TMI Blog2017 (10) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... parent statutory provisions of Section 4 of the Central Excise Act, 1944. The correct method of assessment in these circumstances would be adoption of the price at which the said goods were sold to independent buyers. In the instant case, the demand has been raised on the transaction value for sale to related buyers. The law of the land takes precedence over the circulars issued by the CBEC and also any letters issued by the Revenue by way of audit or by show-cause notice. CBEC Circular itself regarded the transaction value as irrelevant for the purpose of arriving at assessable value for sales to related persons. Time limitation - Held that: - the method of valuation was adopted by the appellants on the directions of audit. The CBEC Circular dated 01/07/2002 also prescribed the same method of assessment. Thus, not only the facts were known to revenue but the appellants acted on the direction of revenue. In these circumstances, the invocation of extended period is also not justified. Appeal dismissed - decided against Revenue. - E/3115/06 , E/CO-50/07 - A/89768-89769/17/EB - Dated:- 28-9-2017 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is applicable than the valuation is to be determined by reasonable means using the principle of Best Judgement Assessment . So when rule 10 (a) Central Excise Valuation Rules, 2000 is applicable in turn the Rule 10 (a) again specifies if the interconnected undertaking are also subsidiary companies than its valuation shall be determined in the manner prescribed under Rule 9 of Central Excise Valuation Rules, 2000. And further Rule 9 of Central Excise Valuation Rules, 2000 specifies that if the goods are consumed in the production where the persons are related than Rule 8 (115%) will be applicable for valuation but if the goods are sold to the related persons and to the persons who are not related than the value of the goods will be determined in terms of Normal Transaction Value in terms of provision of Rule 9 of Central Excise Valuation Rules, 2000. The Circular No.643/34/2003-CX dated 07/02/2002 at Sl.No.12 also say that for the sale of the same goods to related buyers recourse will have to be taken to the residuary Rule 11 read with Rule 10. Rule 9 cannot be applied directly since it covers only those case where all the sales are to the related buyers. Accordingly, the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept of deemed profit for notional purposes has thus been done away with and a margin of 15% by way of profit etc. is prescribed in the rule itself for ease of assessment of goods used for captive consumption. Thus, the formula for determining value is simple. If the cost of production based upon general principles of costing of a commodity is ₹ 10,000 per unit, the assessable value of the goods shall be ₹ 11,500 per unit. 3.2 He pointed out that subsequently, vide Circular No.643/34/2002 dated 01/07/2002 CBEC clarified as follows: 5 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 company/firm for further use in the manufacture of goods ? For captive consumption in ones own factory, valuation would be done as per rule 8 of the Valuation Rules i.e. the assessable value will be 115% of the cost of production of the goods. If the same goods are partly sold by the assessee and partly consumed captively, the goods sold would be assessed on the basis of transaction value [provided they meet the conditions of Sec. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same goods to related buyers recourse will have to be taken to the residuary Rule 11 read with Rule 9 (or 10). Rue 9 cannot be applied in such cases directly since it covers only those cases where all the sales are to related buyers only . 10. In terms of above clarification and applying the provisions of Rule 11 of Valuation Rules the goods cleared to independent customer can be valued in terms of main Section 4 (1) (a) because transaction value is available and for valuation of goods sold to interconnected undertaking who are also the subsidiary units of assesee the general principles laid down under Rule 10 (a) are applicable. Rule 10 (a) is not directly applicable because it applies when goods are sold exclusively to or through the interconnected undertaking. However, since Rule 11 is applicable for assessments in the instant case, the general principles contained in Rule 10 (a) are applicable. 11. Rule 10 (a) specifies that if the interconnected undertakings are also the subsidiary companies then value shall be determined in the manner prescribed in Rule 9 proviso to Rule 9 specifies that in a case where the related person uses or consumes the goods in produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in interpreting the Customs Valuation Rules. We have kept in mind the following observations of the 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, interpret it in such a way as to make it in accordance with the main object that is contained in Section 14 of the Customs Act. It may be that in isolation Rule 9(2) conveys some other meaning, but when it is read along with Section 14 of the Act, it must be given a meaning which is in accordance with the object of Section 14. The object of Section 14 is primary whereas the conditions in Rule 9 (2) are the 'accessories'. The 'accessory' must, therefore, serve the 'primary'. 9. In view of what we have observed above, we answer the reference in the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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