2013 (11) TMI 1613 - AT - Central Excise

Summary

Issues involved: Under-valuation of yarn, applicability of Rules 8 and 9 of Central Excise Valuation Rules, captively used yarn, relief to the appellant.

Under-valuation of yarn: The appellant, engaged in manufacturing Shoddy woollen yarn and synthetic shoddy yarn, faced proceedings for under-valuation of yarn cleared to certain partnership firms. The original Adjudicating Authority assessed duty based on 115% cost of goods, disregarding appellant's argument of sales to other customers. On appeal, the Commissioner confirmed demand differential duty in cases where invoice value was less than 115% of cost, along with interest and penalty.

Applicability of Rules 8 and 9: The Tribunal noted that since the appellant's sales were not exclusively to related persons, Rules 8 and 9, requiring assessable value based on 115% of cost, were deemed inapplicable. Citing a precedent, the Tribunal held that adopting a higher assessable value was unjustified in this case.

Captively used yarn: It was observed that the yarn cleared by the appellant was being used captively by buyer units, who availed Cenvat credit for duty paid by the appellant. This led to a revenue-neutral situation, prompting the Tribunal to conclude that the appellant was entitled to relief on this ground as well.

Relief to the appellant: Considering the above factors, the Tribunal set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.