2012 (11) TMI 772 - AT - Central Excise

Valuation - what should be the value of in respect of inputs on which CENVAT/MODVAT Credit has been taken, are removed as such by the appellant to their sister concerns for use in the manufacture of final product Held that - Appellant had removed only the inputs as such and had reversed the CENVAT Credit taken on such inputs - no processing of whatsoever nature was done on such inputs - amount of Cenvat credit taken by the assessee, of the duty paid on the invoice value as shown in the invoice can be considered as correct assessable value and duty liability to be discharged in favor of assessee. Decision in the case of Eicher Tractors v. C.C.E., Jaipur - 2005 (9) TMI 340 - CESTAT, NEW DELHI , followed.

Summary

Issues:
- Valuation of inputs removed to sister concerns for manufacturing final products.

Analysis:
The appeal challenged an Order-in-Original regarding the valuation of inputs removed by the appellant to sister concerns for manufacturing final products. The appellant, engaged in manufacturing textile machines and parts, had availed Cenvat credit of Central Excise duty on inputs. The Department contended that the appellant should have recalculated the assessable value under Central Excise Valuation Rules 8 & 9, paying 115% of the recalculated value as duty. Show Cause Notices were issued, leading to the demand of duty, interest, and penalty by the adjudicating authority.

The appellant argued that they had reversed the Cenvat credit while clearing inputs to sister concerns, thus no reassessment was necessary as the inputs were removed as such. Reference was made to the Tribunal's decision in Eicher Tractors v. C.C.E., Jaipur. The Department, however, relied on clear Board instructions during the relevant period, stating that assessable value should be recomputed as cost plus 15% for clearances not amounting to sale.

The Tribunal considered both arguments and the records. It was established that the appellant had only removed inputs as such, reversing the Cenvat credit without any processing. Referring to the Larger Bench decision in Eicher Tractors, which reproduced relevant Board guidelines, it was held that the Cenvat credit of Central Excise duty should be the correct amount to be reversed when inputs are removed as such to sister concerns. Therefore, the Larger Bench decision covered the issue in this case, leading to the setting aside of the impugned order and allowing the appeal with any consequential relief.

In conclusion, the judgment clarified the valuation of inputs removed to sister concerns for manufacturing final products, emphasizing the correct method of reversing Cenvat credit in such scenarios based on established legal precedents and Board guidelines.