2004 (9) TMI 716 - AT - Central Excise

Summary

Issues involved:
Determining assessable value of steel tubes consumed captively by M/s. Avon Tubes Limited.

Analysis:
The appeal filed by M/s. Avon Tubes Limited pertains to the determination of the assessable value of steel tubes consumed captively by them. The Department had demanded duty and imposed penalties, arguing that the value should be ascertained as 115% of the cost of manufacturing. The Commissioner (Appeals) upheld this decision, citing Rule 8 of the Central Excise Valuation Rules. However, the appellant contended that Rule 8 should not apply when only a portion of the goods is transferred for captive consumption. They argued that in cases where a significant portion is sold to independent buyers, the value should be determined using reasonable means consistent with the Act's provisions. They relied on a precedent where it was held that determining the assessable value at 115% of the cost of production was unreasonable when goods were sold to unrelated buyers. The Tribunal in that case adopted the ex-factory sale price for valuation.

In response, the learned JDR reiterated the findings of the impugned order. The Tribunal considered the submissions of both sides and referred to Section 4 of the Central Excise Act, which distinguishes between goods sold for delivery and those not sold. It was highlighted that Rule 8, applied by the Revenue, comes into play when goods are not sold by the assessee. In this case, it was undisputed that a significant portion of the goods was sold to unrelated buyers where price was the sole consideration. Therefore, the Tribunal concluded that the assessable value should be based on the sale price at the time and place of removal, rather than applying Rule 8 for goods used captively. This decision was consistent with the precedent cited by the appellant and led to setting aside the impugned order, allowing the appeal.

The judgment emphasizes the importance of considering the specific circumstances of each case when determining the assessable value of goods, particularly in situations involving both sales to independent buyers and captive consumption. It clarifies the application of Rule 8 and the relevance of the sale price as the primary consideration in valuation, ensuring consistency with the principles and provisions of the Central Excise Act.