2012 (7) TMI 321 - AT - Central Excise

Valuation - determination of value of goods cleared for captive consumption to a related unit, when similar goods are also sold to independent buyers - assessee submits that price at which the goods were cleared to related units at the relevant time, were also sold to independent buyers - Held that - Assessable value of the goods cleared to related unit ought to have been determined on the basis of sales to independent customers as per Rule 4 of the Valuation Rules, 2000 and not under the provisions of Rule 9 read with Rule 8 of the Valuation Rules. Impugned Order set aside and the case is remanded to the Adjudicating Authority for the limited purpose of verification of price adopted.

Summary

Issues: Valuation of goods cleared for captive consumption to a related unit based on comparable prices of goods sold to independent buyers.

Analysis:
1. Facts of the Case: The appeals were filed against the Order-in-Original alleging under-valuation of goods cleared to a related company for captive consumption. Differential duty and penalties were imposed on the appellants.

2. Contentions: The consultant for the appellants argued that goods transferred for captive consumption should be assessed based on comparable prices of goods sold to independent buyers. Citing legal precedents, he contended that valuation principles in such cases are well-established.

3. Revenue's Position: The Revenue argued that goods cleared for captive consumption to a related unit should be assessed under specific valuation rules, as held by the Adjudicating Authority.

4. Judicial Examination: The Tribunal considered the issue of valuation when similar goods are sold to independent buyers. Referring to a previous case, it was established that Rule 4 should be preferred over Rule 8 for valuation to ensure consistency with statutory provisions.

5. Decision: The Tribunal found merit in the appellant's claim that goods cleared to the related company were sold at prices similar to those to independent buyers. The Commissioner's failure to verify these facts led to setting aside the impugned order and remanding the case for verification, emphasizing a fair opportunity for the appellants to present their case.

6. Conclusion: The Tribunal allowed the appeals by way of remand for verification of facts regarding the pricing of goods cleared for captive consumption. The judgment highlighted the importance of consistent valuation principles and the need for thorough examination before imposing duties and penalties.