2018 (5) TMI 819 - AT - Central Excise

Valuation - goods cleared to sister concern - related party transaction or not? - applicability of Rule 8 and Rule 9 of Central Excise valuation Rules, 2000 - Held that - the goods have been cleared from their factory at Pitampur to their sister concerned at Parol and Kohlapur. Under such circumstances Rule(8) of the Central Excise Valuation Rule would apply for the purpose of charging Central Excise duty made on the basis of 110 % of the cost of production of a as per the CAS 4 certificate. Reliance placed in the case of M/s Indore Composite Pvt. Limited Versus CCE, Indore 2017 (10) TMI 191 - CESTAT NEW DELHI , where it was held that Both units are owned by the same company and there is no sale involved in the transfer of goods from one unit to another. Under such circumstances, Rule 8 of Central Excise Valuation Rules specifically prescribes that the valuation for purpose of charging of excise duty is required to be made on the basis of 110% of the value of the goods ascertained as per the CAS-4. Appeal dismissed - decided against appellant.

Summary

Issues: Valuation of goods under Central Excise Tariff Act, 1985 for goods sold to sister concerns.

Analysis:
1. The appellant, engaged in manufacturing Sodium Silicate, challenged an order dismissing their appeal against the valuation of goods sold to sister concerns. The authorities held that the valuation should be at 110% of the cost of production, as per Rule 8 & 9 of Central Excise Valuation Rules, 2000. The appellant argued that even if the prices matched those charged to independent buyers, the rules should not apply.

2. The appellant cited settled law that when transaction value is available, Rule 8 & 9 of Central Excise Valuation Rules are not applicable. They referred to cases like Jindal Steel & Power vs CCE Jaipur and others to support their argument. However, the Department relied on case laws like CCE vs Surya Roshini Ltd., stating that the substitution of Rule 8 changed the application of previous judgments.

3. The Tribunal noted that goods were cleared to sister concerns at a certain valuation, invoking Rule 8 of Central Excise Valuation Rules. Referring to the decision in CCE Indore vs Surya Roshini Ltd, the Tribunal emphasized the application of the rule for charging Central Excise duty based on the cost of production. The Tribunal also highlighted the importance of the CAS-4 certificate in determining the cost of production.

4. The Tribunal analyzed the original authority's findings regarding the transfer of goods to sister concerns and the difference in pricing compared to sales to independent buyers. It was observed that the amendments in Rule 8 in 2013 clarified the application of 110%/115% of cost of production for valuation, as consistently followed.

5. The Tribunal distinguished the decision in the present case from previous judgments based on the Supreme Court ruling in CCE, Mumbai vs. Fiat India Pvt. Ltd. The Tribunal upheld the impugned order, dismissing the appeal based on the totality of facts and circumstances, following precedents set in similar cases.

6. The judgment was pronounced on 11.05.2018 by the Appellate Tribunal CESTAT New Delhi, upholding the valuation of goods sold to sister concerns at 110% of the cost of production, in accordance with Rule 8 of the Central Excise Valuation Rules, 2000.