2021 (8) TMI 1064 - AT - Central Excise

Valuation - payment of duty on a lesser assessable value by not including the value of scrap generated during the course of manufacture and retained by themselves as consideration towards job charges - contravention of Rule 6 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and the provisions of Rule 4, 6 and 8 of the Central Excise Rules, 2002 - HELD THAT - The decision of the Tribunal in COMMISSIONER VERSUS P.R. ROLLING MILLS PVT. LTD. 2010 (9) TMI 1072 - SC ORDER was affirmed by the Hon'ble Supreme Court as reported in 2010 (260) ELT A84 (SC). Similar issue was decided in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS CADBURY INDIA LTD. 2006 (8) TMI 2 - SUPREME COURT . In the said decision, it was held that for determining the cost of production of the captively consumed goods, CAS-4 has to be applied which has been done by the appellant. Appeal allowed.

Summary

Issues:
1. Whether the value of scrap arising during the manufacturing process and retained by the appellant should be included in the assessable value for duty calculation.

Detailed Analysis:
1. The appellants were involved in manufacturing tractor parts on a job work basis using materials from another company. The Central Excise officers found discrepancies in duty payment as the appellants did not include the value of scrap generated during manufacturing in the assessable value. This led to a Show Cause Notice being issued for the period from 01/2010 to 03/2015, resulting in confirmed demands, interest, and penalties.

2. The main issue in the appeals was whether the value of scrap should be considered as additional consideration in the assessable value for duty calculation. The appellant argued that a previous Tribunal decision in their favor supported their stance, citing the case of P.R. Rolling Mills Pvt. Ltd. Vs. CCE, Tirupathi. The department, represented by the ld. AR, disagreed and supported the findings of the impugned order.

3. The Tribunal examined the demands for different periods and noted that a previous decision had set aside demands for the period from April 2004 to March 2009 based on the inclusion of scrap value in the assessable value. This decision followed the precedent set in the case of P.R. Rolling Mills Pvt. Ltd. where it was held that the value of scrap generated during manufacturing need not be included in the assessable value for duty calculation.

4. The Tribunal further referenced the affirmation of the decision in P.R. Rolling Mills Pvt. Ltd. by the Hon'ble Supreme Court, emphasizing that similar issues had been decided in other cases like CCE, Pune Vs. Cadbury India Ltd. The Tribunal ultimately concluded that based on the precedents and legal principles established in previous cases, the impugned orders could not be sustained. Consequently, the demands were set aside, and the appeals were allowed with any necessary consequential reliefs.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both parties, relevant case law references, and the final decision rendered by the Tribunal based on established legal principles and precedents.