2023 (11) TMI 214 - AT - Central Excise

Valuation - Recovery of the differential duty alongwith interest and penalty - determination of assessable value of insulated copper conductors manufactured by the appellants on job work basis during the period 01.04.2007 to 08.09.2008 - goods captively consumed - applicability of Rule 8 of the Central Excise Valuation Rules, 2000 - HELD THAT - This issue is no more res-integra and has been considered by this Tribunal in the case of ROLASTAR PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DAMAN 2011 (9) TMI 776 - CESTAT, AHMEDABAD taking note of the amended provisions, namely, Rule 10A of Central Excise Valuation Rules, 2000 and Circulars issued on the subject by the Board from time to time and following the earlier order, held that Rule 8 is applicable to the assessee who manufactures the goods and uses the same captively either by himself or on his behalf. The said Rule would have been applicable if M/s. Sai Flipped Coil Pvt. Limited would have manufactured the goods themselves and then used the same captively. The Hon ble Supreme Court in the case of CCE, Pune vs Mahindra Ugine Steel Co Ltd 2015 (4) TMI 351 - SUPREME COURT interpreting Rule 8 and Rule 11 of Central Excise Valuation Rules, 2000 for determination of the assessable value of the goods manufactured on job work basis held that Rule 11 would be applicable in arriving at the assessable value of the excisable goods. In the said case, the respondent was engaged in the manufacture of motor vehicle parts from the raw material supplied by the manufacturers of the motor vehicles on labour charge basis - The question before the Hon ble Supreme Court was whether Rule 8 of the Central Excise Valuation Rules, 2000 or Rule 11 would apply in arriving at the valuation of the goods at the end of the assessee and it was held that Rule 8 is not applicable in the case of the respondent, it is Rule 11 only which becomes applicable as that is residuary provision for arriving at the value of any excisable goods which are not determined under any other rule. Even though the aforesaid judgement was delivered prior to insertion of Rule 10A, however, there is no change in the wordings of Rule 8 after 01.03.2007, and the facts of the present case do not fall either under sub-rule (i) or sub-rule (ii) of Rule 10A of Central Excise Valuation Rules, 2000. Thus, following the principle laid down in aforesaid judgments, it is opined that Rule 8 of Central Excise Valuation Rules, 2000 is not applicable to the facts of the present case. There are no merit in the impugned order passed by the ld. Commissioner (Appeals) - appeal allowed.

Summary

Issues Involved:
1. Determination of assessable value of insulated copper conductors manufactured on job work basis.
2. Applicability of Rule 8 and Rule 10A of the Central Excise Valuation Rules, 2000.
3. Sustainability of differential duty, interest, and penalty imposed.

Summary:

Determination of Assessable Value: The appellants manufactured insulated copper conductors on job work basis using duty-paid copper rods supplied by principal manufacturers. They determined the assessable value by considering the cost of raw materials and processing charges, and paid excise duty accordingly. The Revenue contended that the valuation should be done under sub-rule (iii) of Rule 10A read with Rule 8 of the Central Excise Valuation Rules, 2000, which mandates the value to be 110% of the cost of production since the goods were captively consumed by the principal manufacturers.

Applicability of Rule 8 and Rule 10A: The appellants argued that Rule 8 is not applicable as they did not manufacture the goods on behalf of the customers but used their own resources. They cited several judgments, including the Supreme Court's decision in Ujjagar Prints, which supports the valuation method they adopted. The Tribunal noted that Rule 8 applies when goods are used for consumption by the manufacturer or on their behalf, which was not the case here. The Tribunal also referred to the Supreme Court's judgment in CCE, Pune vs Mahindra Ugine Steel Co Ltd, which clarified that Rule 8 is inapplicable when goods are not used by the assessee for production or manufacture of other articles.

Sustainability of Differential Duty, Interest, and Penalty: The Tribunal found that the appellants' method of valuation was consistent with legal precedents and that Rule 8 did not apply to their case. Consequently, the confirmation of differential duty, interest, and penalty was deemed unsustainable. The Tribunal set aside the impugned order, allowing the appeals with consequential relief as per law.

(Order pronounced in the court on 03/11/2023)