The provisions of Rule 8 are reproduced below for better understanding : "5.3 RULE 8. 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 per cent of the cost of production or manufacture of such goods." 7.2 Hence, to fit into the ambit of Rule 8, excisable goods are not sold by the assessee, but are used for consumption by him (viz., captive consumption) or on his behalf in the production or manufacture of other articles. 8.1 However, what is forthcoming from the fact....
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.... adopting the 'Price' at arm's length. Hon'ble Tribunal in the case of BSNL vs CCE, Haldia as reported in 2007 (215) ELT 127 (Tri) had held, Valuation (Central Excise)-Captive Consumption-Mere supply of goods without any manufacture does not amount to captive consumption-Determination of value by addition of 15 per cent, rejected Rule 8 of Central Excise (Valuation) Rules, 2000. Respectfully following the same, I am of the view that Rule 8 of the Central Excise (Valuation) Rules, 2000 is not applicable as such to the case at hand. 13. Therefore, I hold that the method of valuation to be adopted in the case of impugned goods which are consumed internally for activities other than for further manufacture of other articles, is under the provision of Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (for determination of valuation of any excisable goods for the purpose of Section 4(1)(b) of CEA, 1944). Applying the aforesaid provisions of Rule 11, which is the residuary rule, I find that the principles of Rule 4 which reads, "The value of the excisable goods shall be based on the value of such goods sold by the assessee for delivery at....