TaxTMI 
TaxTMI 
2021 (12) TMI 358
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....w that in respect of goods transferred to the consignment agents, the appellants had not determined the assessable value correctly in terms of Rule 7 of the Central Excise Valuation ( Determination of Price of Excisable Goods) Rules, 2000 ( hereafter, the Valuation Rules, 2000) and, accordingly, Show Cause Notice No 42/Commr/BOL/09 dated 16.10.2009 was issued to the appellants demanding differential duty of Rs. 4,57,03,268/- along with interest covering the period 1.4.2005 to 31.12.2008. Penalty was proposed under section 11AC of the Central Excise Act, 1944. 3. A second show cause notice No 57/Commr/BOL/09 dated 31.12.2009 was also issued covering the subsequent period January 2009 to August 2009 on the same issue, demanding a further amount of Rs. 57,22,992/-. 4. In the show cause notice there is also an allegation that the appellants had not included the transportation cost while determining the assessable value of goods sold from the premises of the consignment agents and there has been a consequent short levy. 5. In their replies to the show cause notices the appellants raised a number of issues both on facts and on law points. 6. The appell....
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....f Rs. 5,14,26,260/- covered by the two show cause notices, along with interest. He also imposed equivalent penalty under section 11AC of the Central Excise Act, 1944. 9. The appellants are now before us in appeal against the said impugned Order. 10. Following submissions have been made by the appellants:- 10.1 The Annexures to the show cause notice dated 16.10.2009 do not provide any information as to from where they have got the details of the sale price at the consignment agents' end and the corresponding price at the factory gate on the same date and at or about the same time. Details which have been given in the 2nd show cause notice are not available in the first show cause notice. In other words, the demand raised and the charges made in respect of the first show cause notice are unsubstantiated. 10.2 Annexure C to the first Show Cause Notice is unwarranted as there is no separate demand of duty on account of freight charges. 10.3. In respect of the second Show Cause Notice covering the period from January 2009 to August 2009, it may be seen from the Annexures that only the invoices issued by the appellants have been taken into considera....
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....m Corporation Ltd vs CCE Chennai[ 2010(261) ELT 695(Tri-Chennai) 10.7 By applying Rule 4 of the Valuation Rules, 2000, the appellants have demonstrated in their reply to the show cause notice that they have paid more duty than that was legally payable. 10.8 In any case, if Rule 7 is not applicable, Rule 4 cannot be invoked now since that was not invoked in the show cause notice. 10.9 Rule 7 of the Valuation Rules, 2000, was introduced in the year 2000 and has remained unchanged since then. Even though the definition of 'place of removal' was amended with effect from 14.05.2003, no amendment was done to Rule 7 thereby creating an anomaly. In any case, because of the said anomaly or otherwise, Rule 7 cannot be invoked in the instant case. 10.10 Bulk of the demand is time barred. There is no ground for invoking the extended time limit. The only ground for invoking the extended time limit is that the appellants did not inform the department of their marketing pattern (para 14 of the impugned order). It is submitted that no provision of Central Excise law requires an assessee to inform the department of their marketing pattern. [Gammon Far ChemsLtd.Ve....
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....ot be raised now; 11.2 Rule 7 has been correctly applied to demand duty in respect of goods transferred to the consignment agents; 11.3 Even if there are sales to independent buyers at the factory gate, the goods transferred to the consignment agents will be valued as per Rule 7 of the Valuation Rules, 2000. He relied on the decision of the Tribunal in the case of Spice Systems Ltd.Vs Commissioner of Cus. & C. Ex., Noida [2011(272)ELT82(Tri- Del)]. 12. Heard both sides through video conferencing and perused the appeal records. 13. At the time of hearing, a query was raised by the Bench to the learned counsel for the appellants as to how he proposes to reconcile his submissions on points of law viz-a-viz the provisions of section 4(1)(a) of the Central Excise Act, 1944, which states that value has to be determined "on each removal of the goods". 14. The learned counsel responded by referring to the decision of the Larger Bench of the Tribunalin the case of Ispat Industries Ltd vs Commissioner of Centra Excise, Raigad (supra) wherein it has been held that Rule 8 of the Valuation Rules, 2000, would apply only when all the goods of the asses....
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....f the Larger Bench decision in the case of Ispat Industries (supra) was also upheld. 17. He also clarified that no doubt valuation had to be done for each removal of goods from the factory gate, but for each such removal the appropriate valuation rule has to be applied. He submitted that for each removal of goods to the consignment agent Rule 7 of the Valuation Rules, 2000, could only be invoked if the appellants did not have any sale of their goods to independent buyers at the factory gate. Since the appellants did have large sale/clearances of the goods to unrelated buyers at the factory gate, Rule 7 of the Valuation Rules, 2000, could not be invoked in respect of any removal of goods to the premises of the consignment agents. 18. Heard both sides through video conferencing and perused the appeal records. 19. Instead of getting into the pleadings of the appellant on the quantification part, we agree with the submission of the learned counsel that Rule 7 of the Valuation Rules, 2000, will apply only where an assessee does not sell any goods to unrelated buyers at the factory gate but transfers all their goods to their consignment agents. In this regard i....
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....the words "where the excisable goods are not sold". This view is also supported by the judgment of the jurisdictional High Court in the case of Indian Drug Manufacturers Association v. Union of India, wherein the Court held that Rule 8 applies in a situation where goods are not sold but are cleared 'exclusively' to be used in consumption or for manufacture of other articles......."( emphasis supplied) 21. This decision of the Larger Bench was relied upon by the Tribunal in the case of Bharat Petroleum Corporation Ltd (supra) to hold that Rule 7 of the Valuation Rules, 2000, which uses the same expression " where excisable goods are not sold..", can be invoked only where there are no sales of the goods at the factory gate and all the goods of the assessee are transferred to consignment agents.If the assessee's excisable goods are also sold at the factory gate, Rule 7 will not apply. 22. This decision of the Tribunal in the case of Bharat Petroleum Corporation Ltd (supra) was subsequently relied upon by the Tribunal in the case of Steel and Metal Tubes(I) Ltd vs CCE, Meerut-II (supra) to hold the view that Rule 7 of the Valuation Rules, 2000, will not apply if the a....
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....he 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 of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods." 24. We also agree with the learned counsel of the appellants that the expression "Where the excisable goods are not sold by the assessee" appearing in both Rule 7 and Rule 8 of the Valuation Rules, 2000, will have the same meaning and the ratio of the decision of the Larger Bench in the case of Ispat Industries (supra) in the context of Rule 8, will also apply to Rule 7 of the Valuation Rules, 2000, as rightly held by the Tribunal in the cases of (i) Bharat Petroleum Corporation Ltd ( supra) and (ii) Steel and Metal Tubes(I) Ltd vs CCE, Meerut-II ( supra). 25. The decision in the case of Spice System (supra) cited by the learned Authorised Representative is clearly distinguishable. The period involved in the case was July, 1999 to September, 2001. For the period wef 01.07.2000 ( i.e after the introduction of new section 4 and the new Valuation Rules, 2000) the Divisio....