9911796707
TMI Blog2016 (5) TMI 306X X X X Extracts X X X X X X X X Extracts X X X X ..... o.2562 of 2008, are as follows. 3. M/s. Ispat Industries Limited (hereinafter referred to as the "IIL") is engaged in the manufacture of HR coils, sheets, plates, etc., which are cleared on payment of duty of excise. In the manufacture of such goods, it avails credit on inputs such as iron ore pellets. Adjacent to its plant, another group company, namely, M/s. Ispat Metallics Industries Ltd. (hereinafter referred to as the "IMIL") also has a factory in which pig iron and molten metal are manufactured. The principal raw material for manufacture for both these companies is iron ore pellets. The said pellets were purchased from Mandovi Pellets and Essar Steel Limited. These were carried to the factory of IIL. Credit was availed by IIL of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be added and, therefore, the amounts mentioned in the debit note from IIL to IMIL were also includible in the assessable duty valuation as additional consideration. The extended period for limitation was also found to be available on the facts of the present case. 6. The Tribunal reversed the aforesaid decision on the ground that the transfer of iron ore pellets by IIL to IMIL was not a sale of goods but was transfer of raw materials, jointly procured, under a joint procurement policy which was followed by the two sister companies and this becomes clear on a reading of the tripartite agreement between the supplier of the pellets, IIL, and IMIL. This being so, the Tribunal applied a circular dated 1.7.2002 by which, where no sale is involv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand supported the decision of the Tribunal and argued that on a reading of the Rules the rate applicable to such goods would be as on the date of removal but value would necessarily be that determined for such goods under Section 4 or 4A of the Central Excise Act which would be the invoice value of the iron ore pellets cleared by the supplier of those pellets. He relied strongly on the circular dated 1.7.2002, which was also relied upon by the Tribunal, and further went on to argue that there was no suppression of facts in this case and, hence, the extended period of limitation could not possibly have been applied to the facts of this case. 9. Having heard the learned counsel for the parties, it is important to first set out the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge this finding of fact. This being the case, the application of the circular of 1.7.2002 becomes important. Paragraph 14 of the said circular reads as under:- 14. How will valuation be done when inputs or capital goods, on which CENVAT credit has been taken are removed as such from the factory, under the erstwhile sub rule (1C) of rule 57AB of the Central Excise Rules, 1944, or under rule 3(4) of the Cenvat Credit Rules, 2001 or 2002 ? Where inputs or capital goods, on which credit has been taken, are removed as such on sale, there should be no problem in ascertaining the transaction value by application of sec.4(1)(a) or the Valuation Rules. [Provided tariff values have not been fixed for the inputs or they are not assessed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation rules and the value determined using reasonable means consistent with the principles and general provisions of the valuation rules and sub-section (1) of sec. 4 of the Act. In that case it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT credit was taken by the assessee in the first place. In respect of capital goods adequate depreciation may be given as per the rates fixed in letter F No. 495/16/93-Cus.VI dated 26.5.93, issued on the Customs side. 11. A reading of this circular makes it clear that a distinction is made between inputs on which credit has been taken which are removed on sale, and those which are removed on transfer. If removed on sale, "transaction value" on the application ..... X X X X Extracts X X X X X X X X Extracts X X X X
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