TaxTMI 
TaxTMI 
2024 (6) TMI 1463
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....o manufacture cement b. Stock transferred to Kapilas unit to manufacture cement. c. Stock transferred to Bengal unit to manufacture cement starting 2014; and d. Sold to independent buyers at 'transaction value' (in very meager proportion of 2% to 5%) 3. On stock transfer of clinker, the Appellant paid excise duty at 110% of cost of production in accordance with Rule 8 of the Central Excise Valuation Rules, 2000 ('Valuation Rules'). The Kapilas and Bengal units availed Cenvat Credit of the excise duty charged and paid by the Appellant. 4. An audit was conducted during the period April, 2012 to March, 2013 and certain objections were raised by letter dated 28.02.2014. Thereafter, further investigation was conducted and on the basis of such audit and investigation the Show Cause Notice dated 03.08.2016 was issued to the appellant to demand differential excise duty alongwith interest and to impose penalty on clinker transferred to Kapilas unit and Bengal unit during the period from April, 2012 to March, 2016 based on the following allegations: a. the Appellant undervalued the clinker of in contravention of Rule 8, 9, 10 & 11 of Valuation Rules.....
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....le. 12. On the other hand, Ld. Authorized Representative for the Revenue supported the impugned order. 13. Heard the parties and considered the submissions. 14. We find that a similar issue has been examined by this Tribunal in the case of Nalco (Supra) wherein this Tribunal has observed as under: "Whether the appellant has paid he duty correctly in accordance with Rule 8 of the Valuation Rules or the appellant is liable to pay duty in terms of Rule 4 of the Valuation Rules? 7. We find that the Circular No.692/8/2003-CX dated 13.02.2003 is relevant in the present facts and circumstances of the case. Accordingly, the same is extracted below: "Valuation (Central Excise) - Captive consumption -Cost of production to be in accordance with CAS-4 Circular No. 692/8/2003-CX, dated 13-2-2003 F. No. 6/29/2002-CX.I Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Valuation of goods captively consumed I am directed to say that on introduction of Central Excise Valuation (Determination of Price of Excisable goods) Rules, 2000, we.f. 1-7-2....
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....ordance with CAS-4.............. 4. Board's Circular No. 258/92/1996-CX, dated 30-10-1996, may be deemed to be modified accordingly in so far as it relates to determination of cost of production for captively consumed goods" The above paras make it clear that the cost of production of captively consumed goods will "henceforth" be done strictly in accordance with CAS-4 Even in the absence of such a statement, it would be correct to follow the Circular in as much as „general principles‟ are of guidance without regard to time and an assessee would be well within his rights to demand that a dispute involving him may be decided according to "the general principles" applicable to the issue in dispute, irrespective of what a Circular of the Government may say. In the present case such a situation does not arise since the Circular has taken care to specifically clarify that "existing instructions may be deemed to be modified". Since the earlier instruction is to be deemed to be modified, it would not be permissible to apply them without the said modification. The appellant-assessees are also right in their contention that Revenue is bound by the Circular, ....
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.... show cause notice purporting to reclassify the product prior to the issuance of instructions by the Board. Therefore, the said judgment has no application to the facts of the present case." The ratio of this judgment is that a legally sustainable claim, which had been raised by the Revenue prior to and independently of a circular, cannot be extinguished on a plea that a subsequently issued circular is prospective in operation. That is not the case in the present appeals. The revenue seeks to finalise pending valuations applying different costing principles on the plea that different criteria had been circulated from time to time. The assessees are contesting the correctness of that approach by contending that the instructions contained in the earlier circulars were not in conformity with the general principles of cost accounting, and that the latest circular which incorporated correct principles should be followed in all pending cases. It is also to be noticed that the latest circular of 2003 specifically states that the earlier instructions have to be deemed to be modified" by the later circular. Thus, Revenue had no independently sustainable claim its claim is based ent....