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TMI Blog2022 (10) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ods partly to unrelated person and partly to their related person, the transaction value which is charged to unrelated buyer shall prevail and the same price shall be applicable in case of clearance of goods to the assessee s own unit. The Rule 8 does not make it clear that in respect of same goods being cleared partly to the assessee s own unit and partly to the unrelated buyer, whether in both cases the valuation under Rule 8 shall apply or otherwise. In view of the various judgments, it is settled law that wherever there are clearance partly to the assessee s own unit or captive consumption and partly on sale basis, the transaction value of the sale of the goods to the unrelated person shall be applicable for assessment in case of supplies made to their own unit/captive consumption. Applying the same principal, in the present case also, the appellant have rightly paid the duty on the transaction value in terms of Rule 4 of Valuation Rules - Reliance can be placed in judgement of Hon ble Supreme Court in COMMISSIONER VERSUS STEEL COMPLEX LTD. [ 2015 (10) TMI 500 - SC ORDER] wherein, the hon ble Apex Court has given the following observation that Rule 8 of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arn (FDY) to their interconnected sister unit namely M/s. Wellknown Polyester Ltd. (unit I, II and IV) under normal transaction value as per Section 4 of Central Excise Act. During the course of year 2000 Audit of the records of the appellant by central excise officers, it was contended that in respect of clearance of goods to their sister unit the value should be adopted in terms of Rule 8 of Central Excise Valuation Rules, 2002 accordingly, a show cause notice was issued for the period from August, 2009 to November, 2013. 1.1 In the show cause notice, it was alleged that finished goods were cleared by the appellant to their interconnected sister units at the value for charging duty appear to be transaction value as stipulated in Section 4(1)(a) of the Act. It was further contended that since the goods were cleared to their sister unit, it does not involve sale of goods therefore the transaction value adopted for the purpose of charging excise duty is not correct in terms of Section 4(1)(a) whereas, the value has to be determined as per provision of Section 4(1)(b) of the Central Excise Act, 1944 accordingly, the value of goods cleared to sister unit shall be done in terms of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has confirmed differential duty on Chips/ Polyester Oriented Yarn and Fully Drawn Yarn (FDY) by taking the value for the purpose of assessment at 110% of cost of production as per CAS-4 under Rule 8 of Central Excise (Determination of Price of Excisable Goods) Rules, 2000 ( Valuation Rules ) only on those clearances where the value at which duty was paid by the appellant was less than 110% of the cost of production. He referred to Annexure-A to show cause notice wherein, he has pointed out that appellant had paid duty on more than 50% (approximately) of goods transferred to its other units on the value in excess of 110% of cost of production. It is his submission that the adjudicating authority ignored the said clearances in demanding the differential duty. He submits that undisputedly, the appellant had transferred the goods to their other factories under Rule 4 of the Valuation Rules read with Section 4(1)(a) of Central Excise Act, 1944 and paid duty on the value which is higher than 110% of the cost of production for more than 50% of clearances. He submits that it is clear from the impugned order that the learned Commissioner has not accepted the assessment of the goods cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2015 (321) ELT A138 (SC) Steel Authority of India Ltd. Vs. Commissioner of C. Ex., Raipur reported in 2016 (335) ELT 91 (Tri.-Del.) My Home Industries P. Ltd Vs. Commissioner of C. Ex., Hyderabad-III reported in 2017 (357) ELT 1065 (Tri.-Hyd.) Pradip Chandra Parija Vs. Pramod Chandra Patnaik reported in 2002 (144) ELT 7 (S.C.) Shanker Raju Vs. Union of India reported in 2011 (271) ELT 492 (SC) 3. Shri Vinod Lukose, learned Superintendent (AR) appearing on behalf of the revenue reiterates the finding of the impugned order. He placed reliance on the following judgements:- 2018 (359) ELT 242 (Tri-Chennai)-CCE, Puducherry Vs. GEC Alsthom (I) Ltd 2017 (352) ELT 110 (Tri-Mum)-CCE, Mumbai-III Vs. Blue Star Ltd 2006 (200) ELT 353 (SC)-CCE, Pune Vs. Cadbury India Ltd 2004 (177) ELT 1032 (Tri-Mum)-Crompton Greaves Ltd Vs. CCE, Aurangabad 2015 (320) ELT 690 (SC) - Crompton Greaves Ltd Vs. CCE, Aurangabad 2016 (339) ELT 475 (Tri-Bang)-Sun Microsystems India P Ltd Vs. CC, Bangalore 2012 (283) ELT 161 (SC)-CCE, Mumbai Vs. Fiat India P Ltd 2017 (357) ELT 978 (Tri-Del)-CCE, Indore Vs. Surya Roshni Ltd 2018 (13) GSTL 313 (Tri-Mum)-CCE, Mumbai-II Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the clearance of goods to their own unit for the purpose of value Rule 8 shall apply and according to which the value should be arrived at by applying the price on the basis of 110% of the cost of manufacture. As of now it is settled law that in a case where the assessee sell the same goods partly to unrelated person and partly to their related person, the transaction value which is charged to unrelated buyer shall prevail and the same price shall be applicable in case of clearance of goods to the assessee s own unit. The Rule 8 does not make it clear that in respect of same goods being cleared partly to the assessee s own unit and partly to the unrelated buyer, whether in both cases the valuation under Rule 8 shall apply or otherwise. However, the matter was considered by the Larger Bench of this Tribunal has observed as follows:- The issue referred to the Larger Bench is whether the assessable value in respect of goods which are transferred to another plant of the same assessee is required to be determined as per Rule 4 of the Central Excise Valuation Rules, 2000 (as claimed by the appellant) or as per Rule 8 of the said rules (as claimed by the Revenue), in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s case, as unlike in BOC s case, where the entire production was captively consumed, bulk of assessee s clearances are made to independent buyers. In BOC s case, the entire production was cleared for captive use and there was no instance of sale to an independent buyer, so as to enable determination of assessable value under Rule 4. (c) The question referred to the Larger Bench, i.e. whether Rule 4 or Rule 8 of the Valuation Rules would apply is a hypothetical question in so far as the assessee is concerned, as the provisions of Rule 8 are inapplicable to the present case for the following two reasons : (i) As held in Avon s case, Rule 8 applies only when there are no instance of sale of finished products to independent buyers (i.e. when all clearances are for captive consumption) (ii) In addition to (a) above, for applying Rule 8 the clearance must either be for captive consumption of the assessee himself or must be a transfer for the purpose of enabling the transferee unit to manufacture goods on behalf of the original manufacturer (assessee). The assessee , for the purpose of the Central Excise Rules, refers to a particular factory or unit of the manufacturer c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the decision of the Tribunal in the case of Steel Complex Ltd., which did not consider the Board Circular dated 1-7-2002. He also submitted that the facts in the case of Steel Complex were different in as much as the company in that case had suffered huge losses. He submitted that the decision of the Bombay High Court in the case of Indian Drug Manufacturers Association is not applicable as the dispute therein was relating to the applicability or otherwise of Rule 4; assessee s contention that Rule 8 applies only in cases where the goods are not sold but are entirely captively consumed, is incorrect; the Board in its circular dated 1-7-2002 had clarified that in a case where goods are transferred to a sister unit or another unit of same company, the assessable value would have to be determined in terms of proviso to Rule 9, which in turn refers to Rule 8; assessee s contention that Rule 8 will not apply as the goods where not consumed by the assessee himself or on his behalf in the manufacture of other articles was also incorrect as transfer to one s own unit/sister unit tantamounts to consumption on behalf of unit transferring the goods. 5. We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in the instant case. 6. We also note that in the present case the application of Rule 4 is being disputed by the Revenue not on the ground that the said rule is inapplicable to the present case but on the ground that a more specific provision in Rule 8 is available to enable determination of the assessable value. As discussed above, the provisions of Rule 8, in our view, are not applicable to the present case and therefore the value determined by the assessee under Rule 4 deserves acceptance. 7. We also agree with the submission of the assessee that even if both the rules, i.e. Rule 4 and Rule 8, were applicable, it would only be logical to read and apply the various rules in the Central Excise Valuation Rules in a sequential manner. Though the Central Excise Valuation Rules, 2000 do not specifically prescribe such sequential application of various rules, the same, in our view, is the only reasonable way to read these rules. Any other interpretation would only lead to confusion and chaos. Since the applicability of Rule 4 is not really in dispute, there was no need to look further and regardless of the applicability or otherwise of Rule 8, the assessable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. Similar view was taken by this Tribunal in the case of Steel Complex Ltd. -2004 (171) ELT 255 (Tri.- Bang.) 8. Section 4(1) lays down the principle of Central Excise Valuation. The core of it is that value shall be the price at which the transaction is carried out. Sub-section (b) of Section 4 relates to valuation of goods which are not transacted through sale. Valuation Rules have been formulated as a guide for the determination of value of goods which are disposed of except through sale. The direction cumulatively conveyed by these rules is to determine the value of those goods as their would have been sale price, in case, they were to be sold in the course of ordinary trade and commerce. In order to achieve this, rules have stipulated several methods and guidelines like adjustment for different date of delivery (Rule 4), adjustments towards freight (Rule 5), sale price of related buyer (Rule 6). Taking 115% of the cost of production is also one such method (Rule 8). In any event adopting a measure which would yield a very unreasonable and non-commercial value has to be avoided. Rule 11 specifically states, value shall be determined using reasonable means consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his tribunal has been upheld by the Hon ble Supreme Court reported at Steel Complex Ltd.- 2015 (321) ELT A138 (SC) wherein, the hon ble Apex Court has given the following observation: After hearing Learned counsel for the parties, we are of the opinion that Rule 8 of the Central Excise Valuation (Determination of Price of excisable goods) Rules 2000, which was prevailing at that time will have no application in the present case where the goods are only partly sold under ex-factory basis and partly cleared for captive consumption. We are therefore, not inclined to interfere on this ground alone, with the order passed by the customs, Excise and Service tax Appellant Tribunal. The appeals are, accordingly, dismissed. The similar view was taken by this tribunal in the case of Steel Authority Of India Ltd.- 2016 (335) ELT (91)(Tri.-Del.) 6. The main point for determination is that the applicability of Rule 8 of Central Excise Valuation (Determination on Price of Excisable Goods) Rules, 2000 in respect of internally transferred goods for consumption in assessees' various project work. The second point for decision is valuation of steel items cleared on stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is tribunal in the case of MY HOME Industries P. Ltd. 2017 (357) ELT 1065 (Tri.-Hyderabad) held as under:- (Para 5.1 to 5.4) 5.1 The issue that comes up for decision in these appeals concerns the method of valuation required to be followed in respect of the clearances made by the appellants. The period of dispute is from January, 2012 to March, 2013 and April, 2013 to February, 2014. Erstwhile Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2001 was in force up to 30-11-2013, which read as under: 8. Where the excisable goods are not sold by the assessees 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 fifteen per cent. of the cost of production or manufacture of such goods. 5.2 However, pursuant to Notification No. 14/2013-C.E. (N.T.), dated 22-11-2013, the said Rule 8 was substituted w.e.f. 1-12-2013 as under: 8. Where whole or part of 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 of such goods that are con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rule 8 of the Valuation Rules and when part production is used for self or captive consumption, the duty is required to be paid in terms of Rule 4 of the Valuation Rules. This fact is confirmed by the Apex Court in the case of Steel Complex Ltd. - 2015 (321) E.L.T. A138 (S.C.) wherein it is held that Rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, which was prevailing at that time, will have no application in the present case, where the goods are only partly sold under ex-factory basis and partly cleared for capitation consumption. The Larger Bench of Mumbai in the case of Ispat Industries Ltd. v. Commissioner of C.Ex. Raigad 2017 (209) ELT. 185 (Tri. - LB) held that if the transfer of part of production is to another plant of the same assessee and balance production is sold to independent buyers, the provision of Rule 8 of Valuation Rules will not apply. Quoting the above decision of the Tribunal, the High Court of Gujarat, in the case of Ultratech Cement Pvt. Ltd. - 2014 (302) E.LT. 334 (Guj.), held that when captive consumption is made partly and sale to independent buyers is made partly, value is to be determined under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said decision was upheld by the Hon'ble Supreme Court as reported in 2015 (321) ELT A 138 (SC). It has been held that Rule 8 of the Valuation Rules, 2000, which was prevailing at that time, will have no application, where the goods are only partly sold under ex-factory basis and partly cleared for captive consumption. The Hon'ble Gujarat High Court in the case of Commissioner of Central Excise, Bhavnagar Vs Ultratech Cement Pvt. Ltd - 2014 (302) ELT 334 (Guj.) dismissed the appeal filed by the Revenue. It has been held that the captive consumption partly and sale to independent buyers partly, value is to be determined under Rule 4 of Central Excise Valuation Rules, 2000 and not under Rule 8 of the said Rules. It has approved the decision of the Larger Bench of the Tribunal in the case of Ispat Industries Ltd Vs CCE Raigad - 2007 (309) ELT 185 (Tri- LB). We have also noticed that Rule 8 of the Valuation Rules, 2000 was amended by Notification No.14/2013-CE(NT), dt.22.11.2013. The present case is for the period prior to 22.11.2013. 3. In view of the above, the impugned order cannot be sustained. Accordingly, the impugned order is set aside. The appeal filed by the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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