TMI Blog2023 (7) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... d as per the provisions of proviso (i) to Section 4(1)(a) are the normal price of comparable goods and the impugned order does not discuss as to why this price not acceptable except to say that they are contract price, the contention of the appellant cannot be ignored - the contract price has to be treated as the normal price , as provided in section 4, which is comparable and applicable in the appellant s case. Its only when the value of the goods cannot be determined under Rule 6(b)(i) that one needs to travel to Rule 6(b)(ii) which is not the case here. Hence the appellants prayer to adopt the value of goods cleared to their sister unit as per the comparable contract value available on the basis of Rule 6(b)(i) of CVR, 1975 upheld. For the period from 01/07/2007 - HELD THAT:- The erstwhile Section 4 of the Central Excise Act, was substituted by section 94 of the Finance Act, 2000 (No.10 of 2000), and came into force from 01/07/200. This section contains the provision for determining the transaction value of the goods for purpose of assessment of duty. The new Valuation Rules i.e. CVR 2000, enables valuation of goods for excise purposes on value charged as per commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the period from 1998 99 to 2001 2002. The prices declared by the assessee on cost basis comprised of the elements viz. (i) Material cost (ii) Labour cost (iii) Overheads and (iv) Profit margin According to the Valuation Rules, the assessee should arrive at the assessable value on cost construction method based on actual production capacity, whereas the assessee had adopted the estimated production capacity which in turn resulted in short payment of duty. 3.(i) As per Rule 6(b)(ii) of Valuation Rules, 1975 when the excisable goods are not sold by the assessee but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based on the cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods . (ii) As per Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 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 should be 15% of the cost of production or manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 159 ( Tri. Del) Upheld by the Hon ble Apex Court reported in 2016 (337) ELT A139. d) Commissioner of C.Ex. Service Tax, Raipur Vs. Kingar Agrico Pvt. Ltd. 2018 (364) ELT 906 (Tri .Del) e) Jai Corporation Vs. Commissioner of C. Ex. Service Tax, Daman 2015 (317) ELT 353 (Tri. Ahmd) f) Ispat Industries Ltd. Vs. Commissioner of C.Ex., Raigad 2007 (209) ELT 185 (Tri LB). He further stated that as given in their reply to SCN, the unit had a centralized accounting system and a common balance sheet covering all the units and there is no flow of money or sale of materials from unit to another, hence the issue was revenue neutral and since there was no intention to evade payment of duty, penalty could not have been imposed on them. He prayed that the impugned order may be set aside and appeal allowed. 7. The learned AR Smt. Anandalakshmi Ganeshram appearing for Revenue has stated that the issue was whether the assessee has followed the correct valuation procedure to determine the normal price of rough castings cleared to their sister concerns. The contract price under Part II cannot be taken into account as a comparable price as per Rule 6(b)(i) of CVR 1975 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the dispute, are reproduced below for a better understanding of the issue. Rule 6 - If the value of the excisable goods under assessment cannot be determined under Rule 4 or rule 5 and (a) where such goods are sold by the assesse in retail, the value shall be based on the retail price of such goods reduced by such amount as is necessary and reasonable in the opinion of the proper officer to arrive at the price at which the assesse would have sold such goods in the course of wholesale trade to a person other than a related person. Provided that in determining the amount of reduction, due regard shall be had to the nature of the excisable goods, the trade practice in that commodity and other relevant factors (b) Where the excisable goods are not sold by the assesse but are used or consumed by him or on his behalf in the production or manufacture of other articles, the value shall be based (i) on the value of the comparable goods produced or manufactured by the assesse or by any other assesse. Provided that in determining the value under this sub clause, the proper officer shall make such adjustments as appear to him reasonable, taking into consideration all relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale: Provided that (i) where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers; . . . . . (emphasis added) As per proviso (i) to Section 4(1)(a), which deals with contract price, where, in accordance with the normal practice of the wholesale trade in such goods, such goods are sold by the assessee at different prices to different classes of buyers (not being related persons) each such price shall, subject to the existence of the other circumstances specified in clause (a), be deemed to be the normal price of such goods in relation to each such class of buyers. The impugned order notes that the appellant is having sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old the appellants prayer to adopt the value of goods cleared to their sister unit as per the comparable contract value available on the basis of Rule 6(b)(i) of CVR, 1975. 8.3 For the period from 01/07/2007 : the erstwhile Section 4 of the Central Excise Act, was substituted by section 94 of the Finance Act, 2000 (No.10 of 2000), and came into force from 01/07/200. This section contains the provision for determining the transaction value of the goods for purpose of assessment of duty. The new Valuation Rules i.e. CVR 2000, enables valuation of goods for excise purposes on value charged as per commercial practices by introducing the concept of transaction value rather than determining the value of goods by a notionally determined normal price of the erstwhile section. Changes were also made in the Valuation Rules by the introduction of CVR, 2000 in place of CVR 1975 to reflect the change in laws. However, the appellant is of the view that even after 01/07/2000, Rule 8 is applicable to them only if the entire excisable goods are not sold but are consumed by them or on their behalf in the production or manufacture of other articles, which is not so in their case. They have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a statute must be understood as per its plain meaning. There is no room for any intendment. While the department s hands are tied on the basis of Boards circular dt 30/06/2000, it is essential for us to ascertain the correct position of law unencumbered by the Revenue s interpretation. We hence find that its only after Rule 8 of CVR 2000, was amended by Notification No. 14/2013-CE (NT) dated 22.12.2013 with effect from 1.12.2013, that the appellant will be liable to value the goods cleared to their sister unit as per Rule 8 of CVR 2000, even if they have sold comparable goods to un-related buyers based on the transaction value during the same period. 8.3.3 We conclude that the appellant was eligible to clear rough castings to their sister concern on payment of duty on the assessable value based on comparable prices of goods cleared by them to non-related buyers during the entire period covered by the impugned order. 9. We have examined the Tribunals judgment in Parle Biscuits (supra) cited by Revenue to support their view that the appellant should have adopted the cost construction method based on actual production capacity for clearances to their sister unit. We find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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