TaxTMI 
TaxTMI 
2022 (10) TMI 1076
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....ould be adopted in terms of Rule 8 of Central Excise Valuation Rules, 2002 accordingly, a show cause notice was issued for the period from August, 2009 to November, 2013. 1.1 In the show cause notice, it was alleged that finished goods were cleared by the appellant to their interconnected sister units at the value for charging duty appear to be transaction value as stipulated in Section 4(1)(a) of the Act. It was further contended that since the goods were cleared to their sister unit, it does not involve sale of goods therefore the transaction value adopted for the purpose of charging excise duty is not correct in terms of Section 4(1)(a) whereas, the value has to be determined as per provision of Section 4(1)(b) of the Central Excise Act, 1944 accordingly, the value of goods cleared to sister unit shall be done in terms of Rule 8 read with Board Circular No.643/34- 2002-Cx dated 01.07.2002. The appellant adopted transaction value at which the goods were sold to unrelated person, for charging excise duty in respect of clearances made to their sister unit. In some cases, the value determined was more than the value determinable in terms of Rule 8 i.e. more than 110% of the cost of....
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....by the appellant was less than 110% of the cost of production. He referred to Annexure-A to show cause notice wherein, he has pointed out that appellant had paid duty on more than 50% (approximately) of goods transferred to its other units on the value in excess of 110% of cost of production. It is his submission that the adjudicating authority ignored the said clearances in demanding the differential duty. He submits that undisputedly, the appellant had transferred the goods to their other factories under Rule 4 of the Valuation Rules read with Section 4(1)(a) of Central Excise Act, 1944 and paid duty on the value which is higher than 110% of the cost of production for more than 50% of clearances. He submits that it is clear from the impugned order that the learned Commissioner has not accepted the assessment of the goods cleared to other factories of the appellant as determined under Rule 4 of the Valuation Rules and has proceeded to assess the goods under Rule 8 of the Valuation Rules. In view of his finding, that contention of the appellant that provisions of Valuation Rules, 2000 cannot be applied in these removals would make the provision of Section 4(1)(b) redundant as each ....
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....aju Vs. Union of India reported in 2011 (271) ELT 492 (SC) 3. Shri Vinod Lukose, learned Superintendent (AR) appearing on behalf of the revenue reiterates the finding of the impugned order. He placed reliance on the following judgements:- * 2018 (359) ELT 242 (Tri-Chennai)-CCE, Puducherry Vs. GEC Alsthom (I) Ltd * 2017 (352) ELT 110 (Tri-Mum)-CCE, Mumbai-III Vs. Blue Star Ltd * 2006 (200) ELT 353 (SC)-CCE, Pune Vs. Cadbury India Ltd * 2004 (177) ELT 1032 (Tri-Mum)-Crompton Greaves Ltd Vs. CCE, Aurangabad * 2015 (320) ELT 690 (SC) - Crompton Greaves Ltd Vs. CCE, Aurangabad * 2016 (339) ELT 475 (Tri-Bang)-Sun Microsystems India P Ltd Vs. CC, Bangalore * 2012 (283) ELT 161 (SC)-CCE, Mumbai Vs. Fiat India P Ltd * 2017 (357) ELT 978 (Tri-Del)-CCE, Indore Vs. Surya Roshni Ltd * 2018 (13) GSTL 313 (Tri-Mum)-CCE, Mumbai-II Vs. BSNL * 2015 (330) ELT 253 (Tri-Mum)-L Oreal India P Ltd Vs. CCE, Pune-I Revenue Neutrality * 2019 (29) GSTL 304 (Tri-Mum)-Board of Control for Cricket In India Vs. CST, Mumbai * 2005 (183) ELT 241 (SC)-Dharampal Satyapal Vs. CCE, New Delhi LIMITATION * 2019 (365) ELT 681 (Mad)- King Bell Apparels Vs. CCE, Sale, * 2015 (327) ELT 326( Tri....
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....n, the transaction value which is charged to unrelated buyer shall prevail and the same price shall be applicable in case of clearance of goods to the assessee's own unit. The Rule 8 does not make it clear that in respect of same goods being cleared partly to the assessee's own unit and partly to the unrelated buyer, whether in both cases the valuation under Rule 8 shall apply or otherwise. However, the matter was considered by the Larger Bench of this Tribunal has observed as follows:- "The issue referred to the Larger Bench is whether the assessable value in respect of goods which are transferred to another plant of the same assessee is required to be determined as per Rule 4 of the Central Excise Valuation Rules, 2000 (as claimed by the appellant) or as per Rule 8 of the said rules (as claimed by the Revenue), in a case where the same goods are also sold to independent buyers? 2. We have heard both sides. It is an undisputed position that the assessees were transferring a part of its production (about 20%) of HR coils to its units at Taloja, Kamothe and Kalmeshwar and the balance production was being sold to independent buyers. It is also not disputed that the value on which....
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....r Bench, i.e. whether Rule 4 or Rule 8 of the Valuation Rules would apply is a hypothetical question in so far as the assessee is concerned, as the provisions of Rule 8 are inapplicable to the present case for the following two reasons : (i) As held in Avon's case, Rule 8 applies only when there are no instance of sale of finished products to independent buyers (i.e. when all clearances are for captive consumption) (ii) In addition to (a) above, for applying Rule 8 the clearance must either be for captive consumption of the assessee himself or must be a transfer for the purpose of enabling the transferee unit to manufacture goods on behalf of the original manufacturer (assessee). The 'assessee', for the purpose of the Central Excise Rules, refers to a particular factory or unit of the manufacturer company, which in this case is the Dolvi plant where the HR coils are manufactured. (d) The Hon'ble Bombay High Court in case of Indian Drug Manufacturer Association v. Union of India 2002 TIOL 292-HC- Mum has, while dealing with the dispute regarding application of Rule 4 vis-a-vis Rule 8 held that - (i) Rule 8 applies to cases where goods are not sold but are consumed captively ....
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....le as the dispute therein was relating to the applicability or otherwise of Rule 4; assessee's contention that Rule 8 applies only in cases where the goods are not sold but are entirely captively consumed, is incorrect; the Board in its circular dated 1-7-2002 had clarified that in a case where goods are transferred to a sister unit or another unit of same company, the assessable value would have to be determined in terms of proviso to Rule 9, which in turn refers to Rule 8; assessee's contention that Rule 8 will not apply as the goods where not consumed by the assessee himself or on his behalf in the manufacture of other articles was also incorrect as transfer to one's own unit/sister unit tantamounts to consumption on behalf of unit transferring the goods. 5. We have considered the rival submissions and are of the view that the assessee is correct in contending that provisions of Rule 8 would apply only in a case where its entire production of a particular commodity is captively consumed. This is evident on a plain reading of Rule 8 of the valuation rules, which reads as under "Where the excisable goods are not sold by the assessee but are used for consumption by him or on hi....
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....e present case and therefore the value determined by the assessee under Rule 4 deserves acceptance. 7. We also agree with the submission of the assessee that even if both the rules, i.e. Rule 4 and Rule 8, were applicable, it would only be logical to read and apply the various rules in the Central Excise Valuation Rules in a sequential manner. Though the Central Excise Valuation Rules, 2000 do not specifically prescribe such sequential application of various rules, the same, in our view, is the only reasonable way to read these rules. Any other interpretation would only lead to confusion and chaos. Since the applicability of Rule 4 is not really in dispute, there was no need to look further and regardless of the applicability or otherwise of Rule 8, the assessable value should have been determined in terms of Rule 4 of the Valuation Rules. 8. The conclusion that we are drawing in the present case would lead to determination of a value which, in our view, will not only be reasonable but also consistent with the provisions of Section 4 of the Central Excise Act. We would, at this stage, draw support from the judgment of the Supreme Court in the assessee's own case, as reported in....
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....of goods which are disposed of except through sale. The direction cumulatively conveyed by these rules is to determine the value of those goods as their would have been sale price, in case, they were to be sold in the course of ordinary trade and commerce. In order to achieve this, rules have stipulated several methods and guidelines like adjustment for different date of delivery (Rule 4), adjustments towards freight (Rule 5), sale price of related buyer (Rule 6). Taking 115% of the cost of production is also one such method (Rule 8). In any event adopting a measure which would yield a very unreasonable and non-commercial value has to be avoided. Rule 11 specifically states, "value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 4 of the Act". The present is a case where obviously, erroneous value is being obtained by following Rule 8. The appellant is a Public Sector Company. It is disposing of part of the goods manufactured by it through sale in commercial transactions to unconnected parties. There is no dispute that sale price in these transactions is the sole consideration. It also tr....
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....tly sold under ex-factory basis and partly cleared for captive consumption. We are therefore, not inclined to interfere on this ground alone, with the order passed by the customs, Excise and Service tax Appellant Tribunal. The appeals are, accordingly, dismissed." * The similar view was taken by this tribunal in the case of Steel Authority Of India Ltd.- 2016 (335) ELT (91)(Tri.-Del.) "6. The main point for determination is that the applicability of Rule 8 of Central Excise Valuation (Determination on Price of Excisable Goods) Rules, 2000 in respect of internally transferred goods for consumption in assessees' various project work. The second point for decision is valuation of steel items cleared on stock transfer basis to other units of the assessee-company. We find that in respect of steel items consumed by the assessee in various projects within or outside the factory they have adopted the value of comparable goods for which the transaction value is available during the relevant time. The main case of the Revenue is that the excise duty should be paid in terms of Rule 8 as the same were not sold and were captively consumed. The said Rule during the relevant time clearl....
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....e up to 30-11-2013, which read as under: "8. Where the excisable goods are not sold by the assessees 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 fifteen per cent. of the cost of production or manufacture of such goods. " 5.2 However, pursuant to Notification No. 14/2013-C.E. (N.T.), dated 22-11-2013, the said Rule 8 was substituted w.e.f. 1-12-2013 as under: "8. Where whole or part of 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 of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods." 5.3 What comes to the fore is that notwithstanding the amendment to the said Rule 8 of Valuation Rules w.e.f. 1-12-2013, there has been no change in the basic premise and purpose of the Rule, namely, to lay down the method of valuation of excisable goods which are not sold by the assessee but used for consumption by him or on his behalf (job worker), in the production or manufacture of other articles (emphasis add....
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....ex-factory basis and partly cleared for capitation consumption. The Larger Bench of Mumbai in the case of Ispat Industries Ltd. v. Commissioner of C.Ex. Raigad - 2017 (209) ELT. 185 (Tri. - LB) held that if the transfer of part of production is to another plant of the same assessee and balance production is sold to independent buyers, the provision of Rule 8 of Valuation Rules will not apply. Quoting the above decision of the Tribunal, the High Court of Gujarat, in the case of Ultratech Cement Pvt. Ltd. - 2014 (302) E.LT. 334 (Guj.), held that when captive consumption is made partly and sale to independent buyers is made partly, value is to be determined under Rule 4 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and not under Rule 8 ibid. humbly, following the decision of the judicial forum, I hold that the appellant is required to pay the duty on the goods (cement) used for self or captive consumption under Rule 4 of the Valuation Rules, 2000 and accordingly, I uphold the impugned order in demanding the differential duty up to 30-11-2013." 5.4 In the circumstances, we are of the considered opinion that up to 30-11-2013, appellants were r....
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....een held that the captive consumption partly and sale to independent buyers partly, value is to be determined under Rule 4 of Central Excise Valuation Rules, 2000 and not under Rule 8 of the said Rules. It has approved the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd Vs CCE Raigad - 2007 (309) ELT 185 (Tri- LB). We have also noticed that Rule 8 of the Valuation Rules, 2000 was amended by Notification No.14/2013-CE(NT), dt.22.11.2013. The present case is for the period prior to 22.11.2013. 3. In view of the above, the impugned order cannot be sustained. Accordingly, the impugned order is set aside. The appeal filed by the Appellant is allowed." In view of the above decision in the appellant's own case, it was categorically held that for the period prior to 1st December, 2013 the valuation of the goods cleared to their sister units shall be governed by Rule 4 of the Valuation Rules whereby, the transaction value of the similar goods cleared to independent buyers shall be the assessable value for charging excise duty in respect of the goods cleared to the assessee's own other units. In the present case also the period involved is up to November, ....