Custom, Excise & Service Tax Tribunal
M/S. Steel Authority Of India Limited vs Commissioner Of Central Excise, Raipur on 23 November, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELALTE TRIBUNAL R.K. PURAM, WEST BLCOK NO. 2, NEW DELHI-110066 DIVISION MEMBER BENCH Date of hearing/decision: 23.11.2015 Appeal No. E/1587, 1588/2006-EX[DB] [Arising out of order-in-original no. 13/COMMR (ADJ.) RPR/2006 dated 30.1.2006 and Order-in-Original No. 18/COMMR (ADJ.) RPR/2006 dated 31.1.2006 passed by the Commissioner of Central Excise-Raipur] M/s. Steel Authority of India Limited Appellant Vs. Commissioner of Central Excise, Raipur Respondent
Appeal No. E/3122 and 3143/2006-EX[DB] [Arising out of Order-in-Original NO. 18/COMMR (Adj)/RPR/2006 dated 31.01.2006 and Order-in-original No. 13/COMMR (Adj)/RPR/2006 dated 30.01.2006 passed by Commissioner (Adjudication) Customs & Central Excise-Raipur] Commissioner of Central Excise, Raipur Appellant Vs. M/s. Steel Authority of India Limited Respondent Appearance: Shri Rahul Tangri, CA for the party Shri Govind Dixit, DR for the department For Approval and Signature:
Honble Smt. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of the order?
4. Whether order is to be circulated to the Department Authorities?
Coram: Honble Smt. Sulekha Beevi C.S., Member (Judicial) Honble Shri B. Ravichandran, Member (Technical) Final Order No. 53738-53741/2015 Per: B. Ravichandran There are four appeals taken up together for decision as the issue involved is same. Appeals were filed by the assessee- Steel Authority of India Limited and Revenue against two orders passed by Commissioner (Adjudication) Raipur dated 30/1/2006 and 31/1/2006. The assessees are engaged in the manufacture of various iron and steel products liable to Central Excise Duty. The dispute arose regarding valuation of finished goods like plates, angles, channels, etc which were captively consumed in the project work by the assessee and also finished goods transferred by the assessee to Selam Steel Plant for use in further manufacture. In respect of the goods which are captively consumed by the assessee in the project work they have paid duty on the basis of market price of similar goods at the relevant time. In respect of the stock transfer of finished goods to Selam Steel Plant for use in further manufacture, the cost of production was arrived at based on CAS-4 standards and duty paid accordingly. Proceedings initiated against the assessee concluded in these two orders by the original authority. The original authority confirmed the duty amount of Rs. 10,56,604/- and Rs. 1,31,49,800/- and imposed penalties on the assessee. Aggrieved by this order both the assessee and the Revenue are in appeal before us.
2. The ld. Counsel for the assessee, Shri B. L. Narsimhan submitted that in terms of section 4 (1) (a) value of excisable goods for payment of excise duty shall be the transaction value. The new section 4 introduced w.e.f. 1/7/2000 does not make any departure in the legal scope of transaction value for payment of Central Excise Duty. When there is a transaction value available it must be adopted. If the goods are not sold then the value may be determined in terms of section 4 (1)(b). Ld. Counsel submitted that the main case of the department is that the assessee failed to pay excise duty in terms of Rule 8 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. The said Rule states that where the excisable goods are not sold by the assessee but are used for consumption by him or her on his behalf in the production or manufacture of other articles, the valuation be 115% of the cost of production or manufacture of such goods. In the case of the assessee they have used the excisable goods capitvely not for production or manufacture of any excisable goods. They have used in civil construction within or outside the factory. As such the ld. Counsel submitted the provisions of Rule 8 will not apply in such situations. He further submitted that the original authority has fallen in error in interpreting the meaning of Rule 8. Assessee paid duty on these items used by them for civil work, taking the value of goods sold at the factory gate to independent buyers.
3. Ld. Counsel for the assessee submitted that in respect of the clearances made to other units like Selam Steel Plant the clearances are not on sale basis. These units are part of the same company. Hence, there is no question of interconnected or related party in the present case. The entire quantity of goods were stock transferred and not sold as assumed by the department. Since, there is no sale in such clearances assessee paid duty on the basis of cost of production. In fact, the cost of production arrived at by them is higher than uniform cost adopted by the department.
4. The ld. AR, Shri Govind Dixit while reiterating the findings of the lower authority regarding applicability of Rule 8 for valuation in the present case, also submitted that the two appeals filed by the Revenue are mainly on the point of applicability of CAS-4 standard for costing for period before the issue of Board Circular dated 13/2/2003.
5. We have heard both the sides and examined appeal records.
6. The main point for determination is that the applicability of Rule 8 of Central Excise Valuation (Determination on Price of Excisable Goods) Rules, 2000 in respect of internally transferred goods for consumption in assessees various project work. The second point for decision is valuation of steel items cleared on stock transfer basis to other units of the assesses company. We find that in respect of steel items consumed by the assessee in various projects within or outside the factory they have adopted the value of comparable goods for which the transaction value is available during the relevant time. The main case of the Revenue is that the excise duty should be paid in terms of Rule 8 as the same were not sold and were captively consumed. The said Rule during the relevant time clearly indicates that where the excisable goods are not sold by the assessee but are used by him or on his behalf in the production or manufacture of other articles, the value shall be 115% of the cost of production or manufacture of such goods. We find here the assesses are using only part of their production captively for project work. There are proper sale of these items to unrelated persons fulfilling the condition of transaction value for the purpose of Central Excise duty. The new Rule 8 introduced w.e.f. 1/12/2013 clearly makes departure to the effect that even where part of the excisable goods are not sold the value should be on the cost basis. The provisions of Rule 8 as prevailing during the relevant time have no application in the present case where the goods are partly sold under ex-factory basis and partly cleared for captive consumption. This has been repeatedly held in various decisions of the Honble Supreme Court and Tribunal. In a recent decision in the case of Steel Complex Limited (Civil Appeal No. 3408/04 decided on 1/4/2015) the Supreme Court upheld the above reasoning. The ratio have been followed by the Tribunal in various decisions:
1. Balaji Electro Steel Ltd. Vs. CCE 2007 (219) ELT 563 (Tri-Kol)
2. Oswal Woollen Mills Ltd. Vs. CCE-2012 (282) ELT 547 (Tri-Kol)
3. SAIL Vs. CCE-2010 (251) ELT 571 (Tri-Kol)
4. Gangotri Electrocasting Vs. CCE-2013 (293) ELT 395 (Tri-Kol)
7. We find the reasoning given by the original authority in his order dated 30/1/2006 regarding the applicability of Rule 8 in the present case of captive consumption is misconceived. Since the transaction value of the excisable goods is available and not all the excisable goods are captively consumed, the provisions of Rule 8 as prevailing during the relevant time will not apply to the assesses.
8. On the second issue regarding valuation of steel items cleared on stock transfer to other plants of the assessee, we find that the concept of related person has no relevance.
9. All the units are part of one company. There is no sale of goods in this stock transfer. The assesses have paid duty based on cost of production which is higher than the cost of production adopted uniformly by the department.
10. We find that assessee paid duty on cost plus 15 per cent on the entire quantity of stock transferred to their other unit in Selam. The said amount was availed as credit by the Selam Steel Plant. The value adopted by them (Rs. 10,457/- per MT) is much more than value on which duty is being demanded (Rs. 9,489/-).
11. Considering the above factual position, we find the impugned order dated 31/1/2006 is not sustainable on this ground.
12. Regarding the two departments appeals against the impugned orders we find that the only ground taken is that the costing of goods as per CAS-4 standards will be effective only from the date of issue of circular dated 13/2/2003 by the Board. We find the applicability of CAS-4 standards for all the cases even pending at the time of issue of circular has been upheld by Tribunal in the case of National Aluminum Company Limited 2005 (184) EKT 183 (Tri-Del). On the SLP filed, the Honble Supreme Court refused the grant of the stay order. No further developments have been informed.
13. Considering the above position we find no merit in appeals filed by the department. In view of the above discussions and findings, the appeals filed by the assessee are allowed and the appeals filed by the Revenue are dismissed.
(Sulekha Beevi C.S.) Member (Judicial) (B. Ravichandran) Member (Technical) Ritu 2