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TMI Blog2010 (4) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the appellants or that there was any act or conduct on the part of the appellants which could reveal intention to evade the duty. Besides, as rightly pointed out by the learned advocate for the appellants, the assessee was all the time harping on the decision of the Larger Bench to justify non-leviability of the duty amount confirmed under the impugned order. In such circumstances, in our considered opinion, the appellants are justified in contending that, it is not a fit case for imposition of penalty. - E/572/2005 - 296/2010-EX(PB) - Dated:- 13-4-2010 - Justice R.M.S. Khandeparkar, President and Shri Rakesh Kumar, Member (T) REPRESENTED BY : Shri Bipin Garg, Advocate, for the Appellant. Shri Anil Khanna, DR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President]. - Heard the learned advocate for the appellants and learned DR for the respondent. 2. This appeal arises from an order dated 27th October 2004 passed by the Commissioner (Appeals), Jaipur whereby the appeal which was filed by the appellants against the order of the Adjudicating Authority has been dismissed. The Joint Commissioner, Jaipur by his order dated 30th June ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id Circular and placing reliance in the decision of the Larger Bench of the Tribunal in the matter of Eicher Tractors v. CCE, Jaipur reported in 2005 (189) E.L.T. 131 (Tri.-LB) submitted that the points sought to be raised in the matter stand clearly answered by the Larger Bench in favour of the assessee while referring to point 14 of the said Circular and, therefore, it is not open to the Department to take recourse to the provision of Rule 3 (4) of the Cenvat Credit Rules, 2002 for the purpose of ascertaining the value of the goods in question merely on the transfer thereof by the appellants to his sister concern. Further drawing our attention to the decision of the Apex Court in the matter of CCE, Ahmedabad v. Ramesh Food Products reported in 2004 (174) E.L.T. 310 (S.C.), it is the contention of the appellants that we are bound by the said order of the Larger Bench and, therefore, not entitled to take any contrary view. 6. On the other hand, the learned DR referring to said Circular and Rule 3(4) of the said Cenvat Credit Rules, 2002 submitted that the authorities below taking into consideration the fact that the goods in question were sold immediately after transfer thereof t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital goods, on which credit has been taken, are removed as such on sale, there should be no problem in ascertaining the transaction value by application of Section 4(1)(a) or the Valuation Rules, [provided tariff values have not been fixed for the inputs or they are not assessed under Section 4A on the basis of MRP]. There may be cases where the inputs or capital goods are removed as such to a sister unit of the assessee or to another factory of the same company and where no sale is involved. It may be noticed that sub-rule (1C) of Rule 57AB of the erstwhile Central Excise Rules, 1944 and Rule 3(4) of the Cenvat Credit Rules, 2001 (now 2002), talk of determination of value for "such goods" and not the "said goods". Thus, if the assessee partly sells the inputs to independent buyers and partly transfers to its sister units, the transaction value of "such goods" would be available in the form of the transaction value of inputs sold to an unrelated buyer (if the sale price to the unrelated buyer varies over a period of time, the value nearest to the time of removal should be adopted). Problems will, however, arise where the assessee does not sell the inputs/capital goods to any i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, wherein the issue was in respect of correct valuation of the capital goods and inputs on which Cenvat credit had been availed but were removed without consumption in final product. In the said case, the said issue had arisen in the facts where the manufacturer had availed the Cenvat credit on the inputs purchased by them for use in their final products but they had removed the inputs without utilising them in the final products by reversing the credit availed on such inputs. The revenue had objected to the reversal of the credit on such inputs on the ground that as per Rule 3(4) of the Cenvat Credit Rules, 2002, on removal of the inputs, the manufacturer is required to pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of removal and on the value determined for such goods under Section 4 of the Central Excise Act. In the background of those facts, the Larger Bench after referring to the said answer in the said Circular of the Board and the provision of law comprised under Rule 3(5) of the Cenvat Credit Rules, 2004 answered the issue in favour of the assessee. 13. Undoubtedly as pointed out by the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of law comprised under Rule 3(4) of the Cenvat Credit Rules, 2002. This point was not the subject matter of deliberation nor has been considered by the Larger Bench. Being so, the decision of the Larger Bench in Eicher Tractors case is of no help to the appellants in the matter in hand and is clearly distinguishable taking into consideration difference between the facts of the case in hand and those of the Eicher Tractors case. 16. As already pointed out above, Rule 3(4) of Cenvat Credit Rules, 2004 clearly requires transaction value to be considered in the cases where inputs are removed without being consumed by the manufacturer in favour of third person. However, in the cases where the goods are removed in favour of sister concern or related person, not by way of sale, then certainly problem can arise as regards the valuation of such goods to ascertain the duty liability. It was in that context, while explaining Rule 3(4), the Board has advised that in those cases, it would be reasonable to adopt the value shown in the invoice on the basis of which the Cenvat credit was taken by the assessee. This explanation, however, cannot apply in the cases where the transaction va ..... X X X X Extracts X X X X X X X X Extracts X X X X
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