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2024 (2) TMI 247 - AT - Central ExciseValuation of the goods - clearance of kraft paper to their sister concern, and also to independent buyer - period April 2006 to September 2012 - HELD THAT - The issue is wholly covered by ruling of the Larger Bench decision of this Tribunal in the case of ISPAT INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., RAIGAD 2007 (2) TMI 5 - CESTAT, MUMBAI-LB - The issue before the Larger Bench was whether the assessable value in respect of goods which are transferred to any plant/unit of the same assessee, is required to be determined as per Rule 4 or Rule 8 of Central Excise Valuation Rules 2000, in case where some goods were also sold to independent buyers. The Larger Bench have held in the circumstances and facts as follows - In view of what we have observed above, we answer the reference in the following terms - (a) the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers; (b) the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. The impugned order set aside - All penalties also stands set aside - appeal allowed.
Issues involved: Valuation of goods cleared to sister concern and independent buyers during the period April 2006 to September 2012.
The judgment addresses the issue of valuation of goods cleared by the Appellant Assessee to their sister concern and independent buyers between April 2006 and September 2012. The Tribunal found that the matter is covered by the ruling of the Larger Bench decision in the case of Ispat Industries Ltd. vs. CCE. The key question before the Larger Bench was whether the assessable value of goods transferred to a plant/unit of the same assessee should be determined under Rule 4 or Rule 8 of the Central Excise Valuation Rules 2000, especially when some goods were also sold to independent buyers. Rule 8 mandates valuation at 110% / 115% of the cost of production for goods not sold but used for consumption in production, while Rule 4 bases valuation on the value of goods sold nearest to the time of removal. The Larger Bench held that Rule 8 does not apply when goods are cleared to independent buyers, and Rule 4 should be preferred over Rule 8 for a more consistent valuation in line with the statutory provisions of the Central Excise Act, 1944. This ruling was upheld by the Gujarat High Court in a similar case involving Ultra Tech Cement Pvt Ltd. The Tribunal also considered a Board Circular and a Notification that substituted Rule 8 with a new provision regarding the valuation of consumed goods in production. In another case cited by the Revenue, involving clearances to sister units and independent sales, the Tribunal dismissed the appeal of the Revenue, affirming that duty should be paid based on transaction valuation for independent sales and under Rule 8 for goods removed to sister concerns. Ultimately, the Tribunal in the present case found that the issue was conclusively settled by the Larger Bench ruling and the decision of the Gujarat High Court, leading to the Appeals being allowed, the Impugned Orders set aside, and penalties annulled, with the Appellant entitled to any consequential benefits as per the law.
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