ISPAT INDUSTRIES LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue referred to the Larger Bench is whether the assessable value in respect of goods which are transferred to another plant of the same assessee is required to be determined as per Rule 4 of the Central Excise Valuation Rules, 2000 (as claimed by the appellant) or as per Rule 8 of the said rules (as claimed by the Revenue), in a case where the same goods are also sold to independent buyers?

(2.) WE have heard both sides. It is an undisputed position that the assessees were transferring a part of its production (about 20%) of HR coils to its units at Taloja, Kamothe and Kalmeshwar and the balance production was being sold to independent buyers. It is also not disputed that the value on which duty has been discharged by them at the time of clearance of goods to their units was the same at which duty was discharged by them in respect of clearances to independent third parties. Before the referral Bench, the assessees had placed reliance on the decision of the Tribunal in the case of Avon Tubes v. CCE, Ludhiana 2004 (117) ECR 616 wherein the Tribunal held that when the goods are partly sold to unrelated buyers and rest are captively consumed, the assessable value of the captively consumed goods should be determined based on the value at which the goods are sold to unrelated buyers. It was further held that Rule 8 of Valuation Rules is applicable only in a situation where all the excisable goods manufactured by an assessee are captively consumed by him or on his behalf in the production or manufacture of other articles. On the other hand, learned DR appearing for the Revenue had placed reliance on the decision of the Tribunal in the case of BOC (I) Ltd. v. CCE 2004 (168) ELT 478 wherein the Tribunal had by referring to CBEC circular No. 643/34/2002 -CX dated 1.7.2002, held that where goods are captively consumed within the same factory, valuation should be determined in terms of Rule 8 and where goods are transferred to a sister unit or another factory of the same company, valuation of the said goods should be done as per the proviso to Rule 9 of the Valuation Rules.

(3.) SHRI Vipin Jain, learned Advocate appearing on behalf of the assessees, along with Shri Vishal Agarwal, Chartered Accountant, raised the following contentions: