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2016 (6) TMI 577 - AT - Central ExciseValuation - Invokation of extended period of limitation - Inputs cleared to their sister unit on reversal of the credit availing on such inputs - Whether to be valued at the prices at which sale was made to independent buyers - Held that - by relying on the judgment of Hon ble Apex Court in the case of Ispat Metallics Industries Ltd., Vs. CCE, Raigad 2005 (10) TMI 129 - CESTAT, MUMBAI , where the goods are entirely transferred to a sister unit, it is reasonable to adopt the value shown in the invoice on the basis of which Cenvat Credit was taken by the assessee i.e. the invoice of the supplier of the goods to the assessee. Therefore, the impugned orders are unsustainable and liable to be set aside. - Decided in favour of appellant with consequential relief
Issues: Valuation of inputs cleared to sister unit, applicability of Circular and Rules, interpretation of relevant provisions, reliance on previous judgments.
Valuation of Inputs Cleared to Sister Unit: The case involved a dispute over the valuation of inputs cleared to a sister unit by the appellant. The appellant had reversed the Cenvat Credit on such inputs cleared as such. The department contended that the duty liability should be discharged based on the value of the items received from independent buyers. The lower authorities relied on Board Circular No.816/13/2005-CX, stating that Rule 57AB(1B) of Central Excise Rules, 1944 and Cenvat Credit Rules, 2001 should be applicable. However, the appellant argued that Circular No.6/39/2000-CX-I and previous judgments supported their position. The Tribunal analyzed the relevant rules and circulars, emphasizing the distinction between goods removed on sale and those transferred. The Tribunal referred to the Apex Court's judgment in a similar case, where it was held that when goods are entirely transferred to a sister unit, the value shown in the invoice for Cenvat Credit should be adopted. Therefore, the Tribunal concluded in favor of the appellant, setting aside the impugned orders and allowing the appeal. Applicability of Circular and Rules: The dispute also revolved around the interpretation and application of Circulars and Rules governing the valuation of inputs cleared to a sister unit. The appellant relied on Circular No.6/39/2000-CX-I and judgments of the Tribunal and the Apex Court to support their argument. On the other hand, the department emphasized Rule 57AC of the Cenvat Credit Rules, 2001, and the provisions of Section 4 of the Central Excise Act, 1944, for determining the value of the inputs cleared. The Tribunal critically analyzed the arguments presented by both sides, ultimately siding with the appellant's interpretation based on the Circular and previous judicial decisions. Interpretation of Relevant Provisions: The Tribunal delved into the interpretation of Rule 57AB(1C) of the Central Excise Rules, 1944, and Rule 3(4) of the Cenvat Credit Rules, 2001, to determine the duty liability on inputs cleared to a sister unit. By examining the language of the rules and Circulars, the Tribunal clarified the distinction between goods removed on sale and those transferred, highlighting the importance of following the value shown in the invoice for Cenvat Credit in the case of transfer to a sister unit. This interpretation played a crucial role in resolving the valuation issue in the appellant's favor. Reliance on Previous Judgments: The appellant and the department relied on previous judgments and Circulars to support their respective positions on the valuation of inputs cleared to a sister unit. The appellant cited judgments of the Tribunal and the Apex Court, specifically referring to the case of Ispat Metallics Industries Ltd., which had a similar factual scenario. The Tribunal extensively discussed the findings of the Apex Court in that case, emphasizing the relevance of the Circular and the principles laid down in the previous judgments. This reliance on precedent and established legal interpretations played a significant role in the Tribunal's decision to allow the appeal.
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