2021 (11) TMI 301 - AT - Central Excise

Refund of duty paid in excess - captive consumption - applicable valuation rules - manufacture of cement and cement clinker - The appellants were also using the manufactured cement for their own consumption - The appellant undertook the discharge of liability for the cement for own consumption in terms of Rule 8 with effect from 01.04.2011. Since the Central Excise duty as was paid on the basis of MRP and prevailing local market rate was higher than the valuation in terms of Rule 8, the appellant filed refund claim. HELD THAT - The moot controversy to be adjudicated in the facts and circumstances is as to whether any change in the definition of Industrial Consumer under Rule 3 of Legal Metrology (PC) Rules, 2011 as came into effect from 01.04.2011 has caused any change as far as the duty liability of appellant herein is concerned. No doubt due to this change, the appellant can be categorised industrial consumer but still he is consumer of such product as has been manufactured by him, i.e. the appellant is using the cement manufactured by him but for the construction of his own premises. This admitted fact is sufficient to hold that Valuation Rules, 2008 shall not be applicable to the appellant s case. It becomes clear that the appellant still fall under the said Rule if and only if manufactured cement is used by him for manufacture of his another industrial product. From the above discussion, I hold that the applicability of Rule 8 of Valuation Rules has rightly been denied by the Adjudicating Authorities below. The appellant is therefore, not entitled for refund, claiming the said applicability. Decided against the assessee.

Summary

Issues:
1. Applicability of Rule 8 of Valuation Rules on own consumption of manufactured final product.
2. Interpretation of change in definition of Industrial Consumer under Legal Metrology Rules, 2011.
3. Eligibility for refund claim based on local market rate versus Rule 8 valuation.

Analysis:
1. The appellant, engaged in cement manufacturing, sought CENVAT credit and discharged duty liability based on prevailing market rate until 31.3.2011. Post 01.04.2011, they changed to Rule 8 valuation, leading to a refund claim. The dispute revolves around the applicability of Rule 8 to own consumption of the final product. The Tribunal held that Rule 8 applies only when goods are used in manufacturing other products, not for self-consumption in construction, as in this case.

2. The change in the definition of Industrial Consumer under Legal Metrology Rules, 2011 is crucial. The pre-2011 definition included consumers using products in their industry for production, while post-2011, it specifies consumers buying products for direct use by the industry. Despite falling under the post-2011 definition, the appellant's use of cement for self-construction, not manufacturing other goods, renders Rule 8 inapplicable, as clarified by the Tribunal.

3. The appellant argued that Circular No. 6/39/2000-CX 1 mandates Rule 8 valuation for self-consumed goods, leading to a refund claim rejection dispute. However, the Tribunal emphasized that Rule 8 applies only when goods are consumed in manufacturing other products, not for self-use in construction. The Circular's entry on captive consumption further supports this interpretation, confirming the denial of the refund claim based on Rule 8 applicability.

In conclusion, the Tribunal dismissed the appeal, upholding the rejection of the refund claim. The judgment clarifies the specific conditions under which Rule 8 of Valuation Rules applies and highlights the distinction between self-consumption for construction purposes and manufacturing other goods, ensuring accurate duty liability assessment in such cases.