2017 (10) TMI 206 - AT - Central Excise

Valuation - sister units - valuation done on the basis of provisional assessment - Held that - It is seen from the order dated 17.06.2002 wherein the provisional assessment was finalised, that the provisional assessment was sought stating that they are clearing the goods as such to their own unit. It is seen that the appellants have not cleared the goods to their own unit but they have cleared the goods to their sister unit. The provisional assessment ordered and finalised was for the purpose of clearance of their own unit but not to sister unit. When the goods are cleared to any unit which is not related then the transaction value is the value at which the assessment is done under Section 4 of Central Excise Act - the provisional assessment finalised by the order no. 106/DMD/02 dated 17.06.2002 cannot be applied to the value of clearance to sister units. In these circumstances, the relationship between the respondent and the sister units needs to be examined to arrive at the correct method for the purpose of arriving at the assessable value - appeal allowed by way of remand.

Summary

Issues involved:
1. Provisional assessment and valuation of capital goods for duty calculation.
2. Application of Cenvat Credit Rules for valuation under Central Excise Act.
3. Discrepancy in pricing and utilization period of capital goods.
4. Appeal jurisdiction and authority over related units.

Analysis:
1. The appeals were filed by the revenue against the dropping of demand by the Commissioner in respect of the valuation of capital goods by Garware Chemicals Ltd. for its sister units. The Commissioner had accepted the provisional assessment under Rule 8 of the Valuation Rules 2000 and dropped the demand. The revenue argued against the acceptance of the valuation and sought to demand duty on the differential value based on the actual transaction value. The Commissioner relied on Cenvat Credit Rules requiring valuation under Section 4 of the Central Excise Act, rejecting the contention for using the actual transaction value.

2. The review order highlighted the failure of the Commissioner to address the difference in pricing and the period of utilization of the capital goods. The revenue contended that the Commissioner did not consider the reason for the price difference and the period of utilization before sale. The respondent argued that the appeals only related to Garware Chemicals Ltd., making the appeals against the other sister units infructuous.

3. The Tribunal observed that the appeals against Garware Polyesters Ltd. (Chikalthana) and Garware Polyesters Ltd. (Waluj) were infructuous as the grounds of appeal only related to Garware Chemicals Ltd. The Tribunal dismissed the appeals against the sister units and focused on the valuation and provisional assessment done by Garware Chemicals Ltd. for the sister units, which led to the dropping of the demand by the Commissioner.

4. The Tribunal found merit in the revenue's appeal, setting aside the impugned order and remanding the matter to reexamine the finalization of the provisional assessment for clearance to sister units. The Tribunal emphasized the need to determine the correct method of valuation for goods cleared to sister units under Section 4 of the Central Excise Act. The appeal related to Garware Chemicals Ltd. was allowed for remand, while the appeals concerning the sister units were dismissed as infructuous.

This detailed analysis covers the issues of provisional assessment, application of Cenvat Credit Rules, discrepancy in pricing, and appeal jurisdiction over related units as addressed in the judgment by the Appellate Tribunal CESTAT MUMBAI.