9911796707
TMI Blog2024 (3) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... afresh, in the light of the decision of Larger Bench of this Tribunal passed in the case of ITC Ltd. Vs. Commissioner of Central Excise, Chennai-I reported in 2016 (333) ELT 287 (Tri.-LB), while keeping all contentions of the parties expressly open for consideration and decision in the de novo proceeding. 2. Before delving in to the fact of the case, it is necessary to put on record that three appeals are filed in the name of Tata Iron & Steel Co. Ltd., as they were being prosecuted in the Forum below and one appeal is filed by Tata Steel Ltd. It is learnt that Tata Iron & Steel Co. Ltd. is no more in existence as the same has been renamed as Tata Steel Ltd. but Appellants being reluctant to get themselves substituted from Tata Iron & Steel Co. Ltd. to Tata Steel Ltd., though their all four appeals before the Hon'ble Bombay High Court were filed in the name of Tata Steel Ltd. as revealed from the cause-title. We are of the view that in the event Appellants M/s Tata Iron & Steel Co. Ltd. not succeeding in the appeal, it should not escape the liability on the ground that order was passed against a Company which is not in existence or that it is a decree against a dead person. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another similar issue, arose in an appeal filed by M/s. ITC Ltd. before the Chennai Bench of this Tribunal, it was noticed that there was a precedent decision passed by Chennai Bench of this Tribunal in the case of Eveready Industries India Ltd. reported in 2010 (5) TMI 958 - CESTAT Chennai, the findings of which is contrary to the findings of the Mumbai Bench Tribunal. Taking note of divergent views expressed by the Tribunal at its different Benches, matter was referred to the Hon'ble President for constitution of a Larger Bench to decide the issue and give a finding as to which of these two divergent decisions would confirm the correct possession of law? Accordingly, Larger Bench of this Tribunal was constituted and that decided the issue holding that the final decision dated 11.05.2010 passed by Chennai Division Bench of CESTAT in Eveready Industries India Ltd. and its subsequent judgment reported in 2011 (274) ELT 564 (Tri.-Chennai) represent the correct position of law and not the final decision of Mumbai Division Bench passed in respect of Tata Iron & Steel Co. Ltd. Vs. CCE, Thane-II reported in 2013 -TIOL-707. On the basis of this judgment of the Larger Bench, at the instanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion made by the learned Counsel for the Appellant that in view of order passed in Xerox India Ltd. Vs. Commissioner of Customs & Central Excise, Meerut reported in 2017 (349) ELT 532 (All.) of the Hon'ble Allahabad High Court that when specific direction is given to the Tribunal to decide issue on merit, it can't wash off its hand in not giving a decision on merit. In view of the direction contained in the remand order which was apparently passed without bringing to the notice of the Hon'ble High Court about pendency of two appeals then, out of these four appeals before the Hon'ble Supreme Court, in which order for constitution of a Larger Bench and order passed by the Larger Bench overruling the order passed in Appellant's own case were assailed but we will not desist ourselves from deciding the issue as per the direction of the Hon'ble Bombay High Court despite the fact that in the relied upon judgment of Hon'ble Allahabad High Court, hearing of the appeal was deferred as some other appeal on the issue involved therein was pending before the Hon'ble Supreme Court. It is in this background the appeals are heard from both the sides at length and taken up fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween value and cost for the second Unit as well as the justification given in the order that Notional Profit is added only for the purpose of taxation and not to be included in cost would be of no consequence for the second Unit at Tarapur Thane, since landing cost of its input includes tax component of the raw material and therefore, a thread bore analysis of the provision and applicability of the Larger Bench decision to the Appellant's case is required to be made as liberty has been granted by the Hon'ble Bombay High Court for a de novo hearing and passing of order after taking into consideration all contentions of the parties and keeping the same expressly open for discussion. 8. We have gone through the case record, relied upon judgments, provision of law and the written note of submissions filed by the parties. At the outset we must say that at the behest of Appellant, as could be revealed from para 10 of the Remand order passed by the Hon'ble Bombay High Court, direction for keeping all contentions of the parties expressly open has been given by the Hon'ble Court and taking advantage of the said direction we would like to analyse the gist of the judgment passed in Eveready ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as reported in 2011 (274) E.L.T 564 (Tri.-Chennai). 10. Order in respect of these appeals was passed on 22.03.2013. As could be seen from the said order, reference to Eveready Industries India Ltd. order is missing and it is acknowledged by the larger Bench in its finding at para 15 that neither Revenue nor the Assesse had brought the rulings of Eveready Industries India Ltd. passed by the co-ordinate Bench at Chennai to the knowledge of the Mumbai Bench and if such decision was brought to the knowledge of Mumbai Bench, it would have taken an appropriate decision in following the same or referring the issue to the Larger Bench. Therefore, without being influenced by the decision of the Chennai Bench, by way of its acceptance or rejection, Mumbai Division Bench had rendered its decision on the basis of provision of Law and other materials placed before it. The sum and substance of this order would go to say that for the period involved in these appeals namely from May 2003 to December 2008 Circular dated 13.02.2003 issued for the purpose of determination of cost of production to meet the requirement of Rule 8 was applicable and the said Circular clearly states that CAS-4 issued by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed. Since the supply of raw materials by the Bhadrachalam unit to the Chennai unit does not amount to a sale, since both units ate under the same assessee/corporate entity - M/s. ITC Ltd., Section 4(1)(a) has no application. Clause (b) of the said provision enacts that the value in such circumstances shall be determined in such manner as may be prescribed. The relevant prescription is set out in the Valuation Rules, 2000 (relevant for the period under dispute). Rule 2(c) of these rules defines "value" as meaning the value referred to in Section 4 of the Act. Chapter II of the Valuation Rules sets out principle for determination of value. Rule (3) therein enacts that the value of any excisable goods shall, for the purpose of clause (b) of sub-section (1) of Section 4 of the Act, be determined in accordance with these rules. Parties are agreed that the only and appropriate r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e computing the cost of material consumed is also set out, particulars of which are not necessary for the purposes of our analysis herein. 7. The dear intendment underlying indication of the method of computing value of the material consumed as elucidated in para 5.1 is for the purpose of computing the cost incurred in the manufacture of goods by the unit captively consuming the produce of its other unit. Para-6 of CAS-4 requires preparation of a cost sheet in the format set out in Appendix-I or as nearly thereto as possible. For facilitating preparation and verification of the cost of production, Appendix-I is the format mandated by this standard to set out the statement of cost of production of goods employing captively consumed goods. Chapter III of CAS-4 in which the paragraph 5.1 occurs sets out principles for determination of cost of production for captive consumption and indicates that the consumed material shall included a range of materials as indicated in para 5.1 including "self-manufactured items". The principles for valuation of self-manufactured items is also distinctly specified in Chapter III. We set out this principle :- Self-manufactured Items : These wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflected in the invoices raised by Bhadrachalam unit and the value 'at which Bhadrachalam unit was selling such raw material to third parties. This was again for compliance with AS-17 standards. Revenue's endeavour to compute the cost of the raw material on the basis of the IDSC/ICNC values was negated by this Tribunal in its ruling on issue No. (a) and for the reasons recorded therefor in the order dated 11-2-2014. 11. It is pertinent to consider that Rule 8 of the Valuation Rules stipulates that in the case of captive consumption the value shall be determined at the rate of 110% of the costs of production or manufacture of such goods. The Board's Circular dated 13-2-2003, spelt out that the cost of production should be computed as per CAS-4 formula. By careful reading of the para 5.1 of CAS- 4 read with para 4.1 of CAS-1 and the guidelines note, the appellant's case falls under the category 5.1 (d) of CAS-4. (self-manufactured items) as extracted above." (Underlined to emphasise) 12. If this was the observation then Division Bench of the Bombay Tribunal was right in taking 110% of the value of goods of Jamshedpur Unit as the cost of raw material (Billets) received at Tara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s covered under Rule 8 of the Valuation Rules, 2000 and the provisions of Rule 6(b)(ii) are not similar to the provisions of Rule 8 of the Valuation Rules as claimed by the appellants. Similarly, the Tribunal's decision in the case of Rajasthan Spinning & Weaving Mills v. CCE (supra) cited by the appellants, relates to Rule 6(b)(ii). Similarly, the Hon'ble Supreme Court's decision in the case of HBL Aircraft Batteries v. CCE (supra) relates to valuation relating to contract prices in case of different class of buyers and is not relevant to this case. In the case of Hindustan Polymers v. CCE (supra), the question before the Hon'ble Supreme Court was regarding deduction of packing cost while determining the value and hence the case law is not relevant to the present case. 6.2 As already discussed above, the value of goods cleared for captive consumption would be 115/110% of the cost of production or manufacture of such goods and as per the Board circular dated 13-2-2003, the cost of production of captively consumed goods will have to be construed strictly in accordance with CAS-4. The relevant portion of CAS-4 is reproduced hereunder :- "5.1 Material consumed Material consum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the prevention of justice. The rigidity of the law in these instances, the complexity of precedent, and a slowness to respond to technological, economic and social changes, should also be discussed when considering the disadvantages associated with this notion of precedent (Bankowski et al, 1997)." 14.2. Observation of Indian Judiciary in no exception to it. Hon'ble Supreme Court in the case of Maktul vs. Manbhari, reported in AIR 1958 SC 918, also had observed, "... Previous decisions should not be followed to the extent that grievous wrong may result; and accordingly the courts ordinarily will not adhere to a rule or principle established by previous decisions(s) which they are convinced is erroneous. The rule of stare decisis is not so imperative or inflexible as to preclude a departure there from in any case, but its application must be determined in each case by the discretion of the court and previous decisions should not be followed to the extent that error may be perpetuated and grievous wrong may result..." 15. Taking spirit of the above statement of Lord Denning made in respect of the rule of precedent and in obedience to the decision of Hon'ble Supreme Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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