TMI Blog2023 (5) TMI 328X X X X Extracts X X X X X X X X Extracts X X X X ..... lain reading of Section 2 f (iii), makes it clear that as end result of these processes the goods should be marketable to the consumers. In the instant case, the goods were cleared by the appellant to other PDC on the stock transfer after reversal of the CENVAT Credit taken as per the Rule 3 (5) of the CENVAT Credit Rules, 2004. It is an admitted fact that the goods were not cleared for sale to the consumers on the basis of Retail Sale Price declared. It is only under Third Schedule of the Central Excise Act that Section 2(f)(iii) of the Central Excise Act is applicable declaring these processes undertaken to be the process of manufacture. Admittedly in the present case demand has not been made on the value as determined under Section 4A of the Central Excise Act. The impugned goods are undisputedly notified under Section 4 A (1) of the Central Excise Act, 1944. Since the goods were subjected to valuation under Section 4A they could not have been subjected to valuation in terms of Section 4 (1) (b) which provides for determination of value in the manner prescribed as per the Valuation Rules. Rule 8 under which the impugned order determines duty liability is part of the said V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asessee, under the provisions of Section 11AC of Central Excise Act, 1944, to pay 25% of the penalty amount as imposed in para 36.3 above, provided the assessee pays the entire amount of Central Excise duty demanded/confirmed in para 36.1 above, alongwith interest payable thereon as ordered in para 36.2 above as well as the 25% of penalty as imposed under Section 11AC ibid, within thirty days of the date of communication of this order. 37. The said order is issued without prejudice to any other action that may be taken against the assessee under the provisions of the Central Excise Act, 1944 and/or the rules made thereunder and/or any other law for the time being in force. 2.1 Appellant is engaged in packing, repacking, labeling, relabeling etc. of automobile parts which are covered by Third Schedule to Central Excise Act, 1944. Hence the activities undertaken by them amount to manufacture as per Section 2(f)(iii) of the Central Excise Act. 2.2 The goods covered under Third Schedule of the Central Excise Act is dutiable on the value determined as per Section 4A of the Central Excise Act. In respect of the goods on which appellant has affixed the MRP, they have paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e activity of packing / repacking or labeling / relabeling or affixing item identification stickers on such automobile parts, amounts to manufacture in terms of Section 2 f(iii) of the Act. 25. Rule 3(5) of the CCR, 2004 states that- when inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory or premises of the provider of output service, then the manufacturer of final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in Rule 9. 26. I find that in this case, it is an undisputed fact that the assessee, after procuring the local / imported goods, Le. automobile parts in bulk, have undertaken the process of repacking the same in pre-printed or plain polythene bags and sealed in sealing machine. After re-packing, they affix label of Chevrolet Sales India Pvt. Ltd., on the same, which contain details such as Chevrolet Genuine Parts, Part No., Description of Goods, Packed Quantity, Date packed and ASN number, etc., before clearing the same to their PDCs as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Valuation Rules provides that 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 110% of the cost of production or manufacture of such goods Further, the CBEC vide Circular No. 692/8/2003 CX, dated 13-02-2003 has clarified that the cost of production of captively consumed goods will be done strictly in accordance with CAS-4. 30. In the instant case, it is an undisputed fact that the said goods which are subjected to one or more of the process(es) of repacking, labeling or relabeling or affixing stickers and which processes amounts to manufacture in terms of Section 2(0) (iii) of the Act. The assessee is not clearing the said goods for sale but the same are cleared for captive consumption to another unit of the assessee and there is also no dispute about the same. I therefore hold that the valuation of such goods is required to be done as per the provisions of Section 4 (1)(b) of the Act read with the provisions of Rule 8 of the Valuation Rules. 31. The assessee in their submissions have contended that in a similar issue In the case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty in excess, if paid by the assessee, has already been passed on to their depots, who in normal course would have availed CENVAT credit of the same. In absence of any provisions in law for adjustment of excess duty paid, adjustment of excess duty payments against the short duty payments in different transactions is not permissible under law. In case, the assessee was of the view that they had paid excess duty, they should have filed a refund claim for refund of the same, in terms of provisions of Section 11B of the Central Excise Act, 1944, within the time-limit prescribed under law. 4.3 The issues for consideration in the present appeal can be summarized as follows: (i) Whether the demand of duty made in respect of the impugned good, by determining the value as per Rule 8 of the Valuation Rules, 2000, in respect of the goods notified under Section 4 A (1) of Central Excise Act, 1944, is proper? (ii) Whether while making the demand of duty, is revenue not bound to allow the adjustment of the amounts paid by the appellant at the time of clearance of the impugned goods, which as per the revenue was paid under erroneous interpretation of law? (iii) Whether the deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Section 4 (1) (b) which provides for determination of value in the manner prescribed as per the Valuation Rules. Rule 8 under which the impugned order determines duty liability is part of the said Valuation Rules and would determine the value under Section 4 and not under section 4 A. There being so, the manner of determination under Rule 8 cannot be a prescribed method for determination of value. For the above reason itself the demand made by invoking Rule 8 of Central Excise Valuation Rules cannot be sustained if they are not considered to be subjected to duty on the value determined as per Section 4 A for the reason that the processes undertaken have not rendered the goods marketable to the end consumer. 4.6 In the present case, treating as the activity undertaken by the appellant did not amount to manufacture, appellant cleared the goods on reversal of the Cenvat credit taken by them in respect of these goods. The fact that the appellant had reversed the Cenvat credit as per Rule 3 (5) is not disputed. Revenue has also admitted the fact of reversal of CENVAT Credit as per Rule 3 (5), as per the report submitted to this Tribunal, which is reproduced below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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