Case Law Details

Case Name : Hindalco Industries Ltd. Vs Commissioner of Central Excise (Appeals) (CESTAT Kolkata)
Appeal Number : Excise Appeal No. 19 of 2010
Date of Judgement/Order : 20/07/2020
Related Assessment Year :
Courts : All CESTAT (990) CESTAT Kolkata (28)

Hindalco Industries Ltd. Vs Commissioner of Central Excise (Appeals) (CESTAT Kolkata)

The issue under consideration is whether assessee is justified in reducing the assessable value to the actual cost of production in the inter-unit transfer of goods?

In the present case, conversion job was to be undertaken by the Appellant partly through the Taloja Unit of the Appellant and partly through the Belur Unit of the Appellant. The Appellant contends that the Taloja Unit and the Belur Unit paid Central Excise duty in respect of the processes done by them by calculating the assessable value on the basis of the cost of production as contemplated under rule 8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 2000. The dispute that has arisen for consideration in this Appeal is whether in the case of inter-unit transfer of goods from the Taloja Unit for captive consumption to the Belur Unit, the entire value (i.e. 115% or 110% as the case may be) of the cost of production or the actual cost of production (i.e. 100% of cost excluding the notional loading of 15% or 10%) of the goods, manufactured by the Taloja Unit, would be the cost of the raw material for the Belur Unit of the Appellant for the purpose of determining the assessable value under rule 8 of the 2000 Valuation Rules, for ultimately transferring the goods to the supplier of goods.

CESTAT states that in view of the decision of the larger Bench of the Tribunal in ITC Ltd., it has to be held that the Appellant was justified in reducing the assessable value to the actual cost of production (i.e. 100% of cost excluding the notional loading of 15% or 10% of the goods manufactured by the Taloja Unit) as the cost of raw material for the Belur Unit for the purpose of determining the assessable value under rule 8 of the 2000 Valuation Rules. The order dated September 30, 2009 passed by the Commissioner (Appeals) that has been assailed in this appeal, therefore, cannot be sustained and it is set aside. The appeal is, accordingly, allowed.

FULL TEXT OF THE CESTAT JUDGEMENT

This appeal seeks the quashing of the order dated September 30, 2009 passed by the Commissioner (Appeals), Central Excise, Kolkata-II1 by which the order dated December 27, 2006 passed by the Additional Commissioner of Central Excise, Kolkata-II2 confirming the demand of Rs.6,40,362/- with interest and penalty has been upheld and the appeal has been dismissed.

2. The Appellant is engaged in the manufacture of Aluminium Rolled products falling under Chapter Heading No. 7606/7607 of the Central Excise Tariff Act 19853 from its Belur Unit. The Head Office of the Appellant entered into a job work agreement with M/s. Amco India Pvt. Ltd. and M/s. Raviraj Foils Ltd.4. The Appellant received foil scraps/ aluminium ingot from the supplier of goods for conversion into rolled products. This conversion job was to be undertaken by the Appellant partly through the Taloja Unit of the Appellant and partly through the Belur Unit of the Appellant. The Appellant contends that the Taloja Unit and the Belur Unit paid Central Excise duty in respect of the processes done by them by calculating the assessable value on the basis of the cost of production as contemplated under rule  8 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules 20005.

3. The dispute that has arisen for consideration in this Appeal is whether in the case of inter unit transfer of goods from the Taloja Unit for captive consumption to the Belur Unit, the entire value (i.e. 115% or 110% as the case may be) of the cost of production or the actual cost of production (i.e. 100% of cost excluding the notional loading of 15% or 10%) of the goods, manufactured by the Taloja Unit, would be the cost of the raw material for the Belur Unit of the Appellant for the purpose of determining the assessable value under rule 8 of the 2000 Valuation Rules, for ultimately transferring the goods to the supplier of goods.

4. Rule 8 of the 2000 Valuation Rules, as it existed prior to August 5, 2003, provided that where whole or part of 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, the value of such goods that are consumed shall be one hundred and fifteen per cent of the cost of production or manufacture of such goods. However, with effect from August 5, 2003, the value of goods consumed was reduced to 110 per cent of the cost of production or manufacture of such goods from 115%.

5. The Commissioner (Appeals) placed reliance upon a decision of the larger bench of this Tribunal in Eicher Motors Ltd Commissioner of Central Excise, Indore6 and concluded that the principle laid down in rule 8 would apply at all stages for ascertaining the value of goods that are consumed and it would not be material if the job work was undertaken at two separate Units of the Appellant. Thus, the valuation of the intermediate products manufactured by the Appellant by way of job work at two different units of the Appellant should be determined by taking the entire value (i.e. 115%/110% of the cost of production) at both the units.

6. To appreciate the issue involved in this appeal, it would be appropriate to refer to the show cause notice dated April 12, 2004 that was issued to the Appellant. It was stated that between April 1, 2001 and December 31, 2003 the Appellant had reduced the assessable value of the finished product of conversion goods of 5,18,562 Kgs resulting in under valuation of Rs.40,02,263/- and short payment of Central Excise duty of Rs.6,40,362/- with intent to evade payment of Central Excise duty with clear knowledge that full intrinsic cost of raw material received at Belur Unit, the conversion cost and packing cost should be taken together for arriving at assessable value of the finished product and, therefore, the larger period of 5 years under the proviso to section 11A(1) of the Central Excise Act 19947 was invokable.

7. It would also be useful to refer to the relevant portions of Annexure-A to the Show Cause Notice which deals with both the contracts entered into by the Appellant with M/s. Amco India Pvt. Ltd. (Case-I) and with M/s. Raviraj Foils Ltd. (Case-II). It is as follows:

ANNEXURE-A

Case-I

Contract between M/s.AMCO India Pvt. Ltd. & M/s. Indian Aluminium Company Ltd.

(i) Value of H.R. Coil received from INDAL, Taloja= Rs.103.70

(ii) Conversion cost of such H.R.Coil to Foil Stock at Belur Unit=Rs.15.39 (the total conversion cost of Foil scraps/Aluminium Ingots to H.R.Coils at Taloja and its subsequent conversion to Aluminium Foil Stocks/ Aluminium H.R. Closures etc. at its factory at Belur being Rs.24 kg.)

(iii) Thus, full intrinsic cost of the raw material received at Belur Unit viz. that of H.R. Coils plus the conversion cost at the end of Belur amounts to Rs.(103.70+15.39)=Rs.119.09 per kg.

(iv) The assessable value of Aluminium Foil stock declared at Belur=Rs.110.75 per kg.

(v) Therefore, the under valuation is Rs.(119.09-110.75)=Rs.8.34 per kg.

(vi) Total quantity of goods cleared to M/s. AMCO Pvt. Ltd. from 01.04.2001 to 31.12.2003 on such conversion account= 4,02,539 kg.

(vii) Thus, total under valuation= Rs.(4,02,539×8.34) =Rs.33,57,175.00

(viii) Therefore, short levy of duty amounts to Rs.33,57,175.00 x16% =Rs.5,37,148.00

Case-II

Contract between M/s. Raviraj Foils Ltd. & M/s. Indian Aluminium Company Ltd.

(i) Value of H.R. Coil received from INDAL, Taloja =Rs.102.15

(ii) Conversion cost of such H.R.Coil to Foil stock at Belur unit=Rs.16.91 (the total conversion cost of Foil scraps/Aluminium Ingots to H.R.Coils at Taloja and its subsequent conversion to Aluminium Foil Stocks/Aluminium H.R. Closures etc. at its factory at Belur being Rs.27.50/kg.)

(iii) Thus, full intrinsic cost of the raw material received at Belur Unit viz. that of H.R. Coils plus the conversion cost & packing cost (amounting Rs.0.90 as per contract) at the end of Belur amounts to Rs.(102.15+16.9+0.90)= Rs.119.96 per kg.

(iv) The assessable value of Aluminium Foil stock declared at Belur=Rs.114.40 per kg.(vide invoice no.0010232 dt. 31.03.2002)

(v) Therefore, the under valuation is Rs.(119.96-114.40)=Rs.5.56 per kg.

(vi) Total quantity of goods cleared to M/s Raviraj Foils Ltd. from 01.04.2001 to 31.12.2003 on such conversion account=116023kg.

(vii) Thus, total under valuation= Rs.(116023×5.56)= Rs.645088.00

(viii) Therefore, short levy of duty amounts to Rs. 645088 x 16%=Rs.1,03,214.00

Case-I+Case-II

(i) Total goods cleared = 402539kg.+116023kg.= 518562kg.

(ii) Total under valuation = Rs.3357175.00+Rs.645088= Rs.4002263.00

(iii) Total short levy of duty = Rs.(537148.00+103214.00)= Rs.640362.00

8. The Appellant filed a reply dated May 16, 2006 to the aforesaid show cause notice dated May 12, 2006. During the course of hearing held on October 20, 2006 the Appellant also filed detailed written submissions. It was pointed out that in accordance with rule 8 of the 2000 Valuation Rules, the Taloja Unit paid Central Excise duty on the assessable value calculated @110% of the cost of production. The cost of material at the hands of the Appellant in the Belur Unit has to be taken @100% of the cost of production at the Taloja Unit. The Appellant also pointed out in the written submissions:

“8.2 In order to clarify more on this issue, it is submitted that since the manufacturing units at Taloja as well as at Belur are two different divisions of one company viz. M/s. Indian Aluminium Co. Ltd. (presently known as M/s. Hindalco Industries Ltd.) and the job work was undertaken by the company through two units, the ratio of the decision, which was laid down in the case of M/s. Pawan Biscuits Co. Ltd. case has to apply to the company as a whole. Had both the divisions been in one factory, there would not have been any scope for the Department to add the profit margin @10% of the cost of production of each divisions. By applying the same logic, as the two units of the company are located at two different places, there seems to be no legal justification to consider the invoice value, which was calculated @ 110% of the cost of production at Taloja Unit to arrive at the assessable value of the end of Belur Unit where final processing was undertaken. It is needless to state that M/s. Hindalco Industrial Ltd. (earlier M/s. Indian Aluminium Co. Ltd) prepared and still also prepare one annual account and balance sheet for all these divisions together. The Taloja Unit while discharging their duty liability prior to transfer of the partly-processed materials to its sister unit at Belur rightly followed the provisions of rule 8 of the Valuation Rules, by paying duty @110% of the cost of production.

9. The correct position with regard to case I and case II of Annexure A to the show cause notice, was pointed out by the Appellant as follows:

“9. Having regard to the above, the Noticee respectfully submits that the differential duty arrived at in the Notice with reference to the Annexure-A thereto has not been correctly done. The Noticee has recalculated the assessable value considering the invoice value of the raw materials as 110% of the cost of production.

In the Case-I in the Annexure-A to the Notice, it has been noted that HR Coil was received from Indal Taloja @ Rs.103.70 per KG, conversion cost of such HR Coil to foil stock at Belur Unit @Rs.15.39 per KG and the full intrinsic value has been found to be Rs.119.09 per KG (Rs.103.70+Rs.15.39), whereas the Noticee has paid duty on the Assessable Value @ Rs. 110.75 per KG. Therefore, differential duty on 4,02,539 KG at the differential value of Rs.8.34 per KG has been demanded. It is stated that the semi-processed material was received from the Taloja unit of the Noticee on payment of duty on the Assessable Value 110% of the cost of the production in terms of rule 8 of the Valuation Rules. Therefore, the cost of production of HR Coil comes to Rs.94.27 being 100% of the cost of production. After addition of the conversion charges considered in the Noticee the Assessable Value comes to Rs. 109.66. Therefore, the Assessable Value adopted by the Noticee in this case, which is Rs.110.75 per KG, is more than the Assessable Value on which Central Excise duty ought to have been paid by them. As a result, they have paid excess amount of Central Excise in this case.

Similarly, in the Case-II also when 100% of Rs.102.15 per KG, which comes to Rs. 92.86, is added to the conversion charges of Rs. 16.91 per KG (being the proportionate conversion charge of Belur Unit, as noted by the Department) and the packing charge of Rs.0.90, the Assessable Value comes to Rs. 110.67. Considering the Assessable Value adopted by the Noticee in this case @ Rs.114.40, the Assessble Value adopted b the Noticee in this case is more than the Assessable Value on which Central Excise Duty ought to have been paid by them. As a result, they have paid excess amount of Central Excise duty in this case.”

10. It was, therefore, stated that show cause notice clearly misread and misunderstood the valuation provisions of the law and therefore, the demand of duty of Rs 6,40,362/- was totally devoid of merit.

As noticed above, the Additional Commissioner did not accept the contentions advanced by the Appellant and confirmed the demand with interest and penalty. The Commissioner (Appeals) also did not accept the contentions of the Appellant. The relevant portion of the order passed by the Commissioner (Appeals) is reproduced below:

“11. The issue to be decided here is whether Central Excise Duty is to be charged on the value arrived at on the basis of full intrinsic cost of raw materials received in the Appellant’s Belur Unit plus the conversion cost, packing cost and profit made, appropriated at Belur Unit, or, the duty is to be charged on the cost of materials at the hands of the Appellant at 100% of the cost of production at the Appellant ’s Taloja Unit, even though the Appellant paid Central Excise duty on the assessable value calculated at 110% of the cost of production as per Rule 8 of the said Valuation Rules.

12. I find that similar issue is extensively dealt with in the decision of Hon’ble Tribunal in Eicher Motors Ltd. versus Commissioner of Central Excise, Indore [2008 (228) ELT 43 (Tri.- LB)] xxx xxx  xxx

18. In view of the above, the principle settled in the case of Eicher Motors Ltd. (Supra) by the Hon’ble Tribunal (Larger Bench) is squarely applicable to the present case. The contention of the Appellant that the job work was undertaken by their two different divisions located at two different places will not come to their rescue in as much as they undertook the job work in their two units on goods supplied free of cost by the said suppliers of goods. It is immaterial whether they did job work in one or two of their units. The principle laid down is that statutorily determined value under Rule 8 of the said Valuation Rules would apply at all stages and for all purposes whenever the question of ascertaining the value in non-sale transaction arises.”

12. Shri S.P. Majumder, learned counsel appearing for the Appellant made the following submissions;

(i) The decision of the Larger Bench of the Tribunal in Eicher Motors Ltd. would not be applicable in the instant case and in fact the decision of the Larger Bench of the Tribunal in T.C Ltd. vs Commissioner of Central Excise, Chennai-I8 would be applicable because this decision is precisely in relation to a situation where conversion job work is carried out at different divisions of the same company through inter-unit transfer of goods for captive consumption. In the case of Eicher Motors Ltd, there was no inter-unit transfer of goods;

(ii) When “transaction value” in terms of section 4(1)(a) of the Excise Act is not available, particularly in a case of non-sale transactions, the transaction value has to be determined in accordance with section 4 (1) (b) of the Excise Act and rule 8 of the 2000 Valuation Rules;

(iii) In case of inter-unit transfer of goods, if 110%/115% of the cost of production is adopted at every unit of the same company where partial conversion process is carried out, then the value of the goods for the purpose of payment of duty will increase at the rate of 10%/15% at all such places and in that event the assessable value at the final stage of job-work will far exceed the closest equivalent to the ‘transaction value’;

(iv) The conversion charges received by the Appellant undisputedly included its element of profit. Taloja Unit had calculated the cost of production by adding the processing charges, which included profit, to the value of the raw materials received from the suppliers of the goods. The Taloja Unit had calculated the assessable at 110%/115% of the cost of the production to remit central excise duty in course of stock-transfer to Belur Unit. Since the conversion charges at the hand of Taloja Unit included profit and the further notional loading (i.e. 15%/10%) made by the Taloja Unit for remitting central excise duty, need not be considered at the Belur Unit to avoid an absurd result;

The extended period of limitation could not have been invoked in the facts and circumstances of the case;

There is no justifiable reason for imposing penalty under Section 11AC of the Excise Act; and

There being no liability of any short paid or not paid duty in the instant case, there cannot be demand of any interest from the Appellant in terms of Section 11AB of the Act.

13. Shri K.Choudhary learned Authorized Representative of the Department, however, supported the order passed by the Commissioner (Appeals) and submitted that there is no error in the impugned order as it is based on a decision rendered by a Larger Bench of the Tribunal in Eicher Motors Ltd.

14. The submissions advanced by the learned counsel for the Appellant and the learned Authorised Representative of the Department have been considered.

15. Section 4 of the Excise Act deals with valuation of excisable goods for purposes of charging of duty of excise and is reproduced below:

“Section 4 (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall-

(a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value;

(b) in any other case, including the case where the goods are not sold, be the value determined in such manner as may be prescribed.”

16. Where the goods are not sold, the value has to be determined in accordance with the 2000 Valuation Rules. Rule 8 as it stands with effect from 5 August, 2003 is reproduced below:

Rule 8. Where whole or part of 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, the value of such goods that are consumed shall be one hundred and ten per cent of the cost of production or manufacture of such goods.”

17. It needs to be noted that prior to 5 August, 2003 the value of the goods consumed was to be 115% of the cost of production or manufacture of such goods.

18. In the present case, the Head Office of the Appellant entered into job work agreement with the two suppliers of goods for conversion of the aluminium foils scraps/ aluminium ingot received from the suppliers of the goods to rolled products on job-work basis. This conversion was partly through the Taloja Unit of the Appellant in the State of Maharashtra and partly through the Belur Unit of the Appellant in the State of West Bengal. The Appellant contends that the Taloja Unit and the Belur Unit paid Central Excise duty for the processes done by them by calculating the assessable value under rule 8 of the 2000 Valuation Rules. The Department, however, as is clear from the extract of the show cause notice reproduced above, formed an opinion that even in the case of inter-unit transfer of goods from the Taloja Unit for captive consumption to the Belur Unit, the entire value (i.e. 115% or 110% of the cost of production) would be the cost of the raw material at the Belur Unit for purpose of determining the assessable value under rule 8 of the 2000 Valuation Rules for transferring the goods to the suppliers.

19. This issue has been dealt with at length by a larger Bench of the Tribunal in T.C Ltd. The larger Bench answered the reference on February 12, 2016 in the following manner:

“20. In the light of our foregoing analysis, discussion and reasons, we answer the reference as under:

(a) In the case of inter-unit transfer of goods for captive consumption, the actual cost of production (100% of the cost of production), of the raw material procured from the Bhadrachalam unit of the Appellant (excluding the notional loading under Rule 8- 15%/10%) is the cost of raw material in the hands of the Chennai unit, for determining the cost of production of packaging material manufactured by the Chennai unit. The percentage of loading on such cost of production, mandated by provisions of Rule 8 for remittance of excise duty by the Bhadrachalam unit cannot [not] however be considered as comprised in the cost of the raw material consumed for manufacture of packaging material and thus constituting the cost of production at the Chennai unit;

(b) In view of the conclusions recorded in (a) above, we hold that the decision of the Chennai Division Bench of CESTAT in the Final Order dated 11-5-2010 in Revenue’s appeal in Eveready Industries and the subsequent decision of the same Regional Bench in the judgment reported in 2011 (274) ELT 564 represent the correct position in law. The decision of the Mumbai Division bench in Tata Iron and Steel Co. Ltd. v. CCE, Thane-II- 2013-TIOL-707= 2014 (300) ELT 571 (Tri.-Mumbai) does not represent correct view regarding application of Rule 8 of the Valuation Rules and the same is overruled.”

20. It needs to be noted that I.T.C Ltd. was engaged in the manufacture of packaging material. It had unit at Chennai. The raw material was procured from a unit of the Appellant in Andhra Pradesh. The first issue that was refered to the larger Bench for an answer was:

“(i) Whether, in the case of inter-unit transfer of goods for captive consumption, the entire value (i.e. 115%/110% of the cost of production) OR the actual cost of production (i.e. 100% of cost) excluding notional loading (i.e. 15%/10%) of the goods manufacture of another article) for the purpose of determining value under Rule 8 of Valuation Rules and CAS-4 issued by ICWAI, for transferring the goods to their other unit for further use.”

21. The Tribunal noticed that the issue was regarding interpretation of rule 8 of the 2000 Valuation Rules and the relevant portion is as follows:

“4.2 On the admitted factual scenario, raw material such as paper and paper board manufactured by assessee’s Bhadrachalam unit is stock transferred to the assessee’s Chennai unit and this raw material forms a substantive component of the input for the Chennai unit’s manufacture i.e. of packaging product. In the circumstances, captive consumption of assessee’s own products is clearly admitted. Since Revenue proceeded to apply the said rule to compute the value of the packaging material manufactured by Appellant’s Chennai unit, the fact that employment of Bhadrachalam unit’s raw material in the manufacture of Chennai unit’s packaging material amounts to “captive consumption ” is not in dispute. The issue is therefore regarding the interpretation of Rule 8 of the Valuation Rules.”

(emphasis supplied)

22. The Tribunal then observed:

“8. Since Bhadrachalam unit of ITC Ltd. was not selling the raw material but was captively consuming these goods at its Chennai unit, Section 4(1)(b) of the Act and Rule 8 of the Valuation Rules becomes applicable, as already considered. In view of mandate of Rule 8, Bhadrachalam unit was remitting excise duty at the time of clearance of such raw material, at 115%/110% of the cost of production and since 5-8-2003 at 110% of such cost for remittance of excise duty. The Bhadrachalam unit was remitting excise duty accordingly and undisputedly.

9. The issue is whether the cost of production of the goods-the packaging material that is manufactured by the Chennai unit of the Appellant should be computed at 115%/110% of the cost of production/manufacture of the raw material procured from its Bhadrachalam Unit or at the actual cost of such raw material since there was only a stock transfer and not a sale of these goods by the Bhadrachalam Unit to the Chennai unit.

9.1 The answer to the issue turns upon interpretation of Rule 8, in particular on the expression “cost of production of manufacture of such goods”, in the said Rule.”

(emphasis supplied)

23. The Tribunal ultimately concluded as follows:

“18. Since Rule 8 mandates loading of specified percentage (15% or 10% as the case may be) on the cost of production of goods cleared to another unit for captive consumption in the later unit for computing excise duty payable by the first unit, the cost of production (in the present case, packaging material manufactured by the Chennai unit) must only be considered in terms of CAS-4 as mandated by Board’s Circular dated 13-2-2003. None of the clauses, in particular clause 5.1 of CAS-4 deal with excisable value of captively consumed goods. The CAS-4 sets out standards for computation of captively consumed goods. Loading of a percentage of the cost of production (mandated by Rule 8 of the Valuation Rules) is clearly not a requirement of CAS-4. The cost of production must therefore be computed strictly and invariably only under CAS-4.

19. On the aforesaid analyses, we are compelled to the conclusion that in determining the cost of production of packaging material, the cost of paper and paper board (the raw material procured from the Bhadrachalam unit of the Appellant for captive consumption at the Chennai unit) must be taken as the actual cost of production determined in terms of CAS-4 and as set out in Appendix-I of the said standard ; and would not include loading of the notional amount, of 15%/10% to the cost of production of the raw material, which loading is solely pursuant to mandate of Rule 8 of the Valuation Rules and for remittance of excise duty by the Bhadrachalam unit, for the Chennai unit, which used these goods for manufacture of the packaging material. “

(emphasis supplied)

24. The fact of the present case are similar to the facts of the aforesaid decision of the Tribunal in ITC Ltd. The factual position was also explained in detail in the written submissions filed by the Appellant at the time of hearing before the Additional Commissioner. It was clearly pointed out that if both the units of the Appellant had been in one factory, there would not have been any scope for addition of profit margin @ 10% of the cost of production for each division. It was also stated that the Taloja Unit, while discharging the duty liability prior to the transfer of the partly processed material to the unit at Belur, followed the provision of rule 8 of the 2000 Valuation Rules by paying duty @110% at the cost of production.

25. Learned Authorised Representative of the Department, however, relied upon the larger Bench decision of the Tribunal in Eicher Motors Ltd. A perusal of the said decision indicates that Eicher Motors Ltd was engaged in the manufacture and sale of bus/truck. It supplied chassis on payment of excise duty under rule 8 of the 2000 Valuation Rules @110% of the cost of manufacture of the chassis to M/s. Bhagirath Coal and Metal Fabricators Pvt. Ltd. for building the bodies of buses/ trucks on job work basis. The Tribunal held that 110% of the cost of chassis should be considered to arrive at the assessable value at the end of Bhagirath and not 100% of the cost of chassis.

26. It is clear that this decision in Eicher Motor Ltd. did not deal with a case of inter-unit transfer of goods. This decision, therefore, would not come to the help of the Department. On the other hand, the larger bench decision of the Tribunal in T.C Ltd. squarely applies to the present case as the said decision is in relation to conversion and job work carried out at different divisions of the same company through inter-unit transfer of goods for captive consumption.

27. Thus, in view of the decision of the larger Bench of the Tribunal in T.C Ltd., it has to be held that the Appellant was justified in reducing the assessable value to the actual cost of production (i.e. 100% of cost excluding the notional loading of 15% or 10% of the goods manufactured by the Taloja Unit) as the cost of raw material for the Belur Unit for the purpose of determining the assessable value under rule 8 of the 2000 Valuation Rules.

28. The order dated September 30, 2009 passed by the Commissioner (Appeals) that has been assailed in this appeal, therefore, cannot be sustained and it is set aside. The appeal is, accordingly, allowed.

(Pronounced in the open Court on July 20, 2020)

Notes:-

1. the Commissioner (Appeals)

2. the Additional Commissioner

3. The Tariff Act

4. The supplier of goods

5. 2000 Valuation Rules

6. 2008(228) E.L.T 43(Tri.-LB)

7. The Excise Act

8. 2016 (333) ELT 287(Tri.-LB)

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