2018 (3) TMI 686 - AT - Central Excise

Valuation - captive consumption - Rule 8 of the Central Excise Valuation Rules - Department was of the view that for goods which have been captively consumed, Rule 8 of the Central Excise Valuation Rules will be applicable and the value needs to be computed on the basis of the cost construction @ 110% of the CAS-4 value - Held that - when goods are partially consumed by independent buyers, it is not mandatory that the goods cleared for captive consumption has to be valued on the basis of cost construction. It is valid to take the transaction value of independent buyers i.e. comparable prices for adopting of payment of Central Excise duty. The respondent-assessee has, in fact, paid the duty on the basis of the transaction value of goods cleared to independent buyer - appeal dismissed - decided against Revenue.

Summary

Issues:
Dispute over valuation of goods captively consumed for duty payment.

Analysis:
The appeal was filed by the Revenue against the order passed by the Commissioner, Customs & Central Excise, Raipur regarding the valuation of goods captively consumed by the respondent-assessee. The appellant is engaged in manufacturing various steel products, some of which are exempted under a specific notification. The dispute arose from the method of valuing goods for duty payment, with the Department contending that Rule 8 of the Central Excise Valuation Rules should apply, requiring the value to be computed based on the cost construction at 110% of the CAS-4 value for captively consumed goods. The original authority and the Commissioner (Appeals) had both ruled in favor of the assessee, prompting the Revenue to file the present appeal.

During the proceedings, the Revenue argued that Rule 8 of the Valuation Rules applied to goods captively consumed, necessitating duty payment based on CAS-4 valuation at 110%. They relied on various case laws to support their position. In response, the counsel for the respondent assessee cited several case laws to support their contention that duty payment for captively consumed goods based on the transaction value of goods cleared to independent buyers was appropriate.

The Tribunal, after considering the arguments and case laws presented, referred to a Supreme Court judgment and a circular issued by the Board clarifying the application of Rule 8. The Supreme Court ruling highlighted that the Valuation Rules did not mandate sequential application, and the Board's circular emphasized that the new provision aimed to cover specific circumstances regarding clearances of manufactured goods. Consequently, the Tribunal concluded that when goods are partially consumed by independent buyers, it is permissible to use the transaction value of goods cleared to independent buyers for duty payment, rather than solely relying on cost construction.

Upon careful review of the records, the Tribunal found that the respondent-assessee had indeed paid duty based on the transaction value of goods cleared to independent buyers, thereby upholding the impugned order and dismissing the appeal filed by the Revenue. The decision was pronounced in open court, bringing the matter to a close.