2016 (1) TMI 970 - AT - Central Excise

Valuation - captive consumption - stock transfer - Determination of applicability of Rule 8 of Central Excise Valuation (Determination on Price of Excisable Goods) Rules, 2000 in respect of internally transferred goods for consumption in assessee s various project work - Held that - Reasoning given by the original authority in his order dated 30/1/2006 regarding the applicability of Rule 8 in the present case of captive consumption is misconceived. Since the transaction value of the excisable goods is available and not all the excisable goods are captively consumed, the provisions of Rule 8 as prevailing during the relevant time will not apply to the assesses. On the second issue regarding valuation of steel items cleared on stock transfer to other plants of the assessee, we find that the concept of related person has no relevance.All the units are part of one company. There is no sale of goods in this stock transfer. The assesses have paid duty based on cost of production which is higher than the cost of production adopted uniformly by the department. We find that assessee paid duty on cost plus 15 per cent on the entire quantity of stock transferred to their other unit in Selam. The said amount was availed as credit by the Selam Steel Plant. The value adopted by them (Rs. 10,457/- per MT) is much more than value on which duty is being demanded (Rs. 9,489/-).Considering the above factual position, we find the impugned order dated 31/1/2006 is not sustainable on this ground. Regarding the two department s appeals against the impugned orders we find that the only ground taken is that the costing of goods as per CAS-4 standards will be effective only from the date of issue of circular dated 13/2/2003 by the Board. We find the applicability of CAS-4 standards for all the cases even pending at the time of issue of circular has been upheld by Tribunal in the case of National Aluminum Company Limited ( 2005 (3) TMI 186 - CESTAT, NEW DELHI ). On the SLP filed, the Hon ble Supreme Court refused the grant of the stay order. No further developments have been informed. - Decided against revenue.

Summary

Issues:
1. Applicability of Rule 8 of Central Excise Valuation Rules for internally consumed goods.
2. Valuation of steel items cleared on stock transfer basis to other units.

Analysis:

Issue 1: Applicability of Rule 8 for internally consumed goods:
The appeals involved a dispute over the valuation of finished goods like plates, angles, and channels consumed internally by the assessee in project work and transferred to another plant for further manufacture. The main contention was the applicability of Rule 8 of the Central Excise Valuation Rules. The assessee argued that the transaction value should be adopted for excisable goods if available, and Rule 8 should not apply as the goods were not used for production of excisable goods but for civil construction. The Tribunal found that the assesses had properly sold part of the goods fulfilling the condition of transaction value for excise duty, and Rule 8 did not apply. The Tribunal cited various decisions, including a recent Supreme Court ruling, to support its decision that Rule 8 did not apply in such cases.

Issue 2: Valuation of steel items on stock transfer basis:
Regarding the valuation of steel items cleared on a stock transfer basis to other units of the company, the Tribunal noted that all units were part of the same company, and there was no sale involved in the transfer. The assessee had paid duty based on the cost of production, which was higher than the department's uniform cost. The Tribunal found that the assessee had paid duty on the entire quantity of stock transferred at a higher value than demanded, and the impugned order was deemed unsustainable on this ground.

Additional Points:
The Tribunal also addressed the department's appeals related to the applicability of CAS-4 standards for costing, stating that the standards were upheld even for cases pending at the time of the circular's issuance. The Tribunal found no merit in the department's appeals and allowed the appeals filed by the assessee while dismissing those filed by the Revenue.

In conclusion, the Tribunal's detailed analysis clarified the issues surrounding the valuation of goods for excise duty purposes and emphasized the importance of transaction value and proper application of valuation rules in determining the duty payable by the assessee.