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TMI Blog2025 (5) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... t availed exemption from payment of duty as per Notification No. 67/1995-CE dated 16.03.1995 on the quantity of PP granules & waste and scraps captively consumed in the manufacture of BOPP films. The Revenue has alleged that the assessee is not correctly determining the value of such captively consumed waste and scrap while paying duty and that they are taking the value at which the waste is sold by them to independent buyers. The Revenue alleged that the valuation of such captively consumed waste and scrap should be determined on the basis of CAS-4 as quality of waste and scrap used captively is much better than the quality of waste and scrap cleared to independent buyers. On the basis of above, the Revenue calculated the differential duty payable by the appellant. They issued show cause notice dated 13.01.2012 demanding differential duty of Rs. 93,39,670/- for the period January, 2011 to September,2011 along with interest and penalty under Rule 25(1) of the Central Excise Rules, 2002. Similar show cause notices were issued to the appellant covering period from April, 2010 to June,2010 (duty of Rs. 49,55,508/-) and from July, 2010 to December, 2010 (duty of Rs. 1,03,62,950/-). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced reliance on the decision of Apex Court in the case of Commissioner of Central Excise, Pune Vs. Cadbury India Ltd- 2006 (200) ELT 353 (S.C.). 4. We have gone through the facts of the case and also heard rival submissions. Limited issue to be decided in the present case is valuation of waste and scrap generated during the process of manufacture of final products, a part of which is captively consumed within the factory while rest is sold to independent buyers at the factory gate. This Tribunal considering the very same issue in the appellant's own case for the previous period, held that as per the Ispat Industries decision for the purpose of captive consumption, the value of transaction made through the outside buyer should be taken as assessable value. The said decision vide Final order No. 11109-11122/2024 dated 03.06.2024 is reproduced below:- "4. We have carefully considered the submissions made by both the sides and perused the records. We find that limited issue to be decided in the present case is the valuation method in respect of waste/ scrap generated during the process of manufacture of final product and part of it is consumed within the factory and partly sold ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... captively consumed waste/scrap is worked out by them at the price at which such goods are sold by them to independent buyers. Whereas it appears that in the case of captive consumption, the valuation of the goods captively consumed is required to be done in accordance with and as per CAS-4 standard, prepared by the Institute of Cost and Works Accountants of India (ICWAI)." 10. From the plain reading of the above facts narrated in the Show Cause Notice it is accepted that the waste and scrap consumed captively and sold to independent buyers are one and the same. There is no allegation in the Show Cause Notice that the waste and scrap cleared for captive consumption and the one sold to the independent buyers are different. 11. We also find that no investigation was carried out to establish that the waste and scrap sold and captively consumed are different in nature. We also observe that the waste and scrap is generated in the course of manufacture of BOPP film. Therefore, there cannot be different category of waste in one process of Manufacture of BOPP film. The entire Show Cause Notice was issued only on the basis of Rule 8 of Valuation Rules and CBEC Circular dated 30.6.2000, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ug Manufacturers Association v. Union of India, wherein the Court held that Rule 8 applies in a situation where goods are not sold but are cleared 'exclusively' to be used in consumption or for manufacture of other articles. We also agree with the contention of the assessee that Rule 8 will apply only in two situations, (a) where the goods are consumed by him in the same factory (captive consumption) or (b) where such goods are transferred to another factory for consumption in the manufacture of other articles on behalf of the assessee. In this case, it is not the case of the revenue that the goods were transferred to other units for manufacture of other articles on behalf of the assessee/appellant, i.e. the Dolvi Unit. We agree with the assessee's contention that the expression 'assessee', wherever it appears in the Central Excise Rules, applies to a particular factory, which is why different units belonging to one company are separately registered and separately assessed to duty. Since the assessee in the present case is the Dolvi plant and it is not the revenue's case that the other three units of the company to whom HR coils were transferred were undertaking further manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, interpret it in such a way as to make it in accordance with the main object that is contained in Section 14 of the Customs Act. It may be that in isolation Rule 9(2) conveys some other meaning, but when it is read along with Section 14 of the Act, it must be given a meaning which is in accordance with the object of Section 14. The object of Section 14 is 'primary' whereas the conditions in Rule 9 (2) are the 'accessories'. The 'accessory' must, therefore, serve the 'primary'." 9. In view of what we have observed above, we answer the reference in the following terms : (a) the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers; (b) the provisions of Rule 4 are in any case to be preferred over the provisions of Rule 8 not only for the reason that they occur first in the sequential order of the Valuation Rules but also for the reason that in a case where both the rules are applicable, the application of Rule 4 will lead to a determination of a value which will be more consistent and in accordance with the parent statutory provisions of Section 4 of the Central Excise Act, 1944. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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