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TMI Blog2006 (7) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,286/-under Section 11A(2) Safety Seat Belt Assembly 3. E/114/2006 OIO No. 30/2005 dated 7-11-2005 Rs. 8,17,175/- & Rs. 1,48,08,587/-under Section 11A(2) Interest under Section 11AB of the Act, was also demanded. All the appellants challenge the impugned Orders-in-Original strongly. 2.Mr. G. Shivadass, learned Advocate appeared for the appellant (i) & (ii) and Mr. S. Raghu, learned advocate appeared for appellant (iii) and Mr. R.K. Singla, Authorised Representative (JCDR) appeared for the Revenue. 3.The learned advocates urged the following points. (i) In all these appeals, it is seen that the impugned goods are semi-finished at the appellant's end. Since they are transferred to the Sister Units on stock transfer basis, no sale is involved. In these circumstances, Rule 8 is correctly applied and duty liability has been discharged on the basis of the cost of production. The duty paid by the appellants is taken as Cenvat credit by the sister units. The sister units complete the manufacturing process and clear the finished goods on payment of duty, on transaction value. (ii)In the case of appellants (i) & (ii), the Show Cause Notices proposed to adopt the same value that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, where one Commissionerate wants to collect the entire duty itself, ignoring the fact that the differential duty has been paid at different Commissionerate. (x) It was contended in respect of appellant number (i), the demand of duty for the period from December, 2003 to September, 2004 for an amount of Rs. 31,07,929/- in pursuance of Show Cause Notice dated 27-9-2005 is clearly barred by limitation. There cannot be a case of invokation of larger period, since whatever duty paid at Bangalore is taken as credit at other units. In any case, the duty demanded at Bangalore already stands paid at the jurisdiction of the sister units. For that reason also, the larger period cannot be invoked. Shri S. Raghu, learned advocate appearing for the appellant (iii), urged the following points. (xi) The Commissioner gives a finding that Rule 7 of the Valuation Rules provides for a more appropriate method for valuation of the goods. However, from a perusal of the said Rule, it is seen that it applies only to goods not sold by the appellant at the factory gate but transferred to a depot, premises of consignment agent, etc. In this case, the finished product has not at all been cleared to depot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The sister unit completes the product 'P' and clears the same on payment of Central Excise duty on the transaction value. When the incomplete product 'P' is cleared from the factory of the appellant 'A', duty is paid on the basis of the cost of the incomplete product under Rule 8 of the Central Excise Valuation Rules, 2000. The point at issue is whether the valuation adopted, is correct or not. It may be added that the sister unit 'S' takes Cenvat credit of the duty paid on the incomplete product 'P'. The lower authority has vehemently argued that Rule 8 is not applicable in this case and the appellant should pay duty on the transaction value of the sister unit 'S', which is actually in the jurisdiction of another Commissionerate. The differential duty has been demanded ignoring the fact that duty has been discharged on the transaction value at the sister unit. (b) Let us first examine the Commissioner's argument on the inapplicability of Rule 8. We reproduce Rule 8 below. "Rule 8 - When the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, the value shall be one hundred and ten pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the incomplete product sent from the appellant's unit does not lose its identity or undergoes a change. After coming to the conclusion that Rule 8 is not applicable, he examines Rule 11 and finally comes to a conclusion that Rule 7 would be applicable and therefore, the appellant should adopt the transaction value of the sister unit. (d)After carefully going through the relevant Rules, we are of the view that the Commissioner's reasoning is not sound. We shall show it presently. In the present case, the appellant 'A' manufactures at his factory an incomplete product 'P' and duty is paid on this incomplete product. Hence, this product is excisable and there is no dispute on this fact. The incomplete product is not sold because it is cleared to the sister unit 'S'. Can we say that the appellant uses the incomplete product for consumption in the sister unit? Yes, it is not incorrect to hold that the appellant uses the incomplete product for consumption in the sister unit. In the sister unit many other processes are undertaken and a complete product emerges. An incomplete product emerges as a complete product in the sister unit. The appellants have quoted relevant section note, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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