2024 (1) TMI 663 - AT - Central Excise

Method of valuation - Demand of differential duty - clearance of clinkers of 4136661 .31 MTs to the sister units against the miniscule sale of 6018.19MTs to independent buyers - applicability of Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 or Rule 4 read with Rule 11 of Central Excise Valuation Rules, 2000? - period March 2011 to November, 2013 - Extended period of Limitation - HELD THAT - The appropriate rules for determination of the assessable value of the goods for the transferred clinkers to sister units will be Rule 4 read with 11 of the Central Excise Valuation Rules, 2004 rather than Rule 8 of the Central Excise Valuation Rules, 2000 for the period in question - This issue has been considered by the Larger Bench of the Tribunal in ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD 2007 (2) TMI 5 - CESTAT, MUMBAI-LB and their lordships after noting the Circulars issued by the Board in this regard where it was held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers. Extended period of limitation - HELD THAT - The appellant has been declaring the assessable value adopting Rule 8 of the Central Excise Valuation Rules, 2000 and discharging duty during the relevant period. All these facts are recorded in their ER-1 returns and periodically filed with the department; no objection has been raised by the Department on such method of assessment. Therefore, alleging suppression or mis-declaration of facts with intent to evade payment of duty cannot be sustained - In the appellant s own case for the Gujarat Unit, this Tribunal has considered the issue of invocation of larger period of limitation reported as M/S ULTRATECH CEMENT PVT. LTD. VERSUS CCE BHAVNAGAR 2013 (8) TMI 682 - CESTAT AHMEDABAD . Analysing the facts more or less similar to the present one for the period March 2008 to March 2010, though the method of assessment was held to be not correct, it is held that extended period of limitation cannot be invoked. The impugned order is accordingly modified and appeal is partly allowed setting aside demand for the extended period of limitation and remand the matter to the adjudicating authority to re-determine the assessable value applying the principle of Rule 4 read with Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 and compute the differential duty, interest, if any, accordingly.

Summary

Issues Involved:
1. Determination of the assessable value of clinkers cleared to sister units.
2. Applicability of Rule 4 versus Rule 8 of the Central Excise Valuation Rules, 2000.
3. Invocation of the extended period of limitation.
4. Method of computation of differential duty.

Summary:

1. Determination of the Assessable Value:
The appellant, engaged in the manufacture of cement, cleared clinkers to their sister units and independent buyers. The primary issue is whether the assessable value should be determined under Rule 4 or Rule 8 of the Central Excise Valuation Rules, 2000.

2. Applicability of Rule 4 versus Rule 8:
The appellant argued that Rule 8, which involves valuation at 110% of the cost of production, should apply since the clinkers were transferred to their sister units. However, the Revenue contended that Rule 4 should apply as there were sales to independent buyers. The Tribunal referred to the Larger Bench decision in Ispat Industries Ltd. and concluded that Rule 4 read with Rule 11 should apply when goods are sold to independent buyers, even if part of the production is transferred to sister units.

3. Invocation of the Extended Period of Limitation:
The appellant claimed that the demand for the period March 2011 to December 2012 is barred by limitation, as there was no suppression or misstatement of facts. The Tribunal agreed, noting that the appellant had been filing ER-1 returns and the Department had not raised any objections. Thus, the extended period of limitation could not be invoked. The demand was limited to the normal period of limitation.

4. Method of Computation of Differential Duty:
The appellant disputed the method of applying Rule 4, arguing that the Department erroneously adopted the highest previous price and ignored instances where the value under Rule 8 was higher. The Tribunal remanded the matter to the adjudicating authority to re-compute the duty strictly following Rule 4 read with Rule 11 for the normal period of limitation.

Conclusion:
The appeal was partly allowed, setting aside the demand for the extended period of limitation, and the matter was remanded to re-determine the assessable value and compute the differential duty accordingly. The judgment emphasized adherence to Rule 4 read with Rule 11 for valuation and recognized the limitation on invoking extended periods without evidence of suppression or misstatement.