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TMI Blog2018 (1) TMI 721X X X X Extracts X X X X X X X X Extracts X X X X ..... determine the assessable value of stock-transferred servers, appellant adopted cost construction method based on CAS-4 value as envisaged under Rule 8 of the Central Excise Valuation Rules, 2000 for the purpose of payment of Central Excise duty. Department took the view that the procedure followed by the appellant was not in order for the following reasons : (1) Discharge of excise duty based on 110% of cost of production under Rule 8 of the Valuation Rules arises only when 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. (2) The stock transferred servers were neither consumed captively nor used on their behalf in the production or manufacture of other articles. (3) The servers cleared on stock transfer basis form part of a package let on lease by the appellant to customers based on lease agreement, for deferred payment/consideration. (4) Hence the removals of the said servers is nothing but sale. Accordingly, show cause notice dt. 12.10.2009 was issued to appellant, inter alia proposing demand of alleged short paid Central Excise duty of Rs. 18,57,892/- for the period 3/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is otherwise no break in chain of event. Rule 8 was adopted applying Rule 11 as it was akin to the value of stock transferred servers removed to cinema halls and auditoriums under transfer of right to use basis. (vii) Sometimes there is a direct removal from the factory to the client's premises for "transfer of right to use" or "deemed sale". Under 'deemed sale" clients like the theatre owners and corporate bodies, procure servers for use in their theatres/ office, auditorium for screening movies / documentaries in digital format and enter into agreement. However, the assessee continues to be an owner of the server whereas there is a transfer of possession for right to use. (viii) Appellant entertained a bonafide belief that the clearances were akin to captive consumption. There is no question of mis-statement or suppression of facts. There was no intention of evading payment of duty appellants were under bonafide belief that servers stock-transferred for right to use are to be valued under Rule 8 of the Valuation Rules as there is no sale for price at the time of removal. 3. On the other hand, on behalf of the department, Ld. A.R. Shri K. Veerabhadra Reddy suppor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of Central Excise, sale is defined in Rule 2(h) of the Act as follows : (h) "sale" and "purchase", with their grammatical variations and cognate expressions, mean any transfer of the possession of goods by one person to another in the ordinary course of trade or business for cash or deferred payment or other valuable consideration ; The Rules 4, 8 and 11 of the Central Excise Valuation Rules,2000 read as follows : Rule 4. The value of the excisable goods shall be based on the value of such goods sold by the assessee for delivery at any other time nearest to the time of the removal of goods under assessment, subject, if necessary, to such adjustment on account of the difference in the dates of delivery of such goods and of the excisable goods under assessment, as may appear reasonable. 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 ten percent of the cost of production or manufacture of such goods. Rule 11. If the value of any excisable goods cannot be determined under the foregoing rules, the value shall be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UBE logo/trade mark with the words in English This Theatre is equipped with, and the feature film is being screened through Qube Digital Cinema Playerand a translation thereof in the regional language, at the beginning of the show. Beside the above conditions, the theatre owner also pays to the assessee, charges for screening per show, called Pay Per Show. 8.3 As also noted by the adjudicating authority in the same para 11.5 of the impugned order appellant had been collecting (a) Refundable / non-refundable deposit of Rs. One lakh; (b) Advertisement charges from the sponsors of advertisement and (c) "Pay per show' amount apart from free Advertisement space for QUBE products at the theatre premises. 8.4 From a combined reading of the above discussions, legal provisions and facts on record, we are of the considered opinion that there is definitely transfer of possession of the impugned goods from the appellant to their customers partly by cash (refundable and non-refundable deposits) and partly by other valuable considerations (right to collect advertisement charges from sponsors of advertisements and receipt of pay per showamount for the QUBE products at the theatre premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pirit of Rule 8; that in other words, assessable value should be worked out accordingly. Towards this end, had drawn our attention to clarification at para 13 issued by the CBEC vide circular dt. 1.7.2002, on Points of Doubt under the New Valuation Provisions, in respect of valuation of samples. However, the said clarification concerns a situation where no sale was involved, but in the instant case, there is very much a salefor the purposes of the Central Excise Act. 11. In the circumstances, we do not find any merit in the arguments and contentions of the appellant against the decision of the adjudicating authority concerning method of valuation of impugned goods, demanding differential duty liability of Rs. 1,18,57,892/- with interest thereon and also appropriating the amount of Rs. 1,18,57,892/- and Rs. 10,16,278/- paid by the appellant during investigation towards duty and interest liability respectively, hence we do not interfere with that part of the impugned order. 12. However, coming to the matter of penalty, it is not the case that appellants were had removed the goods clandestinely without discharge of any amount of Central Excise duty whatsoever. The Annexure-II to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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