At, Customs Excise Service Tax Appellate Tribunal East Zonal Bench Bench, Kolkata
By, THE HONORABLE JUSTICE: P.K. CHOUDHARY
By, MEMBER AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
For Petitioner: K.K. Achariya, Advocate And For Respondents: H.S. Abedin, A.C. (A.R.)
1. The appeal is against order dated 30/05/2007 of Commissioner of Central Excise, Kolkata-IV.
2. The appellants are engaged in the manufacture of Iron & Steel items liable to Central Excise duty. They have used HR Coils as one of the material in their manufacture. In the course of processing of the said inputs, HR Side Slits are generated. These Side Slits are either captively consumed by the appellant in their own unit in Bangihati or cleared on sale basis to other units situated in Derabasi & Chandigarh. They also cleared these side slits to independent buyers for other than captive consumption in their own unit. Duty liability on such HR Side Slits are calculated based on the transaction value.
3. The Revenue entertained a view that the clearance of HR Side Slits to two of their other units will amount to captive consumption and the valuation for excise purpose should be done in terms of Rule 8 of Central Excise Valuation Rules, 2000. Accordingly, proceedings were initiated against the appellant and the case was adjudicated resulting in the impugned order. The original authority confirmed the duty of Rs. 1,02,27,859/-, on this account and also imposed equal amount of penalty in terms of Section 11AC of the Central Excise Act, 1944.
4. Ld. Counsel for the appellant contended that the impugned order submitted mainly on the following grounds:
a) The clearances to their two other units at Derabasi and Chandigarh on transaction of sale, on due documents, cannot be considered as captive consumption.
b) The appellants have significant quantity of sales to independent buyers from their factory gate and in such a situation, the transaction value available for such independent sales can be made applicable for all clearances, by comparison. In any case, the sale value for their unit at Chandigarh and Derabasi is similar to the value of sale to that of independent buyers. Even on this ground, there is no differential duty to be paid by the appellant.
c) The original authority erroneously applied the provisions of Rule 8 of Valuation Rules and the Board Circular dated 13/02/2003.
5. The Ld. A.R. reiterated the findings of the original authority.
6. We have heard both the sides and perused the appeal records. We note that admittedly the appellants had sold the impugned goods at the factory gate to the independent buyers. This much is noted in the impugned order, at para 7. However, the original authority concluded that the appellant should pay duty on the basis of CAS-4 valuation in respect of the impugned goods cleared to their two other units situated at Chandigarh and Derabasi. First of all, we note that such clearances are on sales basis and cannot be dealt with as captive consumption, on stock transfer basis. Even otherwise, when there is an independent sale transaction at the factory gate of the impugned goods, Rule 8 will have no application even if it is considered that there is a captive consumption on that account. We find no support from the legal provision for the finding recorded by the original authority. We note that Rule 8 of the Valuation Rules stipulates when excisable goods are not sold by the assessee but are used for consumption by him or for manufacture of other articles. In the present case it is not a case of the Revenue that all the goods are captively consumed by the appellants. No such findings have been recorded. Clearance on sales basis to the other units of the appellants cannot be considered as captive consumption. There is no factual support for such assumption.
7. In this connection we find force in the contention of the Ld. Counsel for the appellant in placing reliance on the decision of the Hon'ble Supreme Court in the case of Bata India Ltd. Vs. CCE, Bangalore [2015 (321) ELT 194 (S.C.) and the decision of the Larger Bench of the Tribunal in the c
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ase of Ispat Industries Ltd. Vs. CCE, Raigad [2007 (209) ELT 185 (Tri-LB). 8. We find that the impugned order is not sustainable on both the grounds: availability independent sales to buyers and sale transaction on similar value to their own units. Rule 8 has no application in this case. 9. In view of the discussion and analysis as above, we find that the impugned order is not sustainable and the appeal is allowed.