2020 (1) TMI 376

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....er 87 of the First Schedule to the Central Excise Tariff Act, 1985. One of their units is located at Rewari and another one at Gurgaon. Both these units are independently registered with the Central Excise Department. The issue for consideration in these appeals is the valuation of components manufactured by the appellant and transferred to their Haridwar Plant for captive consumption in use of motorcycles and their parts. The appellant valued them at 110% of cost of production under Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and also sold identical goods to independent buyers at a higher price. The show cause notices were issued in these cases invoking extended period of limitation, called up....

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....er price. 5. At this stage, it would be appropriate to examine the question of valuation under the Central Excise Act. Section 3 of the Central Excise Act is the charging section which levies excise duties on excisable goods manufactured and produced in India. The rates at which the duties are levied are set-out in the Central Excise Tariff. It can be on the basis of quantity of the goods (specific rate of duty) or value (ad valorem rate of duty). In respect of some goods, the duty is with reference to the Retail Sale Price. 6. For majority of the goods, the duty is levied on ad valorem basis. Section 4 of the Central Excise Act and the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 lay down the provi....

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....ication at Sr. No. 5 is as follows:- 5. How will valuation be done in cases of captive consumption (i.e consumed within the same factory) including transfer to a sister unit or another factory of the same company/firm for further use in the manufacture of goods? For captive consumption in one's own factory, valuation would be done as per rule 8 of the Valuation Rules i.e. the assessable value will be 115% of the "cost of production" of the goods. If the same goods are partly sold by the assessee and partly consumed captively, the goods sold would be assessed on the basis of "transaction value" [provided they meet the conditions of sec.4(1)(a)] and the goods captively consumed would be valued as per Rule 8 of the Valuation Rules. Th....