2006 (3) TMI 481 - AT - Central Excise

Summary

Issues: Central Excise duty valuation based on Rule 8 vs. Rule 4, applicability of Board's Circular, interpretation of Tribunal's decision on valuation of transferred goods

In this case, the main issue revolves around the valuation of excisable goods for the purpose of discharging Central Excise duty. The appellants, engaged in the manufacture of H.R Coils, were transferring goods to their sister concern and discharging duty based on the selling price. However, the adjudicating authority contended that duty should be paid as per Rule 8 of the Central Excise Valuation Rules, relying on a Board's Circular. The advocate for the appellant argued that valuation should be done under Rule 4, with reference to the price of goods sold to unrelated buyers. He cited a Tribunal decision supporting this interpretation.

Upon review, the Tribunal agreed with the appellant's contention. They emphasized that valuation rules must be followed sequentially, with Rule 8 being invoked only when value cannot be determined under precedent rules. Rule 8 specifically applies when goods are not sold by the assessee, indicating that if goods are being sold, Rule 8 is not the appropriate rule for valuation. The Tribunal found support in their decision in a similar case, affirming that valuation of transferred goods should be based on prices at which goods were sold to unrelated buyers.

Ultimately, the Tribunal allowed the stay petition unconditionally, given the substantial duty amount involved, and scheduled the appeal for final disposal. The judgment clarifies the correct approach to valuing excisable goods for duty purposes, highlighting the sequential application of valuation rules and the inapplicability of Rule 8 when goods are also being sold by the assessee.