Central Excise Valuation Rules - More Clarity?
GOVERNMENT has amended the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 as follows:The new Rules shall come into force with effect from the 1st day of December 2013.
Rule 8:
Rule 8 as of now reads as:
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, the value shall be one hundred and ten per cent of the cost of production or manufacture of such goods.
The amended Rule 8 reads as:
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.
What does this really mean?
Earlier the value was one hundred and ten per cent of the cost of production or manufacture of such goods.
Now, 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.
Is the value of the goods in question or such goods? Maybe we can litigate on this for another decade or so. The word, 'such' has created massive confusion in Central Excise and is best avoided. But such opinion is rarely valued.
Incidentally (and more importantly), the usage of the words 'whole or part' is probably to put to rest the Larger Bench decision in Ispat Industries [ ] where after applying the Gunapradhan principle it was held that the provisions of Rule 8 of the Valuation Rules will not apply in a case where some part of the production is cleared to independent buyers.
Rule 9:
In Rule 9 the words
"When the assessee so arranges that the excisable goods are not sold by an assessee except to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of the goods shall be the normal transaction value"
are substituted with
"Where whole or part of the excisable goods are sold by the assessee to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of section 4 of the Act, the value of such goods shall be the normal transaction value"
Similar amendment has been made to Rule 10 also.
In , the Tribunal held, "Rule 10 of the Central Excise Valuation Rules, 2000 can be invoked only when the entire production of the goods by a manufacturer is sold to or through an inter-connected undertaking." The Department's appeal is pending in the Supreme Court. This view is now undone at least prospectively.
Notification No., Dated: November 22, 2013