2018 (10) TMI 1273 - AT - Central Excise

Valuation - by products - determination of the value for assessment of goods utilized captively - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Held that - Tribunal in HM Polycontainer Ltd. v. Commissioner of Central Excise 2010 (6) TMI 444 - CESTAT, MUMBAI to the effect that transaction value after abating expenses of the assessee is also on acceptable basis of computation even under rule 8 and find no law in the valuation adopted by assessee - Hon ble High Court of Bombay in Commissioner of Central Excise, Customs & Service Tax, Vapi v. Tarapur Grease India Pvt. Ltd 2015 (11) TMI 1168 - BOMBAY HIGH COURT has held that the principles of revenue neutrality would apply for recovery of duty sought by the Revenue - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Assessment of duty on goods cleared internally
- Applicability of Central Excise Valuation Rules
- Revenue neutrality and bar of limitation

Assessment of duty on goods cleared internally:
The appeal was filed against an order confirming demand duty, interest, and penalty imposed by the Commissioner of Central Excise (Appeals) on M/s Godrej Industries Ltd for clearing 'soap stock' to their sister unit between April 2001 to March 2004. The central excise authorities argued that the goods, consumed internally, should have been valued at a certain percentage of the cost of production. The appellant contended that the market price of the goods should take precedence over the price computed by the authorities based on Central Excise Valuation Rules. The appellant also argued that the goods cleared were 'by products' not subject to the valuation rules for manufactured goods.

Applicability of Central Excise Valuation Rules:
The appellant argued that the Central Excise Valuation Rules should not apply to the 'by products' cleared internally, as the value of the final product already included the manufacturing cost of the 'by product.' The Authorized Representative relied on settled law and lower authorities' findings that the cost of production should be the basis for determining the value of goods utilized captively.

Revenue neutrality and bar of limitation:
The Tribunal relied on previous decisions to support the appellant's arguments. They cited the decision in HM Polycontainer Ltd. case, stating that transaction value after abating expenses of the assessee is an acceptable basis for computation. The Tribunal also mentioned the decision in Commissioner of Central Excise v. Special Steel Ltd, upheld by the Supreme Court, and the decision in Commissioner of Central Excise v. Tarapur Grease India Pvt. Ltd by the High Court of Bombay, supporting the principles of revenue neutrality for recovery of duty. Based on these precedents, the Tribunal set aside the impugned order and allowed the appeal, emphasizing revenue neutrality and the principles established in previous cases.

(Pronounced in Court on 04-10-2018)