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Showing contexts for: captive consumption in M/S. Prakash Industries Ltd vs Cce, Raipur on 7 April, 2010Matching Fragments
And Appeal No.E/1544/07 (Arising out of Order-in-original No.Commissioner/RPR/20/2009 dt.2.3.09 passed by Commissioner(Raipur) M/s. Prakash Industries Ltd. Appellant Versus CCE, Raipur Respondent Appearance S/Sh. S.K.Bagaria and Rohit Choudhary, Advs. For Appellants Shri B.K.Singh, Jt.CDR for Respondent Coram: Honble Mr. JUSTICE R.M.S.KHANDEPARKAR, PRESIDENT Honble Mr. RAKESH KUMAR, MEMBER (TECHNICAL) Date of hearing: 7.4.2010 Date of Decision:7.4.2010 Order No.___________________________ Per Rakesh Kumar The Appellant is a manufacturer of Iron & Steel products namely Sponge iron, MS Blooms/Billets, Ingots, MS Runners & Risers etc. chargeable to Central Excise Duty under Chapter 72 of the Central Excise Tariff which are manufactured in their factory at Champa in District Janjgir-Champa. They are availing the benefit of Cenvat credit of duty paid on inputs and capital goods under Cenvat Credit Rules. They also have a factory at Raipur which uses the goods manufactured by the Appellant in their factory at Champa as inputs for manufacture of various steel products. The goods manufactured by the Appellant in their factory at Champa are partly sold by them at the factory gate to independent buyers and are partly cleared to their factory at Raipur for use in the manufacture of some finished products. The Appellant, during the period from 1.4.04 to 31.12.07 in respect of clearances to their unit at Raipur for captive consumption paid duty at the price at which the goods were sold to other independent buyers, while according to the Department, since as per the provisions of Section 4 of the Central Excise Act,1944 (hereinafter referred to as the Excise Act), transaction value has to be determined for each removal, in respect of clearances for captive consumption to their unit at Raipur, assessable value should have been determined under proviso to Rule 9 read with Rule 8 of the Central Excise Valuation Rules,2000 (hereinafter referred to as CEVR,2000) on the basis of 110% of the cost of manufacture. It is on this basis that two show cause notices SCN dt.14.1.2008 for 1.4.2004 to 28.2.2007 period and SCN dt.11.12.08 for 1.3.07 to Dec07 period were issued for
2.2 Shri B.K.Singh, the learned Jt.CDR, made the following submissions:
(1) From a plain reading of Rule 8 of CEVR,2000, it is clear that it covers both the types cases the cases where only a part of the goods are cleared to captive consumption and remaining are sold to independent buyers as well as the case where there is no sale of the goods manufactured and entire production is captively consumed. Therefore, it is wrong to read the word exclusively in the Rule 8, which is not there.
(2) Since under the transaction value based assessment under Section 4 of the Excise Act, as it stood w.e.f. 1.7.2000, the transaction value has to be determined for each removal, wherever the clearance of the goods is for captive consumption, it is Rule 8 of CEVR,2000 which will be attracted. Rule 4 to 10 of CEVR,2000 are for different situations and there is no provision for applying them sequentially. Therefore, in every clearance for captive consumption, it is Rule 8 which will be applicable irrespective of whether the entire clearances are for captive consumption or only a part of the clearances are for captive consumption and remaining clearances are to independent buyers.
3. We have carefully considered the submissions from both the sides and perused the records. The undisputed facts are that the Appellant clear a part of the goods about 50%, manufactured by them in their factory at Champa to their factory at Raipur for its captive use and the remaining goods are sold to independent buyers. The point of dispute is about the valuation of the goods cleared to Raipur unit for its captive consumption. According to the Appellant, since the sale price of the same goods being sold to independent buyers is available, that price must be adopted as the assessable value in terms of Rule 4 of the CEVR,2000, while according to the Department, irrespective of whether sale price of same goods to independent buyers is available or not, the value of the goods cleared to the Appellants other unit at Raipur for its captive use must be determined under Rule 8 of CEVR,2000, as, as per the provisions of Section 4 of the Excise Act, as it stood w.e.f. 1.4.2000, assessable value of the goods, attracting duty at an advalorem rate, is the transaction value, as defined in this Section and the transaction value has to be determined for each removal and that Rule 8 of CEVR,2000 specifically covers all the cases when the removal/clearances are for captive consumption. It has also been pleaded on behalf of the Department that Tribunal judgment of Larger Bench of the Tribunal in case of Ispat Industries Ltd. vs CCE, Raigad(supra) is not correct.
5.1.2 The other situation where the conditions (a) & (b) mentioned in para 5.1 above would be satisfied when the goods under assessment manufactured by the assessee are cleared for captive consumption in the same factory or to some other factory of the assessee or the goods cleared are not meant for sale but for distribution as gifts or for distribution as free samples, but sale price of such goods i.e. the goods identical to the goods under assessment at some time other than the time of removal is available for the reason that there is sale of such goods to independent buyer also. Therefore, a situation where part of the goods manufactured are cleared for captive consumption in the same factory or another factory of the same manufacturer and part of such goods are sold to independent buyers, would be covered by Rule 4 and the assessable of the goods cleared for captive consumption would have to be determined by the method prescribed in this rule. Through Rule 8 also covers the situation -Where the excisable goods are not sold by the assessee but are used for consumption by him or on his behalf in the production or manufacture of other articles, by applying the principle of harmonious construction, the cases of part captive consumption, part sale to independent buyers, covered by the wordings of Rule 4, would get excluded from the purview of Rule 8 and Rule 8 would be applicable only to those cases of clearances for captive consumption where there is no sale price t independent buyers at any time i.e. there are no sales at all, for example, hundred percent clearances being made for captive consumption or clearances being made partly for captive consumption and partly for distribution as free gift/free samples, without any sales to independent buyers. Thus Rule 4 would be applicable when the two conditions for its applicability as mentioned in para 5.1 above are satisfied and then two conditions are satisfied when part of the goods are cleared for captive consumption either in the same factory or in another factory of the same manufacturer and part of the goods are sold to independent buyers and once a case is specifically covered by Rule 4, there would be no question of applying Rule 8. The view expressed in the Boards circular No.643/34/2002-CX dt.1.7.02 is, therefore, not correct. We find that larger bench of the Tribunal in the case of Ispat Industries Ltd. vs CCE, Raigad(supra) had expressed the same view, though for different reasons.