2024-VIL-283-CESTAT-MUM-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise – Valuation - Inter-plant transfer of inputs – demand as per Rule 8 of the Central Excise Valuation Rules, 2000 - Department is of the view that 110% of the cost of production of inputs received from sister unit is to be taken into consideration for payment of duty – Applicability of decision of Larger Bench of this Tribunal passed in the case of ITC Ltd. Vs. Commissioner of Central Excise, Chennai - HELD - for the period involved in these appeals namely from May 2003 to December 2008, Circular dated 13.02.2003 issued for the purpose of determination of cost of production to meet the requirement of Rule 8 was applicable and the said Circular clearly states that CAS-4 issued by ICWAI would be taken for the purpose of determination of cost and CAS-4 has clearly stated that cost of “material consumed” shall be the cost of material, duties and taxes, freight inwards, insurances and other expenses directly attributable to the procurement and therefore, Appellant’s contentions that cost of billets for Tarapur Unit (Thane) is the cost of billets determined by the Jamshedpur factory without addition of 10% is untenable for the reason that Rule 8 does not state about additional or notational profit at 15/10% but it states that the value in case of Inter-plant transfer would be 110% of the cost of production or manufacture of such goods and in making a comparison between Rule 6(b)(ii) of the Valuation Rules, 1975 with Rule 8 of the Valuation Rules, 2000, notional profit, which was envisaged in the old Rule, is no more available in the present Rule 8 for which definition of cost in CAS-4 would determine the cost of material received at Tarapur unit and as per Rule 8 it would be 115/110% of the cost of production of Billets and not cost of raw material consumed for manufacturing of Billets - in respect of the rule of precedent and in obedience to the decision of Hon'ble Supreme Court, these appeals are decided on the basis of the finding of the Larger Bench, that has accepted the reasoning of the Division Bench of Mumbai on point of law but departed to give a contrary finding on the basis of apparently erroneous observation of the decision of the Hon'ble Supreme Court passed in connection with the erstwhile provision contained in Valuation Rules, 1975 existing prior to the relevant period would cause further hardship to the parties - it would not be a breach of judicial propriety to give a finding that Appellant is liable to pay the duty, interest and penalty as demanded in the Show-cause notice that was also confirmed by this Tribunal vide its earlier order – the appeals are dismissed
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