TMI Blog2003 (9) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/Rods on job charge basis. After so converted, the CTD bars/rods are sold from the premises of the job workers. 3. The issue raised in the present appeal is the valuation of steel billets sent for job work to converters. The dispute is for period subsequent to 1-7-2000 when Section (Valuation) 4 of the Central Excise Act and Valuation Rules thereunder were substituted with new provisions. Since there was no sale prices in the case of clearances of billets to job workers, the appellant adopted the sale price to ex-factory buyers for the valuation of billets cleared for job work and discharged central excise duty. Central Excise Authorities held that the sale price to other buyers cannot form the assessable value of goods sent for convers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessable value has now to be determined for each removal, reliance by the appellant on various case laws is inappropriate to the changed law. 7. In respect of removals of steel billets to job worker, the assessable value is, therefore, to be determined independent of the sales of such billets to other persons. Since the removals to job worker are not by sale, therefore, the provisions of Clause (a) to sub-section (1) of Section 4 would not have any application and one has to take resort to the provisions of clause (b). In other words, valuation of steel billets has to be determined under the provisions of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Under these Rules, Rule 8 caters to situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he commercial value of the goods in question. According to the learned Counsel for the appellant, this position is made clear by Section 4(1)(2) when it states that value shall be "the transaction value". Further, Section has defined transaction value as price for sale. It is his contention that when the very same goods are disposed of partly by sale on ex-factory basis to unconnected buyers, here sale price is the whole and sole consideration for the transaction and partly by a mode other than sale, there is no reason to doubt that would have been sale price in respect of the goods not sold would be the same as the price of other goods sold ex-factory also. The appellant has also submitted that the present case is not covered under Rule 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a loss making manufacturing unit is wholly unreasonable and contrary to the provisions for assessment of goods on the basis of transaction value i.e. sale price. The appellants submit that the value (commercial) of goods produced by a loss making manufacturing unit is its cost of production minus the loss incurred in the production of the goods. Therefore, reasonable basis for valuation would be cost of production minus loss and not 115% of cost of production. Learned Counsel for the appellants has also emphasized that Rule 8 is to be resorted to only in appropriate cases i.e. where the manufacturer is making profit. 6. Learned Counsel has contended that various provisions in the Valuation Rules support his contention. Rule (2) has de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for taking the value at the measure 115% of the cost of production provided in that Rule as the assessable value. He has also submitted that specific provision in law has to be followed irrespective of the hardship caused to an individual assessee. Learned SDR has also pointed out that Circular dated 19-2-2002 of the Board had no application to the present case inasmuch as this is not a case involving the valuation of goods produced on job work basis. He has also submitted that Rule 11 has no application as that is a residuary provision invocable only when other Rules are not applicable. 8. Section 4(1) lays down the principle of Central Excise Valuation. The core of it is that value shall be the price at which the transaction is carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable value (would be sale price) of the goods so transferred is much higher than the price at which the appellants were selling goods in course of ordinary sale and commerce. This finding has been reached by adopting 115% of the cost of production of the goods. That the value so determined bears no resemblance to the sale price or would be sale price of the goods is evident. Such a determination of value is clearly contrary to the principle of valuation and guidelines contained in Section 4(1) and Valuation Rules, 2000. The appellant's submission that valuation carried out is arbitrary, unreasonable and contrary to law has to be accepted. Adopting 115% of cost of production may be a reliable method where the manufacturer in question ..... X X X X Extracts X X X X X X X X Extracts X X X X
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