2006 (3) TMI 450 - AT - Central Excise

Summary

Issues: Valuation of goods for excise duty - Applicability of Rule 8 of Central Excise (Valuation) Rules, 2000 - Captive consumption - Internal transfer within the same company

In this case, the main issue revolves around the correct valuation of goods for excise duty purposes, specifically in the context of internal transfers within the same company for captive consumption. The appellant, a manufacturer of transmission towers, supplied the towers to another wing under the same management for a transmission project. The appellant's argument, presented by Shri K.K. Banerjee, was that they correctly paid duty based on the actual cost of manufacture by apportioning the total project cost, representing the correct assessable value. It was contended that Rule 8 of the Central Excise (Valuation) Rules, 2000, was not applicable as there was no captive consumption for the production of any other excisable goods.

On the other hand, the Revenue argued that the rule for valuation of captive consumption by adding 15% of the cost of manufacture should apply in this case since the goods were supplied within the appellant's company to another wing. The Tribunal acknowledged that while the case did not squarely fall under Rule 8, the principle could be applied to internal transfers under Rule 11 of the Central Excise (Valuation) Rules, 2000. The Tribunal noted that the appellants had determined the value by apportioning the total project amount, which included both cost and profit. Despite this, the Tribunal found this method reasonable for arriving at the assessable value of the product transferred internally within the company. As a result, the Tribunal held that the appellants had a prima facie case in their favor and waived the requirement of pre-deposit during the appeal process.

Therefore, the Tribunal's decision in this judgment provides clarity on the valuation of goods for excise duty in cases of internal transfers within the same company for captive consumption. It highlights the application of relevant valuation rules and principles to determine the correct assessable value, even when specific rules may not directly apply, ultimately ensuring a fair and reasonable assessment of excise duty obligations in such scenarios.