2012 (9) TMI 418 - AT - Central Excise

Removal of Inputs as such - cenvat credit in respect of steel strips as also coils - Subsequently the said inputs were cleared by them to their own sister unit located nearby, on reversal of credit so availed by them - Revenue entertained a view that instead of reversing the MODVAT Credit, they should have paid the duty on the said input by adopting the assessable value as 115% of the cost of production or manufacture of such goods Held that - Where the inputs or capital goods have been purchased from outside and in case of their removals as such to their another unit, then it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT Credit was taken by the assessee in the first place - lower authority s impugned Order-in-Original confirming the duty, imposing penalty and demanding interest, is not sustainable and deserves to be set aside - Revenue s appeal is rejected.

Summary

Issues: Valuation of inputs for excise duty purposes, applicability of circular on valuation rules

In this case, the main issue revolves around the valuation of inputs for excise duty purposes, specifically focusing on the applicability of the circular issued by the Board on the New Central Excise Valuation Rules. The appellate tribunal is tasked with determining whether the assessee correctly followed the valuation rules when clearing steel strips and coils to their sister unit, leading to a dispute with the Revenue regarding the payment of duty and reversal of CENVAT Credit.

The facts reveal that the respondents, engaged in manufacturing metal containers, availed CENVAT Credit for inputs like C.R. Steel Strips and CRCA coils used in production. Subsequently, these inputs were cleared to their sister unit nearby, prompting the Revenue to argue that instead of reversing the credit, duty should have been paid based on the assessable value. This disagreement led to the initiation of proceedings against the respondents, culminating in a Show Cause Notice proposing a differential duty, interest, and penalty.

Upon appeal, the Commissioner (Appeals) set aside the Revenue's order, citing a Board circular clarifying the valuation of inputs removed to another unit of the same assessee. The circular emphasized adopting the transaction value for duty payment when goods are sold but reversing CENVAT Credit when goods are transferred to a sister unit without sale. The tribunal upheld the Commissioner's decision, noting that the circular's guidance was correctly applied, and the Revenue cannot contest its own binding circulars. Consequently, the Revenue's appeal was dismissed, affirming the Commissioner's order.

Therefore, the judgment highlights the importance of adhering to valuation rules for excise duty purposes, particularly when transferring inputs between units of the same assessee. It underscores the significance of following Board circulars, which serve as authoritative guidance for Revenue authorities and must be upheld in decision-making processes to ensure consistency and compliance with established rules and procedures.