EICHER TRACTORS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The issue in this Appeal, filed by M/s. Eicher Tractors, relates to the assessment of inputs cleared by them as such.

(2.) Shri B.L. Narasimhan, learned Advocate, mentioned that the Appellants manufacture I.C. Engines and Parts thereof and avail of CENVAT credit of the duty paid on the inputs under the CENVAT Credit Rules; that at time they clear some inputs as such to their Marketing Division by reversing the CENVAT Credit taken by them at the time of receipt of inputs; that the Revenue has confirmed the demand of duty and imposed penalty on the ground that they were required to pay duty based on selling price of their Marketing Division. The learned Advocate submitted that during the relevant period, Rule 3 (4) of the CENVAT Credit Rules provides that when inputs on which CENVAT Credit has been taken, are removed as such from the factory, the manufacturer shall pay an amount equal to the duty of excise which is leviable on such goods at the rate applicable to such goods on the date of such removal and on the value determined for such goods under Section 4 of the Central Excise Act; that there is no dispute as to the rate which was to be applied on removal of inputs to the Marketing Division; that the expression "on the date of such removal" has been used in conjunction with the expression "rate applicable to such goods" and the expression "on the value determined for such goods" has been used after the expression "on the date of such removal" and these two expressions have been separated by using the word 'and' between them; that, therefore, the expression 'date of removal' is used only for the purpose of rate applicable on inputs and not for determining value of such goods; that accordingly the value which was determined by the inputs manufacturer at the time of removal of inputs is to be adopted for the purpose of Rule 3(4) of CENVAT Credit Rules. He also contended that the value for excisable goods has to be determined under Section 4 of the Central Excise Act only when such goods are manufactured and removed by the manufacturer; that since the person who is taking credit on the inputs is not a manufacturer, the input manufacturer alone is the manufacturer of inputs; that thus the value under Section 4 as indicated in the invoice of input manufacture only has to be adopted for the purpose of removal of inputs as such. He mentioned that the Tribunal in their own matter has held, vide Final Order No. 442 -443/04 dated 14.5.2004, relying upon the decisions in the case of CCE, Vadodara v. Asia Brown Boveri Ltd., 2000 (129) ELT 228 (T -LB) and CCE, Coimbatore v. American Auto Service, 1996 (81) ELT 71 (T -LB) that "what an assessee is required to do when he removed inputs as such can only be to restore the credit which he had taken .. Nothing more was required of them." Finally, the learned Advocate relied upon the Board's Circular No. 643/34/2002 CX dated 1.7.2002 wherein it has been clarified that when the inputs are transferred to a sister unit, "it would be reasonable to adopt the value shown in the invoice on the basis of which CENVAT Credit was taken by the assessee in the first place."

(3.) Countering the arguments, Shri S.C. Pushkarna, learned Departmental Representative, submitted that as per Rule 3(4) of the CENVAT Credit Rules, the value has to be determined under Section 4 of the Central Excise Act when the inputs are removed as such; that as per Section 4, the value shall be the transaction value at the time and place of removal; that thus the value of the inputs has to be determined at the time of their removal as such by the Appellants. He, further submitted that the earlier decisions of the Appellate Tribunal are not applicable as the provision interpreted by the Larger Bench of the Tribunal in Asia Brown Boveri was different and the present Rule 3(4) of the CENVAT Credit Rule cannot be treated as successor to Rule 57 F(1)(ii) of the Central Excise Rules, 1944. Finally, he contended that the Board's Circular dated 1.7.2002 does not support the case of the Appellants as it clearly clarifies that "When inputs or capital goods, on which credit has been taken, are removed as such on sale, there should be no problem in ascertaining the transaction value by application of Section 4 (1) (a) or the Valuation Rules."