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Eastman Spinning Mills (P) Ltd. Versus Commissioner of Central Excise, Madura

2016 (3) TMI 523 - CESTAT CHENNAI

Value for the excisable goods partly cleared to the sister unit/partnership firm - whether to be determined as per Rule 8 or as per transaction value under Section 4(1) (a) of CER? - Held that:- Provisions of Rule 8 will not apply where the goods were partly cleared to independent buyer and also held that rule 4 is to be preferred over rule 8. This Tribunal in the case of Gangotri Electrocastings Ltd. Vs CCE & ST Patna (2012 (7) TMI 321 - CESTAT, KOLKATA ) has held that clearances to related per .....

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t applicable. - Appeal Nos. E/418/2005 & E/26/2006 - Final Order No.40186-40187/2016 - Dated:- 2-2-2016 - SHRI R. PERIASAMI, TECHNICAL MEMBER AND SHRI P.K. CHOUDHARY, JUDICIAL MEMBER For the Petitioner : Ms. Karthika, Advocate For the Respondent : Shri Veerabadra Reddy, AC (AR) ORDER PER R. PERIASAMI Both the appeals are taken up together as the issues are identical in nature, first appeal involving demand of duty and the second one relates to consequential refund arising out of Original Order p .....

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erential duty already paid under protest. Refund was also sanctioned vide OIO No.3/2004 dt. 28.4.2004. Revenue preferred appeals before Lower Appellate Authority against both OIOs dt. 8.12.2003 and 28.4.2004. The Commissioner (Appeals) in the impugned OIA No.40/2005 dt. 21.3.2005 and OIA No.205/2005 dt. 13.10.2005 set aside the OIOs and allowed the Revenue's appeals. Hence the appellants preferred these two appeals. 3. The learned advocate appearing for appellants submitted chart indicating .....

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ed to unrelated buyers. She drew our attention to the invoices, worksheet, placed at pages 80, 81, 82, 82A. She produced copy of Commissioner (Appeals) OIA No.200/2013 dt. 28.11.2013 passed in their own case for the subsequent period wherein the Commissioner (Appeals) allowed their appeal and the department accepted the said order and there is no dispute from 2013 onwards and the department accepted their transaction value on the goods cleared to their partnership firms. She relied the following .....

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1. She drew our attention to audit report at page 170 of the paper book where the department has examined their clearances made to related firms and certified that no discrepancy on valuation. 4. On the other hand, Ld. A.R for Revenue reiterated the findings of the impugned orders both on merit as well as on limitation. On the allegations, he relied OIAs which clearly established mutuality of interest. He also referred to Board's circular dt. 1.7.2002 at point No.5 and point No.12 wherein th .....

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ent order relied Board's circular of 2003 for determination of value as per CAS-4 formula and as per CAS-4 (para 5.16) interest element is not to be included. 6. After hearing both sides, we find that the short issue before Tribunal is whether value for the excisable goods partly cleared to the sister unit/partnership firm is to be determined as per Rule 8 or as per transaction value under Section 4(1) (a) of CER. We find that there is no dispute on the fact that both in the OIOs and in the .....

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ve cleared the goods partly to unrelated buyer and partly to their sister unit. We find the method of valuation when goods are partly cleared to related person, has been clarified by the Board in their circular dt. 1.7.2002. The relevant points of doubt and clarification is reproduced as under :- (Point:5) "Point of doubt: How will valuation be done in cases of captive consumption (i.e. consumed within the same factory) including transfer to a sister unit or another factory of the same comp .....

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captively consumed would be valued as per rule 8 of the valuation rules. This is because, as per new section 4, transaction value has to be determined for each removal." (Point:12) "Point of doubt: How will valuation be done when goods are sold partly to relatedpersons and partly to independent buyers? Clarification : There is no specific rule covering such a contingency. Transaction value in respect of sales to unrelated buyers cannot be adopted for sales to related buyers since as pe .....

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consumption, the goods in their own factory valuation would be done under Rule 8. Board also clarified that when same goods are partly sold by the assessee then such goods should be assessed on the basis of transaction value and duty to be determined as per Section 4 for each removal. This issue stands settled by the Tribunal's Larger Bench in the case of Ispat Industries Ltd. Vs CCE Raigad (supra). We reproduce the relevant paragraphs of the LB decision as under :- "8. The conclusion t .....

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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, interpr .....

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