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Commnr. of Central Excise, Pune Versus M/s. Mahindra Ugine Steel Co. Ltd.

2015 (4) TMI 351 - SUPREME COURT

Valuation of goods - Applicability of Rule 8 on Job work - Whether Rule 8 of the Central Excise (Valuation) Rules, 2000 or Rule 11 thereof would apply in arriving at the valuation of the goods at the end of the respondent/assessee - Held that:- Rule 8 will have no application to the facts of the present case. It is rightly pointed out by the CEGAT that for the applicability of this Rule two requirements are to be fulfilled. The first is that the excisable goods that the assessee manufactures are .....

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these goods are supplied to the manufacturer of the motor vehicles.

Rule would be applicable only in those cases that assessee is related in the manner specified in either of sub-clause (ii), (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act and not in those cases where the person is related in the manner as stated in clause (i) thereof. In those cases where Rule 9 is applicable, for the purpose of valuation, normal transaction value at which such goods are sold .....

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is residuary provision for arriving at the value of any excisable goods which are not determined under any other rule - Dcided against Revenue. - Civil Appeal Nos. 8578-8579 of 2003 - Dated:- 16-3-2015 - A. K. Sikri And Rohinton Fali Nariman,JJ. For the Petitioner : Ms. Nisha Bagchi, Adv. Ms. Ruksana Chaudhary, Adv. Ms. S Srivastava, Adv. Ms. Pooja Sharma, Adv. Mr. B. Krishna Prasad, Adv. For the Respondent : M/s. V. Lakshmikumaran, M. P. Devanath, Vivek Sharma, L.Charanaya, Aditya Bhatacharya, .....

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anufacture of motor vehicle parts from the raw material supplied by the customers of the goods on labour charges basis. In essence, thus, the respondent undertakes the job work. After the manufacturing of the motor vehicle parts, the same are supplied to the customers who had placed the orders for the job work. The customers to whom the motor vehicle parts are supplied are used by those customers in the manufacture of motor vehicles on which full excise duty is paid . While arriving at the value .....

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or Rule 11 thereof would apply in arriving at the valuation of the goods at the end of the respondent/assessee. As per the appellant/Department Rule 8 is applicable and therefore the value has to be 115% of the cost of production. Rule 8 reads as under: "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 fifteen per cent of the cost of produ .....

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esent case, first condition is undoubtedly satisfied as the goods are not sold by the respondent. However, second condition is not at all met or fulfilled inasmuch as the goods are not used by the assessee for consumption either by him or on his behalf in the production or manufacture of other articles. As stated above, these goods are supplied to the manufacturer of the motor vehicles. Learned counsel for the appellant, however, referred to Rule 9 and submitted that the proviso to the said Rule .....

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sold by the related person at the time of removal, to buyers (not being related person); or where such goods are not sold to such buyers, to buyers (being related person), who sells such goods in retail: Provided that in a case where the related person does not sell the goods but uses or consumes such goods in the production or manufacture of articles, the value shall be determined in the manner specified in rule 8." In order to attract this rule, first requirement is that the assessee sel .....

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ey have interest, directly or indirectly, in the business of each other. However Rule 9 mentions relationship that is visualised in sub-clauses (ii) to (iv) only and excludes clause (i). Thus, this Rule would be applicable only in those cases that assessee is related in the manner specified in either of sub-clause (ii), (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Act and not in those cases where the person is related in the manner as stated in clause (i) thereof. In those .....

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