2016 (9) TMI 839 - AT - Central Excise

Captively consumed goods - Valuation - goods captively consumed for further manufacturing of excisable goods from the factory premises - period involved is February 1997 to January 2002 - Held that - as regards the period prior to 01.07.2000 provisions of Rule 6 (b)(i) of Central Excise (Valuation) Rules, 1975 could be applicable in the case wherein the goods are captively consumed as well as sold outside. Revenue s case is that the appellant should have discharged the duty liability on the captively consumed goods based upon the value of the comparable goods sold outside, while the claim is defended by the appellant on the ground that the captively consumed goods were of the substandard quantity. It is found that in the Grounds of Appeal also identical arguments are put forth, but no evidence is on record to show that the captively consumed yarn/goods were of substandard or inferior quality. In the absence of any such evidence we have to hold that the valuation of captively consumed goods needs to be done based upon the provisions of Rule 6(b)(i) of Central Excise (Valuation) Rules, 1975 read with Section 4 of Central Excise Act, 1944. As regards the liability post 01.07.2000, we find that the provisions of Rule 8 of the Valuation Rules are very clear inasmuch as the said Rules mandate from an assessee to discharge the duty liability on 110% or 115% of the cost of production of the goods. Apparently the appellant had produced a certificate from Chartered Accountant indicating the value for captively consumed goods, the same was rejected by the lower authorities on the ground that the Chartered Accountant has not justified the consumption of material was being inferior quality and was not evidenced by any supporting documents. Even before us also this findings are not contested. Therefore, in the absence of any supporting documents, we find that both the lower authorities are correct in confirming the demand raised along with interest and also imposition of penalty. - Decided against the appellant

Issues: Valuation of captively consumed goods for excisable goods manufacturing, application of Central Excise Act and Valuation Rules pre and post 01.07.2000, justification of duty liability calculation, relevance of supporting documents in valuation process.

In this judgment by the Appellate Tribunal CESTAT MUMBAI, the issue revolved around the valuation of captively consumed goods for further manufacturing of excisable goods from a factory premises. The period under consideration was from February 1997 to January 2002, governed by the provisions of Section 4 of the Central Excise Act, 1944 pre and post 01.07.2000. The Revenue contended that the duty liability on captively consumed goods should be based on the value of comparable goods sold outside, while the appellant argued that the captively consumed goods were of substandard quality. However, the Tribunal noted the absence of evidence to support the claim of substandard quality, leading to a decision to value the captively consumed goods based on Rule 6(b)(i) of Central Excise (Valuation) Rules, 1975 along with Section 4 of the Central Excise Act, 1944.

Regarding the liability post 01.07.2000, the Tribunal highlighted the clarity of Rule 8 of the Valuation Rules, which required the assessee to discharge duty liability on a percentage of the cost of production of goods. Despite the appellant presenting a certificate from a Chartered Accountant indicating the value of captively consumed goods, the lower authorities rejected it due to lack of justification for material consumption quality and supporting documents. The Tribunal upheld the lower authorities' decision, emphasizing the importance of supporting evidence in the valuation process to determine duty liability accurately.

Ultimately, the appeals challenging the impugned order failed, and the Tribunal upheld the decision of the lower authorities. The judgment emphasized the significance of complying with the valuation rules and providing adequate evidence to support claims related to the valuation of captively consumed goods for excisable goods manufacturing.

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