2017 (7) TMI 714 - AT - Central Excise

Valuation - clearance of HR Side Slits to two of their other units - captive consumption or not - Rule 8 of Central Excise Valuation Rules, 2000 - Held that - Rule 8 of the Valuation Rules stipulates when excisable goods are not sold by the assessee but are used for consumption by him or for manufacture of other articles - In the present case it is not a case of the Revenue that all the goods are captively consumed by the appellants. No such findings have been recorded. Clearance on sales basis to the other units of the appellants cannot be considered as captive consumption. There is no factual support for such assumption - availability independent sales to buyers and sale transaction on similar value to their own units. Rule 8 has no application in this case - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the clearance of HR Side Slits to other units amounts to captive consumption?
- Whether the valuation for excise purpose should be done in terms of Rule 8 of Central Excise Valuation Rules, 2000?
- Whether the impugned order is sustainable based on the grounds presented by both parties?

Analysis:
1. Captive Consumption Issue:
The appellants, engaged in manufacturing Iron & Steel items, used HR Coils in their production process, generating HR Side Slits. These slits were either consumed internally or sold to other units. The Revenue argued that clearance to other units constituted captive consumption, leading to duty liability. The appellants contended that clearances to other units were sales transactions, not captive consumption. The Tribunal noted independent sales to buyers at the factory gate and ruled that Rule 8 did not apply to clearances to other units, as they were not captive consumption.

2. Valuation Issue:
The Revenue applied Rule 8 of the Valuation Rules, requiring duty payment based on CAS-4 valuation for goods cleared to other units. The appellants argued that Rule 8 did not apply, as there were independent sales to buyers and sales to other units were at similar values. The Tribunal agreed with the appellants, finding no factual support for considering clearances to other units as captive consumption. They cited legal precedents to support their decision and concluded that Rule 8 had no application in this case.

3. Sustainability of Impugned Order:
The Tribunal found the impugned order unsustainable on the grounds of independent sales to buyers and sales to other units at similar values. They ruled that Rule 8 did not apply in this scenario. Consequently, the appeal was allowed, and the impugned order was deemed not sustainable based on the analysis and discussion presented during the hearing.