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2018 (10) TMI 817 - AT - Central ExciseMethod of Valuation - manufacture of end use car carrier - 25 car carriers for captive use for transportation of the cars - It has been contended by the Revenue that the cost of manufactured car carriers given by the Cost Accountant in their CAS 4 certificate is less than the value adopted by the Revenue for the previous period i.e. 2004-2005 to 2007-2008 - Rule 8 of Central Excise Valuation Rules, 2004 - Applicability of notification 6/2006 dated 1.3.2006 - Time Limitation. Whether the assessable value arrived by the appellant assessee for payment of Central Excise duty, on the car carrier body build by them, as per the provisions of Rule 8 of Central Excise Rules, 2000 read with section 4 of Central Excise Act, 1944 is correct as per provisions of law? - whether the demand of duty is hit by bar of limitation? Held that - It is seen that section 4(1)a of the Central Excise Act provides that assessable value of final products shall be the transaction value where the goods are sold by the assessee for delivery within time and place of removal and where the assessable value and price of goods is the sole consideration of sale - In the present case of the appellant, the condition of sale of excisable goods is not being satisfied as manufactured goods are not being sold by the appellant assessee but used by them captively. The Rule 8 of Central Excise Valuation Rules specifically provides that where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be 110 % of the cost of production or manufacture of such goods - for determining the assessable value under the present situation under Rule 8 of Central Excise Valuation Rules, 2000 is the closest and more appropriate because the basic requirement of Rule 8 of Central Excise Valuation Rules, 2008 that (a) that the goods are not sold and (b) the goods are used for consumption by appellant assessee, are satisfied - Since the goods are being used by the appellant assessee himself, it is not necessary that same need to be used only for the production and manufacture of other articles. The method adopted by the appellant assessee for determination of assessable value under Section 4 of Central Excise Act, 1944, is legally correct and thus they have rightly discharged their Central Excise duty liability - there is no merit in the order of Commissioner (Appeals) and same is set aside. Applicability of N/N. 6/2006 dated 1.3.2006 - Held that - Since same has not been subject matter either of the order in original or order of Commissioner (Appeals), therefore, there are no justification in commenting on the applicability of above notification in this case. Time limitation - Held that - The present impugned show cause notice dated 26.04.2013 covers the period of financial year 2008-2009 and 2009-2010 which is much beyond the normal period of demanding duty under section 11AC of Central Excise Act, 1944 - Since the department has all along been aware about the practice followed by the appellant and they have also filed their return in time, there are no valid grounds for invoking extended time of limitation under Section 11A of Central Excise Act, 1944 - demand is barred by limitation. Appeal allowed - decided in favor of appellant.
Issues:
1. Valuation of manufactured car carriers for Central Excise duty payment. 2. Application of Central Excise Valuation Rules and Cost Accountant's certificate. 3. Rejection of assessable value by Revenue based on cost inflation index. 4. Bar of limitation on demanding Central Excise duty. Issue 1: Valuation of manufactured car carriers for Central Excise duty payment The appellant, engaged in manufacturing car carriers, paid Central Excise duty based on the Cost Accountant's valuation as per Rule 8 of Central Excise Valuation Rules. Revenue doubted the valuation, citing discrepancies compared to previous periods. The Revenue demanded duty based on cost inflation index, leading to a show cause notice for ?35,38,452. The appellant argued that their valuation adhered to legal provisions, especially Rule 8 for captive consumption. The Tribunal found the appellant's valuation correct under Rule 8, dismissing Revenue's contentions. Issue 2: Application of Central Excise Valuation Rules and Cost Accountant's certificate The Tribunal analyzed Section 4 of the Central Excise Act and Rule 8 of the Valuation Rules. As the goods were not sold but used captively, Rule 8's provision of 110% of cost of production applied. The appellant's valuation, based on a Cost Accountant's certificate and Rule 8 requirements, was deemed legally sound. Rejecting the use of cost inflation index by Revenue, the Tribunal upheld the appellant's valuation methodology. Issue 3: Rejection of assessable value by Revenue based on cost inflation index The Revenue's rejection of the appellant's assessable value, using a cost inflation index, was deemed legally unfounded. The Tribunal emphasized that the certified cost of manufacturing, as per Rule 8, cannot be arbitrarily rejected without valid reasons. The Tribunal concluded that the Revenue's application of the cost inflation index was beyond the legal premise of Central Excise Act and Valuation Rules. Issue 4: Bar of limitation on demanding Central Excise duty The Tribunal found the demand for duty barred by limitation, as the issue had been previously addressed for the period 2004-2008. The subsequent show cause notice for 2008-2010 was considered time-barred, as the department was aware of the appellant's practices and timely filings. Consequently, the demand for duty was deemed unsustainable, and the appeal was allowed in favor of the appellant.
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