TaxTMI 
TaxTMI 
2022 (10) TMI 1076
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....f goods to their sister unit the value should 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 o....
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....ances where the value at which duty was paid 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 pr....
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....d Vs. Commissioner of C. Ex., Hyderabad-III reported in 2017 (357) ELT 1065 (Tri.-Hyd.) • Pradip Chandra Parija Vs. Pramod Chandra Patnaik reported in 2002 (144) ELT 7 (S.C.) • Shanker Raju 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 25....
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....nsaction value in terms of Rule 4 of Valuation Rules read with Section 4(1)(a) of Central Excise Act, 1944. The claim of the revenue is that for the clearance of goods to their own unit for the purpose of value Rule 8 shall apply and according to which the value should be arrived at by applying the price on the basis of 110% of the cost of manufacture. As of now it is settled law that in a case where the assessee sell the same goods partly to unrelated person and partly to their related person, 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 ....
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....nces to independent buyers, then the provisions of Rule 8 will apply. (b) The decision of Tribunal in BOC's case has no application to the assessee's case, as unlike in BOC's case, where the entire production was captively consumed, bulk of assessee's clearances are made to independent buyers. In BOC's case, the entire production was cleared for captive use and there was no instance of sale to an independent buyer, so as to enable determination of assessable value under Rule 4. (c) The question referred to the Larger 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 be....
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.... reported in 2006 (202) E.L.T. 561, was relied upon in support of this proposition. 4. The learned DR appearing on behalf of Revenue submits that the decisions relied upon by the assessee are all based on the decision of the Tribunal in the case of Steel Complex Ltd., which did not consider the Board Circular dated 1-7-2002. He also submitted that the facts in the case of Steel Complex were different in as much as the company in that case had suffered huge losses. He submitted that the decision of the Bombay High Court in the case of Indian Drug Manufacturers Association is not applicable 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 beh....
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....units of the company to whom HR coils were transferred were undertaking further manufacturing operations on behalf of the Dolvi Unit, the provisions of Rule 8 will not apply. We, therefore, hold that Rule 8 is inapplicable in the instant case. 6. We also note that in the present case the application of Rule 4 is being disputed by the Revenue not on the ground that the said rule is inapplicable to the present case but on the ground that a more specific provision in Rule 8 is available to enable determination of the assessable value. As discussed above, the provisions of Rule 8, in our view, are not applicable to the 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 interpreta....
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....on of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. 10. The papers are now returned to the referral Bench for passing orders on the appeal." • Similar view was taken by this Tribunal in the case of Steel Complex Ltd. -2004 (171) ELT 255 (Tri.- Bang.) "8. Section 4(1) lays down the principle of Central Excise Valuation. The core of it is that value shall be the price at which the transaction is carried out. Sub-section (b) of Section 4 relates to valuation of goods which are not transacted through sale. Valuation Rules have been formulated as a guide for the determination of value 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 c....
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....buyers was adopted as the value for goods transferred to job worker also. Duty was also paid on that basis. There was no requirement to alter that basis for valuation and to make the demand for additional payment of duty." The above decision of this tribunal has been upheld by the Hon'ble Supreme Court reported at Steel Complex Ltd.- 2015 (321) ELT A138 (SC) wherein, the hon'ble Apex Court has given the following observation: " After hearing Learned counsel for the parties, we are of the opinion that Rule 8 of the Central Excise Valuation (Determination of Price of excisable goods) Rules 2000, which was prevailing at that time will have no application in the present case where the goods are only partly 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 applicabilit....
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....f Rule 8 in the present case of captive consumption is misconceived. Since the transaction value of the excisable goods is available and not all the excisable goods are captively consumed, the provisions of Rule 8 as prevailing during the relevant time will not apply to the assessees." • This tribunal in the case of MY HOME Industries P. Ltd. - 2017 (357) ELT 1065 (Tri.-Hyderabad) held as under:- (Para 5.1 to 5.4) 5.1 The issue that comes up for decision in these appeals concerns the method of valuation required to be followed in respect of the clearances made by the appellants. The period of dispute is from January, 2012 to March, 2013 and April, 2013 to February, 2014. Erstwhile Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2001 was in force 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. 14/20....
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....context, we do not find any infirmity in the following finding of the lower appellate authority, which is reproduced as under: "7. From the above, it is clearly evident that only when the entire production of the goods are not sold and used for self or captive consumption, the central excise duty is leviable in terms of Rule 8 of the Valuation Rules and when part production is used for self or captive consumption, the duty is required to be paid in terms of Rule 4 of the Valuation Rules. This fact is confirmed by the Apex Court in the case of Steel Complex Ltd. - 2015 (321) E.L.T. A138 (S.C.) wherein it is held that Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, which was prevailing at that time, will have no application in the present case, where the goods are only partly sold under 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 provis....
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....f Adjudicating authority. 2. We find that the issue is no more res integra in view of the decision of the Hon'ble Supreme Court, Tribunal and the Larger Bench of the Tribunal. The Tribunal in the case of Steel Complex Ltd Vs CCE, Calicut - 2004 (171) ELT 255 (Tri-Bang), on the identical issue, allowed the appeal of the Assessee. The said decision was upheld by the Hon'ble Supreme Court as reported in 2015 (321) ELT A 138 (SC). It has been held that Rule 8 of the Valuation Rules, 2000, which was prevailing at that time, will have no application, where the goods are only partly sold under ex-factory basis and partly cleared for captive consumption. The Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Bhavnagar Vs Ultratech Cement Pvt. Ltd - 2014 (302) ELT 334 (Guj.) dismissed the appeal filed by the Revenue. It has been 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 - 20....