TMI Blog2001 (7) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... -1999. 2.The appellant is a company engaged in the manufacture of paper and paper boards and articles thereof falling under Chapter 48 of the Schedule to the CETA 1985. The assessee has several factories all over India, such as Ballarpur, Ashti, Sewa, Yamuna Nagar, and Chaudwar. The present appeal relate to Ballarpur unit of the assessee. It would appear that Ballarpur unit of the appellant manufactured different varieties of paper and paper board. For the manufacture of paper and paper board, "pulp" is required. Pulp is classifiable under Chapter sub-heading 4701 and chargeable to nil rate of duty. The pulp is also manufactured in the assessees factory at Ballarpur and is captively consumed for the manufacture of paper and paper board. A small portion of this pulp is sent to its sister unit at Ashti. The period in dispute is September 1996 to September 1999. During the relevant period, the assessee was availing Modvat credit. As far as the manufacture of pulp is concerned, there is no impact vis-a-vis Modvat credit availed on the inputs, since the duty is paid only on the final product, namely paper and paper products. It is the case of the appellant that it was under the bona f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... served from the price declarations filed by the assesee, that the cost of goods was arrived at by considering direct cost only. The arrival of such cost is not as per Section 4 of Central Excise Act, 1944 read with Valuation Rules, 1975. As per Rule 6 (b) (ii) of Valuation Rules, 1975, value is to be arrived at on the basis of cost of production or manufacture including profits, if any, which the assessee would have normally earned on the sale of such goods. 6. During the scrutiny of above declarations and enquiry, it is confirmed that the assessee's other unit at Yamuna Nagar and Chaudwar are normally selling pulp on much higher prices. The assessee did not filed price declaration under Rule 173C with effect from 1-9-1996. Till the filing of price declaration on 15-4-1997, the assessee appears to have contravened the provisions of Rule 173C of Central Excise Rules, 1944. From the above, it appears that the assessee has deliberately adopted Rule 6(b) (ii) and that too on wrong calculation knowingly and therefore misdeclared cost of goods in their price declarations instead of following Rule 6 (b)(i) i.e. to apply cost of goods available at their units at Yamuna Nagar and Chaudwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he pulp to its sister unit at Ashti, the department cannot take the price of the pulp sold by its Sewa unit to its customers for the purpose of reversal of the Modvat credit for the assessees' factory in the instant case, namely at Ballarpur unit. He says that drawing the logic of similar goods or comparable goods contemplated under Rule 6 (b) (ii) of the Valuation Rules for the purpose of reversal of Modvat credit enshrined in Rule 57CC of the C. Ex. Rules is wrong in law. The learned counsel emphasises before us that Rule 57CC of the C. Ex. Rules only says "the price excluding sales tax and other taxes, if any, payable on such goods or the second category of final products charged by the manufacturer for the sale of such goods at the time of their clearance from the factory." He says pulp was never sold by the factory of the manufacturer namely Ballarpur unit which is the assessee's case in this matter. He stressed the point out that assessee before us is not Sewa or Ashti units. He emphasised the fact that movement of goods from one unit of the assessees factory to another factory of the assessee could never be treated as sale. The learned counsel stressed the point that one nee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te inventory and account of the receipt and use of inputs for the aforesaid purpose and he should not take credit of the specified duty paid on such inputs. In the alternative, he should pay 8% of the price excluding sales tax and other taxes if any payable on such goods of such exempted category of final products charged by the manufacturer for the sale of such goods, at the time of their clearance from the factory. It is clearly an admitted fact that that the assessee's factory has produced pulp which was captively consumed for the production of paper and paper boards which is charged for nil rate of duty. In such a situation, the taxing authority, namely the Central Board of Excise and Customs, under the Ministry of Revenue, were aware of the fact there can be manufacturers who were also captively consuming the products in the manufacture of the final products and that is contemplated clause (8) of Rule 57CC of the Central Excise Rules. When that is the position, the rule making authority were aware of the fact that captive consumption category of manufacture are also in existence. If that were to be so, what is the interpretation we have to give for Rule 57CC of the Central Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company, none of the above ingredients of the sale are present. Admittedly, the respondents are not selling the goods to their other unit from whom they are not charging any consideration for the transfer of the goods. The question which arises is as to whether in the absence of any sale, the provisions of Rule 57CC will have any application or not. The expression used in sub-rule (1) of Rule 57CC read with sub-rule (8) of Rule 57CC which stipulates that the manufacturer for the sale of such goods at the time of their clearances from the factory, makes the position clear. Sub-rule (8) of Rule 57CC is further to the effect that 'if any goods are not sold by the manufacturer at the factory gate but are sold from a depot or from the premises of a consignment agent or from any other premises, the price (excluding sales tax and other taxes, if any, payable) at which such goods are ordinarily sold by the manufuacturer from such depot or from the premises of a consignment agent or from any other premises shall be deemed to be the price for the purpose of sub rule (1)' A careful reading of Rule 57CC (8) also makes the position clear that if the exempted goods are not sold from the fact ..... 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