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Hindustan Spinning & Weaving Mills Ltd. Versus Commissioner of Central Excise, Mumbai

2015 (3) TMI 1044 - SUPREME COURT

Valuation of goods - Captive consumption - Calculation of excise duty - The respondent Department felt that the aforesaid method adopted by the appellant assessee in calculating the excise duty and paying the same in respect of the captive consumption was in-appropriate. As per the Department such a duty should have been paid on the same price at which the unit was sold by the appellant in the market. - period 1.4.1994 to 1.6.1998 - Held that:- As it is clear from the reading of the Section 4, c .....

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ed or manufactured by the assessee or by any other assessee is to be taken into consideration. However, the proviso to this clause (i) of sub-rule (b) provides that in determining the value in the aforesaid sub-clause the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors, and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods.

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xcise duty is payable for the yarn domestically consumed. - appellant shall be entitled to adjust the cost which is incurred as mentioned in process (v) & (vi) of the sales in selling costs. Since this benefit is wrongly denied to the appellant by all the authorities below, for this limited purpose we remand the case back to the adjudicating authority. Before the Adjudicating authority it would be permissible for the appellant to supply the figures of the cost incurred on the aforesaid processee .....

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jana Ramachandran, Adv. Mr Aditya Sharma, Adv. M/s Parekh & Co For the Respondents : Mr yashank Adiyaru, Sr. Adv. Mrs Shirin Khajuria, Adv. Mr Rajiv Nanda, Adv. Mr Ajay Sharma, Adv. Mr B K Prasad, Adv. Mrs Anil Katiyar, Adv. JUDGMENT A. K. Sikri,J. This appeal is preferred by the appellant/Assessee under Section 35-L of the Central excise Act, 1944, (hereinafter referred to as 'the Act') against the order dated 11.6.2003 passed by the Customs Excise and Gold (Control) Appellate Tribu .....

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f the costs, which according to the appellant is the cost of production of the yarn. The yarn which is sold in the market, the duty is paid thereon at the factory gate price. The respondent Department felt that the aforesaid method adopted by the appellant assessee in calculating the excise duty and paying the same in respect of the captive consumption was in-appropriate. As per the Department such a duty should have been paid on the same price at which the unit was sold by the appellant in the .....

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.2002 passed by the Commissioner of Central Excise (Appeals), a demand in the sum of ₹ 39,24,324.29 was raised and confirmed and equal amount of penalty was also imposed. Feeling aggrieved by the said order, the appellant preferred the appeal before the CEGAT. By the impugned judgment and order CEGAT has affirmed the order of the Commissioner (Appeals), resulting into the dismissal of the appeal in so far as payment of excise duty is concerned. However, in so far as penalty is concerned, t .....

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oods, such value shall- (a) In a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) In any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed." As it is clear from the reading of the aforesaid provision, clause (b) which is attracted in t .....

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or manufacture of other articles, the value shall be based - (i) On the value of the comparable goods produced or manufactured by the assessee or by any other assessee: Provided that in determining the value under this sub-clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors and, in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods. (ii) if the v .....

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to be taken into consideration. However, the proviso to this clause (i) of sub-rule (b) provides that in determining the value in the aforesaid sub-clause the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relevant factors, and in particular, the difference, if any, in the material characteristics of the goods to be assessed and of the comparable goods. Since the appellant itself is selling same very yarn in the open market, as per the afor .....

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nt of all relevant factors pointing out the difference between the value of the comparable goods and the value which is to be assigned to the goods meant for captive consumption. In this behalf, he has drawn our attention to the impugned order wherein this very submission was specifically made by the appellant with the plea that while arriving at the cost of the captive consumption yarn, adjustment for winding, warping, sizing, packing, godown rent and selling cost is to be given. Likewise, it w .....

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rgo the process of wharfing, coning, packing etc, and the goods have to be kept in the B.S.R. therefore, the yarn which was sold differential size duty has been paid on the differential value. Notwithstanding the same, by relying upon the judgment of this Court in question Indian Oxygen Limited vs. CCE, 1988 (36) ELT 723 (S.C.) the Tribunal dismissed the appeal of the appellant and did not even deal with the aforesaid submission of the appellant. To this extent contention of Mr. Parekh appears t .....

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and weighed. The weight of the bobbins is excluded and excise duty is paid on the net weight of the yarn at this stage itself. (iii) The bobbins are then removed to the winding department, which is another section. In this section the yarn is wound on cheeses or pirns and the empty bobbins are sent back to the spinning department. (iv) The yarn that has been wound on cheeses is sent to the warping department. The cheeses are placed on a creel machine and the yarn is wound on warp beams. It is on .....

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es becomes apparent that the appellant is entitled to adjustment of the costs which are incurred in the sale of the same product in the open market as that cannot be included in the cost in respect of yarn which to be captively consumed. From the aforesaid process explained by the appellant itself it is clear that up to the stage (iv) above, the process is common in respect of the production of the yarn whether it is to be consumed by the appellant itself or it is to be sold in the market. It is .....

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