2008 (7) TMI 652 - AT - Central Excise

Valuation (Central Excise) - Transfer to sister unit - Case of Revenue is that the cost of production is higher than the price at which the goods were transferred to their sister unit

Summary

Issues:
- Assessment of goods transferred to sister unit under Rule 8
- Applicability of comparable price for goods transferred to sister unit
- Interpretation of concurrent findings in favor of the assessee

Analysis:
1. Assessment of goods transferred to sister unit under Rule 8:
The Department contended that a significant quantity of production was transferred to the appellant's sister unit at a cost of production higher than the transfer price. The Department argued that Rule 8 should be applied in this case.

2. Applicability of comparable price for goods transferred to sister unit:
The Advocate for the respondent referred to a Mumbai Bench Tribunal decision in a previous case, where the assessment adopted the price of comparable goods for transfers to the sister unit. This decision was based on a Larger Bench ruling in the case of Ispat Industries Ltd. v. C.C.E., Raigad. The Tribunal noted that it would be illogical to impose duty on goods transferred to the appellant's own unit at a higher price than to third parties, especially when there was no indication of any improper transaction.

3. Interpretation of concurrent findings in favor of the assessee:
After considering both parties' arguments, the Tribunal found no justification to overturn the concurrent findings of the Original Authority and the Commissioner (Appeals) that favored the assessee. The Tribunal highlighted that previous decisions supported the respondent's position, emphasizing the consistency in the application of pricing principles for intra-company transfers.

In conclusion, the Tribunal rejected the Department's appeal, affirming the lower authorities' decisions in favor of the assessee. The judgment underscored the importance of pricing consistency and fairness in assessing goods transferred within the same entity, aligning with established legal precedents and principles.