2016 (12) TMI 1036 - AT - Central Excise

Intermediate goods - valuation - job-work - Rule 8 of the Valuation Rules, 2000 - Held that - In view of the confusion of both sides on valuation of goods, appellant shall place entire facts and figures with a copy of the Larger Bench decision in the case of I.T.C. Ltd. case 2016 (4) TMI 280 - CESTAT CHENNAI and the ratio laid by Hon ble Supreme Court in Ujagar Prints case 1989 (1) TMI 124 - SUPREME COURT OF INDIA before the adjudicating authority by 31.08.2016 with a prayer to hear the matter as expeditiously as possible in September, 2016. On the date fixed, the Appellant shall co-operate with the adjudicating authority - matter on remand.

Summary

Issues: Valuation of intermediate goods, application of Larger Bench decision, MODVAT credit eligibility

Valuation of Intermediate Goods:
The appellant, a job-worker receiving inputs from various sources, processed these inputs in its Taloja Unit, resulting in intermediate goods. The valuation of these goods was done by applying Rule 8 of the Valuation Rules, 2000, without dispute from the Appellant. However, a dispute arose regarding the valuation of the intermediate goods processed in its Belur Unit for the final output. The Appellant argued that the final output should be valued following the Supreme Court's ratio in the Ujagar Prints case. In contrast, the Revenue valued the final output differently, leading to the dispute.

Application of Larger Bench Decision:
Both parties agreed to be governed by the Larger Bench decision in the case of I.T.C. Ltd. vs. Commissioner of Central Excise, Chennai-I, specifically concerning inter-unit clearances. The Revenue acknowledged the applicability of this decision but lacked the necessary facts and figures to verify if the valuation of goods cleared from the job working unit in Belur complied with the Ujagar Prints case's ratio. Consequently, the Tribunal directed the Appellant to provide all relevant facts and figures, along with the mentioned decisions, to the adjudicating authority for re-adjudication by a specified date.

MODVAT Credit Eligibility:
The Appellant's eligibility for MODVAT Credit was to be re-examined by the adjudicating authority in light of the Supreme Court's decision in the case of Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd. The judgment emphasized the realistic approach a man of commerce would take in determining the cost of excisable products for excise duty assessment, particularly regarding the MODVAT scheme. The Tribunal agreed with this proposition, directing the authority to consider the MODVAT issue accordingly during re-adjudication.

Conclusion:
The Tribunal disposed of the appeals, providing clear directions for re-adjudication based on the Larger Bench decision for inter-unit transfers and the Ujagar Prints case's ratio for job-worked goods. The adjudicating authority was tasked with ensuring compliance with the specified decisions and principles, with a deadline set for the completion of re-adjudication. Additionally, the MODVAT credit eligibility was to be re-evaluated in line with the realistic cost considerations outlined in the Dai Ichi Karkaria Ltd. case.