2016 (10) TMI 870 - AT - Central Excise

Captive consumption - Adjustment of short payment of duty with the excess payment of duty during the same year - self adjustment in the absence of provisional assessment - the correct value for excise duty purpose has been arrived at only on completion of the financial year and based on final accounts and following the CAS-4. When the value is arrived at based on annual data it is apparent that whatever value adopted by the appellant for captive clearances during the year are not based on final price as the same is not known at the time of clearance. - hot-rolled products of iron and steel. Held that - the appellant was not allowed to have provisional assessment and the department now proceeds to demand of duty selectively for periods within the same financial year wherever the value is less than the Rule 8 value and refused adjustment within the same financial year when the value is determined higher than the Rule 8 value. It is apparent that the duty liability as already discharged on the basis of value which is not final. The net excess or shortage will have to be considered. In the present case, admittedly, no refund has been claimed or under consideration for the impugned period even though overall payment by the appellant for the whole year is much higher than the actual liability. Appeal allowed - decided in favor of appellant.

Issues:
Calculation of excise duty for captively consumed goods based on Rule 8 of Central Excise Valuation Rules, 2000 for the year 2005-2006.

Analysis:
The appeal in this case was against an order-in-appeal dated 25.02.2010 of Commissioner (Appeals-I) Raipur regarding the calculation of excise duty for captively consumed goods by the appellants engaged in the manufacture of hot-rolled products of iron and steel. The Revenue contended that duty should have been paid on 110% of the cost of production for goods used captively, as per Rule 8 of Central Excise Valuation Rules, 2000. The appellants had adopted transaction value based on market price charged to other buyers for goods cleared for their own use. The dispute revolved around whether the overall duty payment for the entire year of 2005-2006 should be considered together to determine the liability of the assessee for duty on captively consumed goods. The lower authorities held that the demand for short payment was valid and excess payment made during part of the same year could not be adjusted against the short payment. The appellant challenged this finding.

Upon hearing both sides and examining the appeal records, it was established that the correct value for excise duty purpose was arrived at only on completion of the financial year and based on final accounts following CAS-4. The Revenue's proposal to consider only cases where the initially adopted value was less than the final CAS-4 value was deemed unjustified. The Tribunal noted discrepancies in the Revenue's approach to fixing duty liability for different periods within the same financial year. The lower authorities emphasized the applicability of Section 11B for excess payments made by the assessee on captively consumed goods. However, it was deemed unsustainable to recover such excess payments only through Section 11B when the initial duty payment was based on a non-final value. The Tribunal highlighted that the appellant's request for provisional assessment under Rule 7 was rejected, and the subsequent demand for duty selectively for periods within the same financial year was deemed unfair. It was concluded that the duty liability had already been discharged based on a non-final value, and the net excess or shortage needed to be considered. Despite the overall payment by the appellant for the whole year being higher than the actual liability, no refund had been claimed or considered for the impugned period.

In light of the above factual findings, the Tribunal found no merit in the impugned order and allowed the appeal by setting it aside.

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