TMI Blog2024 (4) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... duty is binding on the Revenue as held by the Hon ble Apex Court in the case of Ratan Melting and Wire Industries [ 2008 (10) TMI 5 - SUPREME COURT] - thus, the appellant has correctly paid the duty on the goods in question, which has been captively consumed by the sister unit for manufacturing of excisable goods in terms of CBEC Circular No.692/8/2003-CX dated 13.02.2003. On merit, the appellant has rightly paid the duty as per CAS-4 in terms of Rule 8 of the Valuation Rules - thus, Rule 4 of the Valuation Rules, is not applicable in the facts and circumstances of the case. Whether the extended period of limitation is invokable or not? - HELD THAT:- For the period from April, 2009 to November, 2013, a show-cause notice was issued on 22nd December, 2015 is barred by limitation as the appellant has not suppressed any facts from the Department while paying duty and on finalization of provisional assessment, Therefore, this issue is answered in favour of the appellant. Whether it is a case of revenue neutrality or not? - HELD THAT:- The appellant is clearing the goods in question to their sister unit, who is entitled to take the cenvat credit itself. In that circumstances , we hold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Credit by the Angul Unit, in terms of Rule 3 of the Cenvat Credit Rules,2004. 2.2 Out of the total manufactured quantity of calcined alumina at the Damanjodi unit, approximately 60% is exported, 39% is removed to Angul Unit for captive consumption and a negligible quantum of 1% is sold to the independent buyers at factory gate. 2.3 Damanjodi Unit is started removing Calcined Alumina to Angul Unit from the year 1987 and various proceedings were initiated by the respondent and differential duty was demanded on the basis of comparable price, i.e., the price at which the goods are sold to independent buyers at the factory gate. The dispute for the period 1987 to June 2000 was finally resolved by this Tribunal reported in 2000 (125) ELT 519 (Tri), holding that the price applicable to small buyers to whom stray sales are made, cannot take the character of representative assessable value of goods transferred in bulk to Angul unit for captive consumption. 2.4 With effect from July 1, 2000, Section 4 of the Central Excise Act was amended. The Valuation Rules issued under the said Section, provided for determination of assessable value of goods cleared from the factory under different situ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue is to be adopted for Calcined Alumina for captive consumption to its Smelter plant shall not be in terms of Rule 8 of the Valuation Rules in as much as it is applicable only when the entire production of a particular commodity is captively consumed. Similarly, Rule 9 of the Valuation Rules is applicable only when the entire production of a particular commodity is sold to or through a related person. 2.12 The value to be adopted for the purpose of discharging Excise duty on the stock transfer to the Smelter plant shall be in terms of Section 4 of the Act read with Rule 4 of the Valuation Rules. In terms of the said rule, the price at which the Appellant sells Calcined Alumina to the independent buyers is to be considered. 2.13 The appellant never disclosed the fact of independent buyer sale prior to audit detection during the year 2013. Therefore, the price of sale of the goods to the independent buyers has not been disclosed in the Statutory returns as well. Thus, the appellant has contravened the provisions of the Act with an intention to evade payment of duty. Accordingly, extended period of limitation was invocable. 2.14 The appellant contested the show-cause notice but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion has been settled in the appellant s own case, the adoption of Rule 4 by the authorities is not correct. 3.4 He further submits that the decision in the case of Ispat Industries Vs. Commissioner reported in 2007 (209) ELT 185 (Tri.-LB) is not applicable to the present facts in as much as in that case, the goods transferred by the Dolvi unit to other sister units was not used for captive consumption, whereas in the present case, admittedly, the Calcined alumina has been transferred to Angul for captive consumption. Further, he also submits on the decision in the case of Indian Drug Manufacturers Association Vs. Union of India reported in 2008 (222) ELT 22 (Bom.) is not also applicable to the present case in as much as it pertains to valuation of physician samples supplied for free distribution to doctors and not transfer of goods for captive consumption. 3.5 He further submits that in view of the provisions of Rule 8 of the Valuation Rules vide Notification 14/2013-CE (NT) dated November 22, 2013 and clarified the same vide Circular no. 975/9/2013-CX dated November 25, 2013, the said amendment was brought into force w.e.f. 01.12.2013 is clarificatory in nature, the same is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the impugned order is to be affirmed. 5. Heard both sides and considered the submissions. 6. After considering the arguments advanced from both sides, the following issue emerges : (a) Whether the appellant has paid the duty correctly in accordance with Rule 8 of the Valuation Rules or the appellant is liable to pay duty in terms of Rule 4 of the Valuation Rules ? (b) Whether the extended period of limitation is invokable or not ? (c) Whether it is a case of revenue neutrality or not ? (d) Whether in the absence of challenge of final assessment order, a show-cause notice issued to the appellant is maintainable or not ? Issue (a) Whether the appellant has paid the duty correctly in accordance with Rule 8 of the Valuation Rules or the appellant is liable to pay duty in terms of Rule 4 of the Valuation Rules ? 7. We find that the Circular No.692/8/2003-CX dated 13.02.2003 is relevant in the present facts and circumstances of the case. Accordingly, the same is extracted below : Valuation (Central Excise) Captive consumption Cost of production to be in accordance with CAS-4 Circular No. 692/8/2003-CX., dated 13-2-2003 F. No. 6/29/2002-CX.I Government of India Ministry of Finance (Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes as under : 3. It is therefore, clarified that cost of production of captively consumed goods will henceforth be done strictly in accordance with CAS-4 .. 4. Board s Circular No. 258/92/1996-C.X., dated 30-10-1996, may be deemed to be modified accordingly in so far as it relates to determination of cost of production for captively consumed goods. The above paras make it clear that the cost of production of captively consumed goods will henceforth be done strictly in accordance with CAS-4. Even in the absence of such a statement, it would be correct to follow the Circular inasmuch as general principles are of guidance without regard to time and an assessee would be well within his rights to demand that a dispute involving him may be decided according to the general principles applicable to the issue in dispute, irrespective of what a Circular of the Government may say. In the present case such a situation does not arise since the Circular has taken care to specifically clarify that existing instructions may be deemed to be modified . Since the earlier instruction is to be deemed to be modified, it would not be permissible to apply them without the said modification. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bags Manufacturer (supra) did not deal with the case where the department had issued show cause notice purporting to reclassify the product prior to the issuance of Instructions by the Board. Therefore, the said judgment has no application to the facts of the present case. The ratio of this judgment is that a legally sustainable claim, which had been raised by the Revenue prior to and independently of a circular, cannot be extinguished on a plea that a subsequently issued circular is prospective in operation. That is not the case in the present appeals. The revenue seeks to finalise pending valuations applying different costing principles on the plea that different criteria had been circulated from time to time. The assessees are contesting the correctness of that approach by contending that the instructions contained in the earlier circulars were not in conformity with the general principles of cost accounting, and that the latest circular which incorporated correct principles should be followed in all pending cases. It is also to be noticed that the latest circular of 2003 specifically states that the earlier instructions have to be deemed to be modified by the later circular. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d period of limitation is invokable or not ? 14. We take note of the fact that the appellant was paying duty following the decision in their own case (supra) for the earlier period as reported in 2005 (184) ELT 183 (Tri.Del.). During the impugned order, the provisional assessment of the said period has also been finalized. 15. In that circumstances, for the period from April, 2009 to November, 2013, a show-cause notice was issued on 22nd December, 2015 is barred by limitation as the appellant has not suppressed any facts from the Department while paying duty and on finalization of provisional assessment, Therefore, this issue is answered in favour of the appellant. Issue (c) (c) Whether it is a case of revenue neutrality or not ? 16. We find that the appellant is clearing the goods in question to their sister unit, who is entitled to take the cenvat credit itself. In that circumstances , we hold that it is a revenue neutral situation as held by this Tribunal in the case of Hindalco Industries Limited Vs. Commissioner of Central Excise, Bhubaneswar-II reported in 2023 (5) TMI 720-CESTAT Kolkata, wherein this Tribunal has observed as under : 15. The Appellant has argued that the enti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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