9911796707
TMI Blog2024 (7) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Act, 1944. It also requires to be stated that though it is alleged by department that appellant has undervalued the good by not adopting Rule 8, there is no evidence in the nature of cost comparison or details of comparable market price put towards to show that the goods have been undervalued. After appreciating the facts, and following the decisions above we hold that the demand of duty cannot sustain and requires to be set aside. The impugned order is set aside - The appeal is allowed. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. C. L. MAHAR Shri Anand Nainawati Advocate for the Appellant Shri R R Kurup , Superintendent ( AR ) for the Respondent ORDER C. L. MAHAR Brief facts are that the appellant is engaged in manufacture of excisable goods and holds Central Excise Registration. The appellant is engaged in manufacture of Sucralose and Fructo-Oilgo Saccharide (hereinafter referred to as FOS) from October 2006 and were clearing their finished products, namely, Sucralose and FOS as under :- (i) Stock transfer for captive consumption to the other units and factories of the appellant situated at Daman, Baddi, Ankleshwar, Taleja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 issued by Cost Accountant. 3. In view of the above, show cause notice dated 29.08.2011 was issued invoking the extended period alleging suppression of facts with intent to evade payment of duty for the period 2006-07 to 2009-10 and proposing to demand:- (a) The differential central excise of Rs. 6,40,096/- in respect of stock transfer of the goods to their other units for captive consumption during the period 2006-07 to 2009-10. (b) The differential excise duty of Rs. 10,84,876/- in respect of clearance of goods to M/s Surya Herbal Ltd for use in the manufacture of Jeevanprash during the period 2006-07 to 2009-10 (c) The differential excise duty of Rs. 3,88,978/- in respect of stock transfer of the goods to the group companies for captive consumption during the period 2006-07 to 2009-10 (d) The differential excise duty of Rs. 50,61,824/- in respect of the goods cleared to the group companies during the period 2006-07 to 2009-10. 3.1 The SCN also proposed, inter alia, to demand interest and to impose penalties. After due process of law, the original authority confirmed, the duty demand along with interest and imposed penalties. Aggrieved by such order, the appellant in now before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ten per cent of the cost of production or manufacture of such goods (emphasis supplied). If the intention was not to restrict the applicability of Rule 8 to cases where the entire production was being captively consumed, the Rule would have simply stated where excisable goods are consumed by an assessee himself or on his behalf in the manufacture of other articles instead of preceding the above expression with the words where the excisable goods are not sold . This view is also supported by the judgment of the jurisdictional High Court in the case of Indian Drug Manufacturers Association v. Union of India, wherein the Court held that Rule 8 applies in a situation where goods are not sold but are cleared exclusively to be used in consumption or for manufacture of other articles. We also agree with the contention of the assessee that Rule 8 will apply only in two situations, (a) where the goods are consumed by him in the same factory (captive consumption) or (b) where such goods are transferred to another factory for consumption in the manufacture of other articles on behalf of the assessee. In this case, it is not the case of the revenue that the goods were transferred to other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation Rules. We have kept in mind the following observations of the Court in coming to our above conclusion : 26. In our opinion if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra vires the Act. 27.................. 36. In our opinion, the Gunapradhan principle is fully applicable to the interpretation of Rule 9(2). Rule 9(2) is subservient to Section 14. We must, therefore, interpret it in such a way as to make it in accordance with the main object that is contained in Section 14 of the Customs Act. It may be that in isolation Rule 9(2) conveys some other meaning, but when it is read along with Section 14 of the Act, it must be given a meaning which is in accordance with the object of Section 14. The object of Section 14 is primary whereas the conditions in Rule 9 (2) are the accessories . The accessory must, therefore, serve the primary . 9. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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