TMI Blog2019 (5) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... se entities. The appellant cannot come under the fold of self consumption as claimed by the appellants, to justify resorting to valuation at 110% of the cost of production as envisaged under Rule 8 of the Central Excise Valuation Rules, 2000 - There is no doubt that some of the clearances made under the claim of self consumption were also for captive consumption. However, even in these cases, the impugned goods were only used for Expansion (Civil Works) Projects. Just because the goods have been captively consumed for use within the same factory, it cannot automatically fall within the four walls of Rule 8 ibid. To do so, the excisable goods should be used for consumption in the production or manufacture of other articles. The assessable value to be adopted in the case of the impugned goods cleared to sister concerns and also for self-use within the factory, which have only been utilized in expansion projects (civil or construction works), is required to be done as envisaged under Rule 4 of the Central Excise Valuation Rules, 2000 read with Rule 11 ibid. Time Limitation - HELD THAT:- The allegations of suppression, mis-statement, etc., cannot be made on the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture of other articles; that instead the goods which have been transferred to the sister concerns and also self-consumed, have been utilized only in various expansion projects. Hence, in terms of Rule 11 read with Rule 4 ibid, the value of similar goods sold and delivered to independent buyers would require to be adopted for the purpose of valuation. 2.3 Accordingly, a SCN dated 19.08.2010 was issued to the appellant inter alia proposing as under:- i) that valuation of inter-unit transfers should be on the basis of Rule 11 read with Rule 4 of the Rules in as much as the conditions of Rule 8 of the Central Excise Valuation Rules were not satisfied; ii) Demand of an amount of ₹ 4,92,93,111/- under the provisions of Section 11A of the Central Excise Act, 1944 for the period from 2007-08 to 2009-10 along with interest thereon; iii) Imposition of penalties under Section 11AC of the Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. 2.4 In adjudication, the Commissioner vide the impugned order dated 29.09.2011 inter alia confirmed the demand of differential duty as proposed in the SCN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raws our attention to paragraph 21 of the Board s Circular dated 30.06.2000, paragraph 5 of the Board s Circular dated 01.07.2002 and paragraphs 1 and 2 of the Board s Circular dated 25.11.2013 to support his contentions. vii) He placed reliance on the ratio of the case law in M/s. Eicher Motors Limited Vs. CCE, Indore 2008 (228) E.L.T. 43 (Tri.-LB), wherein the Larger Bench of the Tribunal inter alia held that Rule 8 is generally applicable to non-sale transactions. He also draws our attention to paragraph 26 where the Larger Bench has held that the words using reasonable means consistent with the principles and general provisions of these rules occurring in Rule 11 clearly indicate the relevance of the provisions of Rule 8 . viii) Ld. Advocate also placed reliance on the ratio of the Tribunal decision in C.C.E., Nagpur Vs. M/s. P.C. Pole Factory 2006 (199) E.L.T. 865 (Tri.-Mum.), where it was held that even though the impugned goods were not used by the assessee in the production or manufacture of other articles but were used by them for transmission of electricity, Rule 8 of the Rules is not applicable. However, since no other Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces involved are Revenue neutral since whatever duty would be paid on such clearances, would always have been taken as CENVAT credit by the concerned sister concern. 4. On the other hand, Ld. AR Shri K. Veerabhadra Reddy, ADC (AR), made oral and written submissions, which can be broadly summarized as under:- i) Rule 8 will only be applicable in respect of goods which are cleared for captive consumption or cleared to related persons for further production or manufacture of other articles. ii) In the present case, the goods that have been cleared for captive use or stock transfer to sister units were not utilized for further manufacture but only for construction activity in their expansion projects. Hence, Rule 8 Valuation cannot be adopted. iii) For enabling valuation @110% of cost of production, the provisions of Rule 8 and relevant portion of Rule 9 should be applicable. iv) Ld. AR drew our attention to the question 4 to the statement of the Vice President dated 07.10.2008, wherein in his reply, it has been clarified that the appellants had not availed any CENVAT credit and duty paid in respect of stee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 8. 5. In response, Ld. Advocate submitted that the contention of the Ld. AR with respect to ER-1 returns is outside the scope of the SCN. 6. Heard both sides and have gone through the facts of the case. 7.1 The provisions of Rule 8 are reproduced below for better understanding : 5.3 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 per cent of the cost of production or manufacture of such goods. 7.2 Hence, to fit into the ambit of Rule 8, excisable goods are not sold by the assessee, but are used for consumption by him (viz., captive consumption) or on his behalf in the production or manufacture of other articles. 8.1 However, what is forthcoming from the facts is that the impugned goods which have been cleared for captive use or stock transferred to other units were not used for consumption by or on behalf of the appellant. The impugned goods were used for construction activities in the expansion projects of the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any manufacture does not amount to captive consumption-Determination of value by addition of 15 per cent, rejected Rule 8 of Central Excise (Valuation) Rules, 2000. Respectfully following the same, I am of the view that Rule 8 of the Central Excise (Valuation) Rules, 2000 is not applicable as such to the case at hand. 13. Therefore, I hold that the method of valuation to be adopted in the case of impugned goods which are consumed internally for activities other than for further manufacture of other articles, is under the provision of Rule 11 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 (for determination of valuation of any excisable goods for the purpose of Section 4(1)(b) of CEA, 1944). Applying the aforesaid provisions of Rule 11, which is the residuary rule, I find that the principles of Rule 4 which reads, 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 date of delivery of such goods and of the exc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
