Order date – 26 October 2022

 Facts –

•  The appellant, Wellknown Polyester Ltd, have cleared their finished goods namely Polyester Oriented Yarn (POY), Polyester Chips and Fully Drawn Yarn (FDY) to their interconnected sister unit under normal transaction value as per Section 4 of Central Excise Act.
• A show cause notice was issued on 29 November 2013 on the ground that finished goods were cleared by the appellant to their interconnected sister units at the value for charging duty appear to be transaction value as stipulated in Section 4(1)(a) of the Act. It is alleged that the same should be valued in terms of Rule 8 of Central Excise Valuation Rules, 2002
• Aggrieved appellant had filed an appeal

Issue – 

• whether valuation of the goods cleared by the appellant to their sister units should be made under Rule 8 i.e. 110% of the cost of production or on transaction value i.e. in terms of Rule 4 of Valuation Rules read with Section 4(1)(a) of Central Excise Act?

Order – 

• The Tribunal observed that the appellant have cleared their goods to their sister units and value of the same was determined as per the transaction value in terms of Rule 4 of Valuation Rules read with Section 4(1)(a) of Central Excise Act, 1944. 
• The Tribunal relied on the decision of Hon’ble Supreme Court reported at Steel Complex Ltd.- 2015 (321) ELT A138 (SC) that wherever there are clearance partly to the assessee’s own unit or captive consumption and partly on sale basis, the transaction value of the sale of the goods to the unrelated person shall be applicable for assessment in case of supplies made to their own unit/captive consumption. Applying the same principal, in the present case also, the appellant have rightly paid the duty on the transaction value in terms of Rule 4 of Valuation Rules.
• Also, it was observed that there is an amendment made in the Rule 8 w.e.f. 01.12.2013. It is clear that prior to 01.12.2013 the Larger Bench and Hon’ble Apex court interpreting the Rule 8 prevailing at that time held that wherever part clearance is for own unit or captive use and part for independent buyers, the price charged to independent buyer should be taken as transaction value in terms of Section 4(1)(a) read with Rule 4 of Valuation Rules. The legislators keeping in mind and accepting the interpretation of valuation provision made in the judgments supra, brought an amendment in Rule 8 and the same is effective from 10.12.2013. 
• Hence the appeal is allowed.