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2023 (10) TMI 871 - AT - Central ExciseValuation of excisable goods transferred to other units - same products are also sold by the Appellant to unrelated buyers from its depots/ stockyards - to be valued at 110% of cost of production under Rule 8 of the Central Excise Valuation Rules, 2000 or not - HELD THAT - The issue is no longer res integra as as the issue has already been decided in favour of the Appellant in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD 2007 (2) TMI 5 - CESTAT, MUMBAI , wherein it has been held that the provisions of Rule 8 of Central Excise Valuation Rules will not apply in a case where some part of the production is cleared to the independent buyers. The submission of the Appellant agreed upon that it is a settled position that Rule 8 of Excise Valuation Rules will not be applicable if apart from captive consumption, independent sales are also taking place directly from the factory gate or the depot of the manufacturer - Rule 8 of Central Excise Valuation Rules will not be applicable in this case and hence the demand of duty confirmed in the impugned order is not sustainable. Since the duty demand is not sustainable, the question of demanding interest and imposing penalty does not arise. The impugned order set aside - appeal allowed.
Issues Involved:
The issues involved in the judgment are the valuation of excisable goods transferred to other units, application of Rule 8 of the Central Excise Valuation Rules, 2000, and the sustainability of duty demand, interest, and penalty imposed. Valuation of Excisable Goods Transferred to Other Units: The appeal was filed against the Order-in-Original confirming the demand of excise duty, education cess, and higher education cess on the clearance of MS Ingots and structurals by the Appellant to their Durgapur Steel Plant. The Department contended that such valuation should be at 110% of the cost of production under Rule 8 of the Central Excise Valuation Rules, 2000. The Appellant argued that Rule 8 would apply only if the entire production is captively consumed or sold to related persons. They adopted prices fixed by the Central Marketing Officer for inter-unit transfers, as these prices reflected the market value for sales to unrelated parties. The Appellant also claimed that the Show Cause Notice was time-barred and the extended period could not be invoked. Application of Rule 8 of Central Excise Valuation Rules: The Appellant cited precedents where it was held that Rule 8 does not apply when some production is cleared to independent buyers. They argued that Rule 8 is inapplicable when independent sales occur directly from the factory gate or depot of the manufacturer. Relying on the decision in Ispat Industries Ltd. v. Commissioner of Central Excise Raigad, it was contended that the duty paid for the transfer of goods to the Durgapur unit by adopting the sale value to unrelated buyers is proper. The Tribunal agreed, holding that Rule 8 is not applicable in this case, and thus, the duty demand was deemed unsustainable, leading to the dismissal of interest and penalty. Sustainability of Duty Demand, Interest, and Penalty: The Tribunal observed that the issue had been previously decided in favor of the Appellant in Ispat Industries Ltd. v. Commissioner of Central Excise Raigad, where it was established that Rule 8 does not apply when some production is cleared to independent buyers. As the duty demand was found unsustainable, the question of demanding interest and imposing a penalty did not arise. The Tribunal set aside the impugned order and allowed the appeal filed by the Appellant.
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