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TMI Blog2021 (12) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... nal in the case of BHARAT PETROLEUM COPRN. LTD. VERSUS COMMR. OF C. EX., CHENNAI [ 2009 (9) TMI 845 - CESTAT CHENNAI] to hold that Rule 7 of the Valuation Rules, 2000, which uses the same expression where excisable goods are not sold.. , can be invoked only where there are no sales of the goods at the factory gate and all the goods of the assessee are transferred to consignment agents. If the assessee s excisable goods are also sold at the factory gate, Rule 7 will not apply. Appeal allowed - decided in favor of appellant. - Excise Appeal No.10 of 2011 - FINAL ORDER NO. 75802/2021 - Dated:- 7-12-2021 - SHRI P.K. CHOUDHARY, MEMBER(JUDICIAL) AND SHRI RAJU, MEMBER(TECHNICAL) Shri A.K.Prasad, Advocate Shri S.Mohapatra, General Manager(Taxation) for the Appellant (s) Shri A.Roy, Authorized Representative for the Respondent (s) ORDER Briefly stated the facts of the case are that M/s Jai Balaji Industries Ltd ( Unit-IV) located in Banskopa, P.O. Rajbandh, Durgapur-713212, West Bengal, (hereinafter referred to as the appellants ) are a mini integrated steel plant and are, inter-alia, engaged in the manufacture of Sponge Iron, Pig Iron, Iron Billets, Silica M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3292.06 5272.56 3004.63 125918.31 2007-08 117603.41 70396.99 4206.05 - 2111.13 194317.58 2008-09 (Dec-08) 62334.66 46048.32 1205.83 204.95 601.41 110395.17 Total 358983.7 172315.28 9032.65 5477.51 5760.26 551569.44 (b) Period covered in the 2nd show cause notice no 57 dated 31.12.2009(Quantities in MT) Period Direct parties Consignment Agents Sister Units Related parties Captive Consumptio n Total 2008- 09(Jan 09-March 09) 32170.07 13858.79 435.97 42.29 22.95 46530.07 2009-10 (April 09 to Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the invoices issued by the appellants have been taken into consideration and there is no mention of the corresponding sale invoices issued by the consignment agents in respect of the goods transferred to them by the appellants. As an illustration, invoice number 9874 dated 23.01.2009 recorded at page 56 of the Appeal may be referred to. A copy of the said invoice raised by the appellants may be seen at page 416 of the Appeal. In fact, the values adopted by the department for sale at the end of the consignment agent is uniform for the whole of the month of January 2009 and has been taken as ₹ 34,663.46 per MT. This is clearly not permissible even as per Rule 7 of the Valuation Rules, 2000. 10.4 Rule 7 of the valuation Rules is not applicable since it can be invoked only if the goods are not sold from the place of removal but from some other place. As per definition of place of removal the premises of a consignment agent is also a place of removal . Thus, if goods sold from the premises of a consignment agent are goods sold from the place of removal then rule 7 cannot apply. Thus, the whole basis of the demand is misplaced. 10.5 Rule 4 of the Valuation Rules, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ammon Far ChemsLtd.Versus Collector Of Central Excise, Bangalore 1994 (71) E.L.T. 59 (Tribunal) affirmed by the Supreme Court in 2003 (152) E.L.T. 28 (S.C.)]. This aspect is examined by the department at the time of Audit, which was done in this case. 10.11 The appellants premises were subjected to EA-2000 audit as well as CERA audit a number of times during the relevant period and the pattern of sale or clearance of goods of the appellants was scrutinised and no discrepancies noticed. Sample copies ofAudit queries and Audit Memos have been enclosed as Annexures E to H of the Appeal. As per the Audit manual of the department relating to EA- 2000 Audit one of the things done in desk review is to examine the marketing/sale pattern of an assessee. [Refer Serial Number 10 of Circular No. 514/10/2000-CX, dated 16-2-2000]. Hence, it cannot be said that the department was unaware of the sale of goods through consignment agents and that the appellants had deliberately concealed this information from the department. 10.12 The appellants have paid duty as per their bona fide knowledge of law. Everything was recorded in their books. There was no deliberate attempt to either suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hile holding so the Larger Bench had overruled the decision of the Division Bench of the Tribunal in the case of BOC (I) Ltd. v. CCE 2004 (168) E.L.T. 478 wherein the Division Bench had relied on CBEC Circular No. 643/34/2002-CX dated 1-7-2002 on this issue. Serial Number 5 of the Circular dated 01.07.2002 is relevant wherein the Board had clarified as under: 5. How will valuation be done in cases of captive consumption i.e. consumed within the same factory) including transfer to a sister unit or another factory of the same company/firm for further use in the manufacture of goods ? For captive consumption in one s own factory, valuation would be done as per rule 8 of the Valuation Rules i.e. the assessable value will be 115% of the cost of production of the goods. If the same goods are partly sold by the assessee and partly consumed captively, the goods sold would be assessed on the basis of transaction value [provided they meet the conditions of Sec. 4(1)(a)] and the goods captively consumed would be valued as per Rule 8 of the Valuation Rules. This is because, as per new Section 4, transaction value has to be determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their consignment agents. In this regard it will be useful to examine the provisions of Rules 7 and 8 of the Valuation Rules, 2000, during the relevant period, as they use the same starting expression. The provisions read as under:- Rule 7. Where the excisable goods are not sold by the assessee at the time and place of removalbut are transferred to a depot, premises of a consignment agent or any other place or premises (hereinafter referred to as such other place ) from where the excisable goods are to be sold after their clearance from the place of removal and where the assessee and the buyer of the said goods are not related and the price is the sole consideration for the sale, the value shall be the normal transaction value of such goods sold from such other place at or about the same time and, where such goods are not sold at or about the same time, at the time nearest to the time of removal of goods under assessment.(emphasis supplied) Rule 8. Where 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 per cent of the cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply if the assessee has some sales of their excisable goods at the factory gate. Relevant portion is reproduced below:- 3. Heard learned counsel for the appellant Shri Rajesh Chhibber. He submits that in the impugned Order-in-Appeal, it has been observed that the appellant is selling their product partly at factory gate; and partly through consignment agents by stock transferring the goods on payment of duty. The learned counsel also submits that he has paid the duty at factory gate and differential duty is also paid by him as per the assessment Order. He has submitted that provisions of Rule 7 of Central Excise (Valuation) Rules, 2000, are not squarely applicable in the instant case as Rule 7 is exclusively for the circumstances where all the goods are transferred to a depot and not where the goods are partly sold at factory gate. Ld. Counsel relied on the ratio laid down in the case of Bharat Petroleum Corporation Ltd. v. Commissioner of Central Excise, Chennai, 2010 (261) E.L.T. 695 (Tri.-Chennai). 4. On the other hand, learned DR, Rajeev Ranjan, Joint Commissioner, has relied on the impugned order. 5. Having considered the rival contentions, we note that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred to consignment agents/depots valuation was required to be done under Rule 7 of the Valuation Rules, 2000, on the ground that the premises of the consignment agent was not considered as a place of removal . However, it is a matter of record that in the present case the period involved is post 14.05.2003 when the definition of place of removal has been amended to include the premises of consignment agent/depot also. Therefore, since the decision in the case of Spice System ( supra) was delivered in the context of law prevailing at that point of time its ratio cannot be applied to the present case when the law has changed. Further, the ratio of the Larger Bench decision in the case of Ispat Industries (supra) [which has been endorsed by Hon ble Gujarat High Court in the case of Commissioner of Central Excise, Bhavnagar vs Ultratech Cement Pvt Ltd], was not brought to the notice of the Bench in the case of Spice Sytems (supra) and hence, it was not considered. 26. In view of the above, we do not consider it necessary to examine the other issues raised by the appellants. 27. The Appeal is, accordingly, allowed by setting aside the impugned Order. (Order pronou ..... 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